The Philippine Stock Exchange (PSE) has joined the rest of the business community in supporting a tax reform legislation that will reduce corporate tax burden to a level that will make corporate Philippines competitive with its peers in Southeast Asia.
PSE president Ramon Monzon and PSE chair Jose Pardo, a former trade and finance secretary, expressed strong support for the Corporate Income Tax and Incentives Reform Act (Citira), which seeks to lower the corporate income tax (CIT) from 30 percent to 25 percent by 2024 and further to 20 percent in 2029.
Upon reaching 20 percent or at par with peers in the Association of Southeast Asian Nations, the PSE officials said the CIT regime “will make the Philippines an attractive investment destination for new foreign and domestic businesses and encourage existing companies to expand their operations.”
“All these will redound to job creation, higher income increased spending and more money in circulation, a cycle that can continue indefinitely as a result of the multiplier effect,” the PSE said.
Last week, 10 of the largest business and professional organizations in the country also urged Congress to pass the Citira. The signatories are 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 Association, Tax Management Association of the Philippines, University of the Philippines School of Economics Alumni Association and Women’s Business Council Philippines.The 10 organizations proposed that the scheduled CIT rate reduction, however, should be fixed and not conditional, although an acceleration of rate reduction would be welcome. “Uncertainty is the biggest nightmare in doing business,” they said.
These organizations also urged Congress to provide a reasonable fixed transition period for concerned firms under the gross income earned regime to adjust their operations and prevent dislocation. They also supported 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.
For its part, the PSE said it appreciated that while Citira would provide fiscal incentives, the government’s revenue raising mandate was still upheld with the time-bound and performance-based conditions.
The PSE also commended what it saw as an imminent countryside development through fiscal incentives that would be granted to businesses in less developed areas through Citira. “The fiscal multiplier effect in these areas will help boost economic growth in third or fourth-class municipalities,” the PSE said.
The PSE lauded the Department of Finance headed by Secretary Carlos Dominguez III and the Senate committee on ways and means chaired by Sen. Pia Cayetano for coming up with necessary reforms that would make the tax system “more efficient, equitable and attractive” to investors.
“The PSE respectfully urges said Senate committee to prioritize the immediate passage of the Citira bill as well all look forward to jump-start its short and long-term benefits to Filipinos,” the local bourse said. INQ