Foreign firms must be convinced to stay
Credit to Author: Tempo Desk| Date: Tue, 15 Oct 2019 16:45:05 +0000
THE Philippine Economic Zone Authority (PEZA) has yielded to what appears to be a firm administration stand on the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA).
PEZA Director General Charito B. Plaza had opposed CITIRA’s move to remove the 5 percent Gross Income Earned (GIE) tax that foreign companies operating in the nation’s various export zones had been paying in lieu of local and national taxes. The foreign firms had come to the Philippines over the years attracted by this and other incentives offered by the Philippine government.
With the impending CITIRA, many of the foreign firms have said they may move on to other countries like Vietnam. Director General Plaza had thus asked that PEZA locators be exempted from the CITIRA provision removing the 5 percent GIE tax.
Last week, Secretary of Trade and Industry Ramon Lopez, who is chairman of the PEZA board, called a meeting of the board and presided over it for the first time. He said the tax reform in the CITIRA bill has the mandate of the President himself and approved by the Cabinet.
There are ongoing refinements in certain provisions of the bill to meet the concerns of the foreign firms, he said, along with those of senators on possible repercussions on the jobs now held by so many Filipinos in the foreign firms. The refinements have to do with the number of years that the special 5 percent GIE tax rate is to be enjoyed by the firms. The bill also proposes lower tax rates for new projects in strategic high-technology industries.
Director General Plaza said PEZA has now aligned itself with the Department of Finance in support of CITIRA’s efforts to overhaul the tax incentive system for foreign firms, making it time-bound, and with due attention and action on the serious concerns of the foreign firms.
“At the end of the day,” she said, “we will leave it to the wisdom of the senators and the President for a beautiful law.”
The bill was originally
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