The Department of Finance (DoF) is proposing to give the President the power to grant “tailor-fit” incentives to investors under the Corporate Income Tax and Incentives Rationalization Act (CITIRA) bill, which is still pending at the Senate.
Finance Secretary Carlos G. Dominguez III said giving more “flexibility” to grant incentives under the CITIRA bill will attract investors to relocate their businesses in the Philippines, which will create jobs and spur economic growth.
“Enhancements under a more COVID-19-responsive version of the bill could include the power of the President, upon recommendation of the Fiscal Incentives Review Board (FIRB), to grant a mix of incentives that better suit an investor’s unique needs,” Mr. Dominguez said in a Viber message to reporters on Tuesday.
Legislators are looking to revise the CITIRA bill, which is currently pending second reading approval at the Senate, to address the disruptions caused by the coronavirus crisis.
Under the current CITIRA bill, Mr. Dominguez said the President is given the authority to extend the duration of incentives, upon FIRB’s recommendation.
“Flexibility refers to mechanisms that will allow the government to tailor-fit incentives — fiscal and non-fiscal — to specific investors whose relocation to the Philippines can yield significant economic returns for the country,” he said.
Currently, Mr. Dominguez said the structure of the country’s incentive scheme offers “limited room” for negotiations compared to neighboring countries.
“Our menu of incentives should not be a one-size-fits-all approach,” he said. “There are potential investments that are uniquely deserving of incentives for reasons that serve the public interest, but their needs do not fit the kind of incentives specified in our laws.”
BEST EFFORT
Despite Mr. Dominguez’s push to have the CITIRA approved by June 3, senators remain divided on the measure that would lower corporate income tax (CIT) and streamline incentives.
“We will give it our best effort,” Senate President Vicente C. Sotto III said in a phone message sent to reporters on Tuesday.
Mr. Dominguez appealed to the Senate to pass the proposed CITIRA before the regular session closes on June 3.
Senate Majority Leader Juan Miguel F. Zubiri said the chamber will hold a caucus after Tuesday’s session to discuss concerns surrounding CITIRA.
Senator Grace S. Poe-Llamanzares does not want to change the incentives system at a time when the world is facing the coronavirus crisis.
“Nag-aalinlangan ako sa CITIRA, now that we are experiencing this shift in doing business. A lot of countries would be affected economically and a lot of them, for survival, will think of the most cost efficient way of running their business,” Ms. Poe-Llamanzares said in a virtual briefing, Tuesday.
“With CITIRA, we are actually taking out the benefits, exemptions or incentives for these companies… it will be hard for us to catch those investments,” she added.
Senate Bill No. 1375 aims to gradually lower the CIT to 20% from 30%. It has been certified as urgent by Malacañang, which would allow the Senate to do away with the three-day interval between second and third reading.
Albay Rep. Jose Ma. Clemente S. Salceda, who chairs the House Ways and Means Committee, said he is coordinating with the Senate and the economic managers to tackle amendments that will make the CITIRA more responsive to the COVID-19 crisis.
“As a matter of strategy, we await the Senate version and introduce these COVID provisions in the bicam,” he said in a phone message sent to reporters. — Beatrice M. Laforga and Charmaine A. Tadalan
Source: https://www.bworldonline.com/dof-proposes-revisions-to-citira-bill/