THE Department of Trade and Industry (DTI) will continue to push for an extended transition period for the rationalization of fiscal incentives under House Bill 4157, or the “Corporate Income Tax and Incentives Rationalization Act” (Citira).
“I will still push for the five to 10-year transition period. We will talk to the DoF (Department of Finance) and…let the senators decide,” Trade Secretary Ramon Lopez said on the sidelines of the 45th Philippine Business Conference & Expo in Manila on Thursday.
His comments come after the Finance department said it would remain firm on keeping the maximum five-year transition period.
The second package of the government’s Comprehensive Tax Reform Program, the bill formerly known as the Tax Reform for Attracting Better and High-quality Opportunities measure seeks to reduce the corporate income tax rate (CIT) from 30 percent to 20 percent in 10 years. It also seeks to remove the 5-percent tax on gross income earned (GIE) currently enjoyed by select firms.
Depending on how long a company enjoys the GIE, Citira allows for a transition period of two to five years.
“Ideally, we start with five years. If two years, that would be difficult. Dangerous for some companies that might leave. Two years is too short,” Lopez said.
For its part, the Philippine Chamber of Commerce and Industry (PCCI) also called for a longer transition period.
In a resolution approved at the conference, the PCCI said the government should “provide a longer transition period of 10 years for existing registered enterprises availing [themselves of] the fiscal incentives.”
The organization also expressed support for the CIT reduction, and wants investment promotion agencies to continue as one-stop-shops in their availment of these incentives.