Extend Citira transition to 15 years
Credit to Author: ANNA LEAH E. GONZALES| Date: Wed, 23 Oct 2019 16:25:51 +0000
THE Philippine Economic Zone Authority (PEZA) and various business groups are resolute in their stance to secure a 15-year transition period for the rationalization of fiscal incentives under the Corporate Income Tax and Incentives Rationalization Act (Citira).
In a statement on Wednesday, PEZA Director General Charito Plaza said the longer transition period was one of the refinements her agency proposed for Citira — formally called House Bill 4157 — after it held a second dialogue with top sector locators, industry associations and foreign chambers on October 22.
“Industry associations and foreign chambers have decided to continue with their lobbying to the senators, the Bicameral Conference Committee and [President Rodrigo
Duterte] for [the] enhancement of incentives to make the Philippines globally competitive with [other] countries [in attracting] foreign direct investments and a longer transition period of 15 years to assure” a return on their capital investments, she said.
“PEZA wants to end the agony of uncertainties which has created fears [of] industries’ possible exits and the massive job losses, affecting peace and prosperity in the country,” Plaza added.
The second package of the government’s Comprehensive Tax Reform Program, Citira proposes to reduce the corporate income tax rate from 30 percent to 20 percent in 10 years and streamline fiscal incentives.
It also proposes that firms enjoying the existing 5-percent tax on gross income earned would have a transition period in which they can continue to benefit from the incentives granted to them for two to five years. Once these so-called sunset provisions expire, these firms may seek to apply for incentives under the new system.
The PEZA chief said leaders of these associations and chambers had reiterated that “incentives are important factors for continuously attracting investments [to] the country despite the absence of other efficiency factors, including low supply chain, high power rate and logistics costs.”
“Citira is considered a major incentives revamp which will affect PEZA’s image and credibility in the international community, in honoring commitments and contracts with investors, the stability of our investment policies and laws and most is the trust and confidence of investors to our government,” she added.
“[We] appeal for more transparency, ‘openness’ and a critical evaluation by the Senate…and for wisdom and enlightenment by the President who will finally approve the kind of Citira law that the government will adopt,” she added.
The proposed transition period and other refinements will be submitted to and deliberated in Congress once sessions resume, as well as to the Finance and Trade departments.