Various groups of businesses and experts in finance, tax and economics have expressed support for the Corporate Income Tax and Incentives Rationalization Act bill, but they also proposed several “refinements” to the proposed law.
These groups include Bankers Association of the Philippines, Cebu Business Club, Federation of Filipino Chinese Chambers of Commerce and Industry, 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.
In a joint statement, the 11 groups said they supported “the overall corporate income tax framework” proposed under the Citira, as this would lower the corporate income tax (CIT) and at the same time widen the tax base.
They noted that if the CIT were brought down to 20 percent from 30 percent—“although over a long period of 10 years ” —this would eventually put CIT in the Philippines within the range that was prevailing among members of the Association of Southeast Asian Nations and would make the country as well as Philippine-based companies more competitive.
“We are aware that the tightening of tax incentives is not welcomed by certain sectors within our ranks, but we believe in the underlying principles of having a tax incentives system that is transparent, performance-based, targeted and time-bound,” the groups said.
Even then, the groups proposed three items that would improve the Citira bill.
First, the scheduled CIT rate reduction should be fixed and not conditional, although the period could be made shorter than 10 years, if needed.
“Uncertainty is the biggest nightmare in doing business,” they said.
Second, the bill should provide a reasonable fixed transition period for concerned firms under the gross income earned regime.
And third, they proposed a one-stop shop approach for registered enterprises that would allow such firms to deal with only one tax agency.
Such streamlining would, in effect, enable firms to avoid the rigors of going through difficult processes and different rules of local government units.