The Department of Finance (DoF) is looking to tweak the Corporate Income Tax and Incentives Rationalization Act (CITIRA) proposal and allow the government’s incentive-giving body to provide “tailored” relief programs for firms hit by the coronavirus pandemic.
Finance Secretary Carlos G. Dominguez III said the DoF is reviewing the proposed CITIRA and floated the idea of giving the Fiscal Incentives Review Board (FIRB) the authority to craft programs that address specific needs of companies.
“CITIRA [proposal is] still under study, but one idea worth exploring is the possibility of granting the FIRB the flexibility of tailoring programs to the needs of individual companies,” Mr. Dominguez told reporters via Viber on Wednesday, stopping short of giving other details.
This came after acting Socioeconomic Planning Chief and former Finance Undersecretary Karl Kendrick T. Chua said he is in favor of continuing the administration’s Comprehensive Tax Reform Program (CTRP) but with some revisions to provide relief to sectors hardest hit by the coronavirus disease 2019 (COVID-19) pandemic.
“Ako po ay naniniwala na ituloy dapat ang comprehensive tax reform pero siguro, may konting dagdag o pagbabago para matulungan ’yung mga naapektuhan ng COVID-19 (I believe we should continue the CTRP but maybe with some changes to help those affected by COVID-19),” Mr. Chua said during the Laging Handa briefing aired on People’s Television Network (PTV-4) on Wednesday.
The CITIRA bill, which aims to gradually lower corporate income tax to 20% and streamline the tax incentive system, is still pending before Congress, which is scheduled to resume its session on May 4.
Under the bill, the FIRB’s coverage will be expanded to include approval of tax incentives for private businesses in addition to its current mandate to grant tax subsidies to state-owned firms.
FIRB, an interagency committee chaired by the DoF, is proposed to act as an oversight body for the 13 investment promotions agencies (IPAs). Currently, the Philippine Economic Zone Authority (PEZA) and other IPAs are authorized to grant incentives to businesses located inside the special economic zones.
Mr. Chua, who once led DoF’s team that lobbied for tax reform measures in Congress, explained the remaining packages of the CTRP have to be passed as these will provide additional revenues for the government to pay off debt accumulated for its massive spending for COVID-19 response and relief measures.
He said these loans are certainly “not free” and will have to be paid back somehow by future generations. The government would have to weigh the best option, whether to borrow more money or raise taxes in order to repay the loans, he said.
“Kung hindi po tayo magpapasa ng tax reform, ibig sabihin niyan, sa dami ng kailangan tulungan, ay uutang po tayo… Ang ibig sabihin ng utang, hindi natin babayaran ito ngayon sa pamamagitan ng buwis, ’yung mga anak o apo natin ang pinapabayad natin ng inutangan natin. Kaya ’yung desisyon natin whether to borrow money or raise taxes, kailangan pag-aralan kung ano ’yung pinakamagandang balanse,” Mr. Chua said.
Aside from tax revenues, the NEDA chief said the government also has savings from the efficient use of funds, dividends as well as excess income remitted to the national government by state-owned firms.
The government has passed three tax laws so far under the Duterte administration: the Tax Reform for Acceleration and Inclusion law (TRAIN) and the two consecutive increases in sin taxes — Republic Act (RA) No. 11346, which raised excise taxes on tobacco products, and RA No. 11467, which further raised excise taxes on electronic cigarettes and alcohol products.
Other pending measures under the administration’s tax reform program include the Passive Income and Financial Intermediary Taxation Act; the proposal to provide a uniform framework for real property valuation and assessment; and the bill increasing government’s share from mining revenues. — Beatrice M. Laforga
Source: https://www.bworldonline.com/dof-mulls-tweaks-to-citira-bill/