Industry groups, foreign chambers seek 15-year CITIRA transition

MANILA, Philippines — Industry groups and foreign chambers are seeking a longer transition period for the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA), saying this would ensure a steady return on investment (ROI).

In a statement, the Philippine Economic Zone Authority (PEZA) said it recently held a dialogue with its top sector locators, industry associations and foreign chambers earlier this week to discuss refinements to the proposed CITIRA bill.

“CITIRA is considered as 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 the trust and confidence of investors to our government,” PEZA director general Charito Plaza.

“Meanwhile, industry associations and foreign chambers have decided to continue with their lobbying to the senators, the bicameral conference committee, and to the President for an enhancement of incentives to make the Philippines globally competitive with a very strong competition among countries to attract foreign direct investments and a longer transition period of 15 years to assure an ROI of their capital investments,” Plaza added.

CITIRA contains Package 2 of the government’s Comprehensive Tax Reform Program. It seeks to lower the corporate income tax rate from 30 to 20 percent, while rationalizing fiscal incentives to make them more performance-based, time-bound, targeted and transparent.

The measure proposes a sunset provision for existing incentives, which is a maximum of five years.

The Department of Finance (DOF) remains firm on the five-year transition period.

Despite initially opposing the CITIRA bill, the PEZA board caved in and expressed its support for the bill earlier this month.

“We had to explain fully that there are ongoing refinements in certain provisions of the bill to address the serious concerns of the stakeholders, especially the existing PEZA locators, and some senators who are equally concerned on minimizing any possible repercussion on jobs if some firms leave the country,” said Trade Secretary Ramon Lopez, who chairs the PEZA board.

Apart from a longer transition period, industry associations, locators and foreign chambers are also calling for more transparency, in a bid to end the uncertainties being caused by the pending tax reform on incentives since 2017 up to the present.

“PEZA wants to end the agony of uncertainties which has created fears to industries’ possible exits and the massive job losses, affecting peace and prosperity in the country,” Plaza said.

“We appeal for more transparency, openness and a critical evaluation by the Senate, the committee and for wisdom and enlightenment by the President who will finally approve the kind of CITIRA law that the government will adopt,” she added.

Key leaders of chambers, industries and associations also reiterated the importance of incentives as they are factors for continuously attracting investments in the country despite the absence of other efficiency factors including low supply chain, high power rate and logistics costs.

Moreover, Plaza said with the recommendations and inputs of the affected parties under PEZA, they have now come up with proposed refinements to better craft a legislation that’s beneficial for all.

The proposed refinements to the CITIRA bill will be submitted and deliberated with Congress, the Department of Trade and Industry, and the Department of Finance once the session resumes.