Business leader: Citira to drive away investors

CEBU, Philippines — If the Philippine government will pursue the rationalization of incentive schemes for foreign direct investors, the country may be facing a red flag.

Business leader and educator Virgilio Espeleta thinks that it is dangerous for the Philippines to fully implement the tax reform program – Comprehensive Income Tax and Incentive Rationalization Act (CITIRA), which threatens to rationalize some incentives enjoyed by companies located in the economic zones.

Citira is the renamed version of the Tax Reform for Attracting Better and High-Quality Opportunities bill that the House had passed in the previous 17th Congress. The Trabaho bill, however, ran out of time in the Senate and had to be refiled in the 18th Congress.

“If we are begging for investments, we cannot afford to drive them away,” Espeleta said adding that investors have long list of choices, meaning every country is trying their very best to attract investors.

Espeleta mentioned a recent report saying that due to the concerns on the proposed changes in the incentives scheme being pushed under the second package of the government, many exporters are now preparing their exit plans to move out from the Philippines and instead invest their money in other neighboring countries.

The business leader said this is a warning that law makers should consider, if they were to pursue the rationalization of FDIs tax holdiays.

Locator enterprises in Philippine Economic Zone Authority (PEZA) economic zones

directly employs 1,508,727 Filipinos, while 6,034,908 indirectly.

Should the government insist on rationalizing fiscal incentives, the country will suffer from capital flight which will result to millions of Filipinos losing their job.

The Citira bill also aims to gradually cut corporate income taxes starting 2021, eventually bringing down the current 30 percent to 20 percent by 2029.

The measure would also remove certain tax perks enjoyed by companies in the country.

The Citira bill retains the current incentives for two years, for investors to have enough time to adjust to the new tax scheme.

Perks would also be targeted, time-bound, and transparent.