By JAMES A. LOYOLA
The Philippine Chamber of Commerce and Industry (PCCI) and the Philippine Stock Exchange (PSE) have joined the clamor for Congress to immediately pass the Corporate Income Tax and Incentives Rationalization Act (CITIRA) bill that seeks to create a competitive business environment thus making the country’s tax system at par with neighboring economies in ASEAN.
PSE and PCCI, the largest business organization in the country representing an estimated 35,000 strong small, medium and large enterprises nationwide, joined other organizations Federation of Filipino Chinese Chamber of Commerce and Industry Inc (FFCCCII), UP School of Economics Alumni Association (UPSEAA), Organization of Housing Developers of the Philippines (OSHDP) and Subdivision and Housing Development of the Philippines (SHDA), Management Association of the Philippines (MAP), Makati Business Club (MBC), FINEX, in calling for the urgent passage of Senate Bill No. 1357 when Congress resumes session in May to end any uncertainty in doing business.
PCCI President Benedicto V. Yujuico said that the Philippines tax rate is now the highest in ASEAN at 30 percent, putting the country at a disadvantage position against other countries competing for foreign direct investments.
“We support the lowering of CIT from 30 percent to 20 percent and the modernization or rationalization of the country’s fiscal incentives regime that will ensure big and small businesses compete on a level playing field,” Yujucio said.
Senate Bill No. 1357 incorporates the comments made by the group.
These include a scheduled CIT rate reduction that is fixed for the first five years to reduce uncertainty in doing business.
The bill also allows an extended transition period of 7 years is provided to footloose firms under the gross income earned (GIE) regime to adjust their operations and prevent dislocation;
CITIRA also keeps the current one-stop approach for registered enterprises. This would allow them to deal with only one tax agency, in effect avoiding the inconvenience of going through difficult processes and different rules of local government units.
PCCI Industry Committee Chair Ferdinand Ferrer said that CITIRA could help the Philippines become a global manufacturing hub.
If passed into law and effectively implemented, Ferrer added it would attract more investors to invest in the country, which actually is beneficial to small businesses.
Meantime, the PSE urged the Senate Ways and Means Committee to prioritize the immediate passage of the Corporate Income Tax and Incentives Reform Act (CITIRA) bill.
The bourse expressed strong support for the tax reforms under the bill said as these are seen to attract investments among other short- and long-term benefits to Filipinos.
“The CITIRA provision that gradually lowers corporate income tax to 25 percent by 2024 and 20 percent by 2029 will be considerably beneficial to Philippine corporates,” said the PSE.
It noted that, “Once corporate income tax reaches this level, the country will be within the same corporate income tax range as its peers in the ASEAN region.”
This will make the Philippines an attractive investment destination for new foreign and domestic businesses and encourage existing companies to expand their operations.
“All these will redound to job creation, higher income, increased spending and more money in circulation, a cycle that can continue indefinitely as a result of the multiplier effect,” the PSE added.
The PSE also “commends the imminent countryside development through fiscal incentives that will be granted to businesses in less developed areas through CITIRA.”
It said the fiscal multiplier effect in these areas will help boost economic growth in third or fourth class municipalities.
“The PSE appreciates that while CITIRA provides fiscal incentives, government’s revenue raising mandate is still upheld with the time-bound and performance-based conditions for the said incentives,” the bourse said.
The PSE said it lauds the government for coming up with the necessary reforms that will make the tax system more efficient, equitable, and attractive to investors.