“A fair deal for all. The best deal for Filipinos.”
This was how Senate Ways and Means Chair Pia S. Cayetano described Senate Bill No. 1357, or the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA) which she sponsored in plenary on Wednesday.
CITIRA seeks to reduce the corporate income tax (CIT) rate in the country, which is currently among the highest in the ASEAN region, and reform the fiscal incentives system to make it more fair, efficient, and accountable.
Under the bill, the country’s CIT rate will be gradually lowered by one percent every year, from 30 percent to 20 percent by 2030.
The measure will also rationalize fiscal incentives given to firms to make these “performance-based, time-bound, targeted, and transparent.”
The bill intends to prioritize incentives to business activities that generate domestic employment; promote research, development and innovation; promote agribusiness; and invest in areas that are less developed or are recovering from disasters and conflicts, among others.
CITIRA shall likewise offer additional tax deductions to reward corporations’ good behavior, such as local job creation, exports, and investment in high technology.
Meanwhile, the committee is also proposing to implement sunset provisions for firms currently enjoying fiscal incentives to help them transition to the new tax regime under CITIRA.
“After listening to the concerns and apprehensions of existing investor groups that will be affected by this bill, we came up with terms that address their request for a smoother transition period. This addresses our objective, which is to keep companies and investors here in the country while rationalizing the incentives that we give them,” the senator stressed in her speech.
Furthermore, the measure seeks to expand the functions of the Fiscal Incentives Review Board (FIRB), which presently grants incentives to government-owned or controlled corporations. If passed, CITIRA shall mandate the FIRB to approve all incentives, including those given to private companies, as recommended by the different Investment Promotion Agencies (IPAs).
“Currently, there are 13 different IPAs… that offer different menus of incentives to various industries, sometimes not in line with national priorities… There is no one simple set of incentives that the country may promote to potential investors,” Cayetano stressed.
Lastly, the measure allows the Philippine President to grant incentives for a longer period of up to 40 years for highly desirable projects, as long as they will primarily benefit the Filipino public.
“This is the urgency of our task ahead. Let us end the uncertainty (in the business community) by passing CITIRA” Cayetano said. #
Download Sen. Pia Cayetano’s presentation here: CITIRA sponsorship speech ppt