Taguig City – With the forthcoming passage in the Senate of the Corporate Income Tax and Incentives Reform Act (CITIRA) bill that will affect tax incentives administered by Investment Promotion Agencies including the Philippine Economic Zone Authority (PEZA) which is country’s biggest export-based investment agency, PEZA and its industry partners have now passed its proposed recommendations for the enhancement of the CITIRA bill.
According to PEZA Director General Charito B. Plaza, “While the agency supports the goals of CITIRA bill, PEZA aims to address the possible exits of foreign investors in the country’s ecozones towards other countries as this will result in massive job losses for thousands of Filipino, thus affecting peace and prosperity in the country.”
Plaza stated “the refinements are the result of the various formal consultations PEZA undertook over the last month with its Export and IT Enterprises, Ecozone Developers, and industry partners namely: Philippine Ecozones Association (PHILEA), Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI), Information Technology and Business Process Association of the Philippines (IBPAP), Confederation of Wearable Exports of the Philippines (CONWEP), and the various Foreign Chambers to include the Joint Foreign Chamber.”
According to the PEZA chief, the said proposal for enhancement of CITIRA bill aims to implement the grandfather rule and extend the transition period for 15 years for the shift from PEZA’s current tax incentives to the new menu of incentives under the CITIRA bill.
The proposed enhancement provisions to the CITIRA bill were based on ten (10) principles which are important both to the agency and its valued partners. These are as follows:
- Eliminate the risk of massive unemployment in the CITIRA Bill;
- Eliminate Red-Tape and the threat on the Ease-of-Doing Business in the CITIRA Bill;
- Eliminate constitutional infirmities in the CITIRA Bill;
- Eliminate un-competitiveness in the CITIRA Bill;
- Eliminate complicated items in the CITIRA Bill;
- Eliminate controversy in the CITIRA Bill;
- Eliminate the shotgun approach in the CITIRA Bill;
- Eliminate the risk of the backlash from the international and global export manufacturing and exporters of I.T. Services community;
- Save the P21 Billion intended for the Structural Adjustment Fund in the CITIRA Bill; and
- Save the reputation of the Philippines and its Investments Promotion Agencies (IPAs) as honorable members of the global business community.
Other groups like the Trade Union Congress of the Philippines (TUCP) also gave their recommendations to the bill from the perspective of labor. Their input aims to address the unintended consequences the bill might bring to the country like during the passage of the first Tax Reform for Acceleration and Inclusion (TRAIN) Act also known as TRAIN 1 and the Rice Tarrification Law.
“Our proposed enhancements seek to answer the pleas of the industry and labor leaders who are now in agony due to the uncertainties CITIRA created since its pending passage in the past years,” explained the Director General.
Amid agreement on fine-tuning, other affected parties still push for status quo
But amid PEZA’s agreement with the Department of Trade and Industry (DTI) on the fine-tunings, other affected parties like the Union of Local Authorities of the Philippines, Inc. (ULAP) still continue to push for a status quo on the current incentives.
This comes a month after Plaza and DTI Secretary and PEZA board chairman Ramon M. Lopez came to an agreement in October 9, 2019 that they will submit their proposals for the pending bill for the consideration of Congress, considering the concerns of PEZA and its registered industries.
In a letter addressed to President Rodrigo Roa Duterte last October 22, ULAP stated its strong support to Administrative Order no. 18, which aims to accelerate rural progress in other parts of the Philippines. Likewise, the group discussed their concern with the pending CITIRA bill.
ULAP President Governor Al Francis Bichara asks “how can we allow legislation to dampen the AO 18’s scenario of local economic growth even before it unfolds?” According to him, “the high probability of an influx of exporters into our ecozones is the best boost that the President has given LGUs toward self-governance.”
ULAP urged to preserve the status quo for PEZA and its existing regime of incentives and direct its efforts at farther enhancing the competitive advantage of doing business in the country.
The group also recommend to focus on full-scale commercial operation imperatives such as access to transportation and logistics infrastructures, establish terminals for food and raw materials, and reduce the cost and maintain the ease of doing business for both the local and national government level.
“With the recommendations and inputs of the affected parties under PEZA, we have now come up with our proposed refinements to better craft a beautiful legislation that’s beneficial for all,” said Plaza.
Plaza underlined that “PEZA wants to have win-win situation for everyone and leave to the Honorable Senators’ wisdom for the final version.” #