Various groups have expressed their support to the second package of the government’s Comprehensive Tax Reform Program, but said refinements to the proposed measure are needed.
“We support the overall corporate income tax framework proposed under the Corporate Income Tax and Incentives Rationalization Act (Citira) bill lowering the corporate income tax (CIT), and at the same time widening the tax base and promoting discipline in tax expenditure through a more prudent, targeted and transparent fiscal incentives system,” the groups announced in a joint statement released on Monday.
The groups were composed of the Bankers Association of the Philippines, Cebu Business Club, Federation of Filipino Chinese Chambers of Commerce and Industry Inc., Financial Executives Institute of the Philippines, Foundation for Economic Freedom, Management Association of the Philippines, Organization of Socialized Housing Developers of the Philippines, Subdivision and Housing Developers Association, Tax Management Association of the Philippines, UP School of Economics Alumni Association, and Women’s Business Council Philippines.
Despite their support, the groups said the proposed House Bill 4157 needed three key
First, they emphasized that “the scheduled CIT rate reduction should be fixed and not conditional, although an acceleration of rate reduction, should fiscal circumstances warrant, is welcomed to be competitive with Asean (Association of Southeast Asian Nations) peers.”
“Uncertainty is the biggest nightmare in doing business,” the groups added.
Citira aims to reduce the CIT rate by 30 percent to 20 percent in 10 years.
Second, the groups highlighted that the proposed measure must “provide a reasonable fixed transition period for concerned firms under the gross income earned (GIE) regime to adjust their operations and prevent dislocation.”
Under Citira, the government will provide firms a maximum five-year transition period for the rationalization of fiscal incentives.
Firms enjoying the existing 5-percent tax on GIE, on the other hand, would have a transition period in which they can continue to benefit from this incentive for two to five years.
Lastly, the groups said they “are supportive of a one-stop shop approach for registered enterprises that would allow them to deal with only one tax agency, in effect avoiding the rigors of going through difficult processes and different rules of local government units.”
Formerly called the “Tax Reform for Attracting Better and High-quality Opportunities” or Trabaho bill, Citira was approved by the House of Representatives last month, and is now being discussed at the committee level in the Senate.