‘DTI not concerned with Citira issues’
Credit to Author: ANNA LEAH E. GONZALES| Date: Wed, 28 Aug 2019 17:38:12 +0000
THE Philippine Economic Zone Authority (PEZA) and the Department of Trade and Industry (DTI) on Wednesday traded accusations and offered differing views on the proposed rationalization of fiscal incentives.
In a statement on Tuesday night, PEZA Director General (DG) Charito Plaza lamented Trade Secretary Ramon Lopez’s seeming lack of concern over her agency’s issues with the proposed Comprehensive Income Tax and Incentive Rationalization Act (Citira), which is pending in Congress.
“DTI hears, but does not listen to the concerns of PEZA and its industries, such as ensuring that it was included in the discussions and the formulation of the Comprehensive Tax Reform Program Package 2 by the Department of Finance, which affects PEZA incentives and structure, [and] most of PEZA’s industries,” Plaza said, referring to Citira.
Formerly the Tax Reform for Attracting Better and Higher-quality Opportunities measure, Citira seeks to gradually lower the country’s corporate income tax rate to 20 percent from the current 30 percent. It also proposes to remove some of the incentives being enjoyed by firms.
The PEZA chief had urged lawmakers to exempt her agency from Citira, warning that the rationalization of incentives would affect the ease of doing business in the country.
Besides issues with Citira, Plaza also refuted Lopez’s claim that he was not consulted on the proposed amendments to the PEZA law, even if he leads the PEZA Board.
According to her, Lopez was informed of the plan to amend the law and was given a copy of the proposal.
“The DTI secretary was not bypassed, as he was aware earlier of the proposed PEZA law amendment. It was he who bypassed PEZA and its registered-industries by not supporting the ‘tried-and-tested incentives of the agency,’ which are backed by the industry associations and locators,” Plaza said.
“This is contrary to the expected behavior of a PEZA Board [chairman] who should…listen and support the concerns of its investors and locators,” she added.
The proposed amendment seeks to institutionalize the incentives of PEZA under one law; pushes for PEZA to be under the Office of the President, instead of the DTI; increase the gross income earned by all registered enterprises within an ecozone to 7 percent from 5 percent; and empower the agency to expand its one-stop shop service.
“It is understood that from the very beginning, the Trade secretary would not support the amendment to the PEZA law. We never expected him to support the amendment which will pave the way for us to be removed as an attached governmental agency to the DTI and which are similar with other investment promotion agencies under the Office of the President (SBMA, BCDA, etc.),” said Plaza, referring to the Subic Bay Metropolitan Authority and the Bases Conversion and Development Authority.
“From the very beginning, PEZA never expect the DTI secretary, who is supposed to be the chairman of the PEZA Board, to support the amendment. He never showed support and listened to the sentiments, issues and problems of the industries,” she added.
‘Uncalled for’
For his part, Lopez said her claims were “not fair and uncalled for.”
“The statements from DG Plaza does not have the endorsement of the Board. And PEZA’s position on the tax reform and the moves to propose a new PEZA law are not
officially endorsed,” Lopez said in a Viber message to reporters on Wednesday.
According to him, PEZA locators are also the reason his department is seeking for a longer transition period of incentives under Citira.
“That’s why we have been working closely with DOF and Congress on adjustments and transitions to the draft bill on the tax reform. This is to soften the landing for existing locators toward a time-bound and performance-based incentive, which are very rational economic principle that I believe in and must be understood by all government policy makers,” Lopez said.
As long as PEZA is a government agency and a custodian of fiscal incentives, “it is part of an overall tax reform that the government has adopted, which will bring benefits for the greater majority,” he added.