TRADE Secretary Ramon Lopez said the tax reform bill endorsed by the Senate ways and means committee is a well-balanced approach to corporate tax reform and helps remove uncertainty of foreign investors.
On Wednesday, Feb. 19, 2020, Sen. Pia Cayetano sponsored Senate Bill 1357, also known as the “Corporate income tax and incentives rationalization (Citira).” Cayetano, who heads the committee, is optimistic that the Senate will approve the bill on final reading on March 13.
“The DTI would like to thank Sen. Pia Cayetano for sponsoring a bill that could create a better investment climate for the greater majority. We think that this is a well-balanced bill that enhances the incentives but will ensure investment performance and efficiencies, with a systematic way of rationalizing incentives,” said Lopez.
“We appreciate this version of the bill, and we hope for the immediate passing of the bill to remove uncertainties and the wait-and-see attitude of investors. We are now pushing for the passage of the bill to resume the growth momentum of the country,” he added.
The Citira bill, which seeks to lower the income tax rate from 30 percent to 20 percent, and modernize the tax incentive system, is a priority bill of President Rodrigo Duterte.
Since a bill on rationalizing tax incentives was first proposed in 1995, the Department of Finance (DOF) and the Department of Trade and Industry have urged Congress to finally make this crucial reform happen.
“After a series of consultations and meetings with various members of the government, business community and academe, and thorough consideration of the sensitivities of key stakeholders, the new bill offers a more reasonable transition period and one that gives recognition to high performing investments such as being 100 percent exportation, or 10,000 jobs created or being in highly competitive footloose industries,” said Lopez.
Through the Citira, the Philippines’ corporate income tax rate will be gradually reduced from 30 percent to 20 percent over the next 10 years, not far from the 17 to 25 percent of its neighboring countries in the Association of Southeast Asian Nations.
The bill prioritizes incentives of business activities that generate local employment, promote development, innovation, high technology projects and agribusiness, as well as those that invest in less developed areas or communities recovering from disasters and conflicts.
The incentives provided will be in accordance with the principles based on international good practices to make them performance-based, targeted, time-bound and transparent. (PR)