By Bernie Cahiles-Magkilat
The country’s business groups have rallied behind the proposed overhaul of the country’s tax incentives system under the Corporate Income Tax and Incentives Rationalization Act (CITIRA) Bill but put some conditions and refinements to the proposed measure.
The CITIRA bill seeks to lower the corporate income tax (CIT) and at the same time widen the tax base and promote discipline in tax expenditure through a more prudent, targeted and transparent fiscal incentives system.
“The lowering of the CIT rate from 30 percent to 20 percent, although over a long period of 10 years, will eventually put us within the ASEAN range. This will not only make us more competitive in attracting foreign investments, but it will also make our domestic corporates at par with their counterparts, thus making them more competitive as they expand their operations outbound under an integrated ASEAN market,” said a joint statement by various business groups.
The business groups also acknowledged that the tightening of tax incentives is not welcomed by certain sectors within our ranks, but said “We believe in the underlying principles of having a tax incentives system that is transparent, performance-based, targeted and time-bound. We believe in the equitable sharing of tax burden, as we believe in the equitable enjoyment of living in an orderly, healthy, and prosperous society.”
The groups also support the enhancement and modernization of tax reporting system through the use of electronic sales reporting system, thereby reducing compliance costs.
Foremost in their proposed refinements to the CITIRA bill is for the scheduled CIT rate reduction to be fixed and not conditional, although an acceleration of rate reduction, should fiscal circumstances warrant, is welcomed to be competitive with ASEAN peers.
The group noted that “uncertainty is the biggest nightmare in doing business.”
Businessmen also called for a reasonable fixed transition period for concerned firms under the gross income earned (GIE) regime to adjust their operations and prevent dislocation.
They also support for a one-stop shop approach for registered enterprises that would allow them to deal with only one tax agency, in effect avoiding the rigors of going through difficult processes and different rules of local government units.
The business groups include the Bankers Association of the Philippines, Cebu Business Club, Federation of Filipino Chinese Chambers of Commerce & Industry Inc., Financial Executives Institute of the Philippines, Foundation for Economic Freedom, Management Association of the Philippines, Organization of Socialized Housing Developers of the Philippines, Subdivision and Housing Developers Association, Tax Management of the Philippines, UP School of Economics Alumni Association, and Women’s Business Council Philippines.