New CITIRA bill version to be filed in Senate

MANILA, Philippines — A bill is set to be filed at the Senate for the second package of the government’s tax reform program or the Comprehensive Income Tax and Incentives Rationalization Act (CITIRA) which the Department of Trade and Industry (DTI) hopes would address concerns raised by stakeholders on the version passed at the House of Representatives.

Speaking at the Manufacturing Summit 2019 yesterday, Trade Secretary Ramon Lopez said a new version of the CITIRA bill would be filed by Sen. Pia Cayetano.

Lopez hopes the bill would integrate the positions put forward by stakeholders, as well as by DTI and the Department of Finance.

“What stakeholders can expect is one that would address the specific interests, needs of stakeholders,” he told reporters.

Various groups such as the Philippine Ecozones Association, Semiconductor and Electronics Industries in the Philippines Foundation Inc., Information Technology and Business Process Association of the Philippines, Confederation of Wearable Exporters of the Philippines and the Joint Foreign Chambers (JFC) earlier raised concerns on the CITIRA, saying its implementation based on its current form would affect existing operations of firms, as well as the country’s attractiveness to new investments.

In its position paper submitted to Cayetano, who serves as chair of the Senate Committee on Ways and Means, the JFC said fiscal incentives are important in attracting more foreign investments as they make up for the high costs of operating in the country.

JFC also said implementation of the CITIRA in the first year would  lead to an estimated loss of 121,000 direct and 582,000 indirect jobs.

Approved on third and final reading at the House of Representatives, the CITIRA bill aims to gradually cut the country’s corporate income tax rate to 20 percent from the current 30 percent, which is considered among the highest in Southeast Asia.

In addition, the bill would rationalize fiscal incentives which includes the removal of the five percent tax on gross income earned (GIE) firms operating in economic zones pay in lieu of all national and local taxes after their income tax holiday period ends.

Given the concerns of stakeholders, Lopez said the DTI has submitted its position to the Senate to push for a five to 10-year transition period under the CITIRA bill.

This position is to provide a reasonable transition period and soften the landing for existing investors toward a time-bound and performance-based incentive system.

Under the CITIRA bill approved at the House of Representatives, there would be a two to five-year transition period which would depend on how long firms have been under the GIE regime.

Lopez said the DTI is hopeful the bill could be filed at the Senate soon, so deliberations could proceed and the final form of the proposed measure could be approved.

The Congress will have sessions until Dec. 21 this year and resume on Jan.20 next year.