‘Philippines misses out on $12-B potential investments due to CITIRA delay’

MANILA, Philippines — The Philippines has missed out on about $12 billion potential investments in the last two years due to the prolonged deliberation on the proposed second package of tax reform which seeks to reduce the corporate income tax (CIT) and rationalize fiscal incentives, Albay Rep. Joey Salceda said.

To bring back these potential investments, he said the House of Representatives is willing to adopt the Senate version of the Corporate Income Tax and Incentives Reform Act (CITIRA) for the quick passage of the bill into law.

Speaking at the Makati Business Club’s general membership meeting yesterday, Salceda, the principal author of the CITIRA bill, said he estimates there were $12 billion investments in the pipeline in the last two years, but did not push through as the CITIRA has yet to be passed.

While many investors want to enter the country, he said they could not do so due to uncertainties on the final form of CITIRA.

CITIRA seeks to gradually bring down the CIT to 20 percent over a 10-year period from 30 percent, and introduce changes to the incentives system by making the grant of perks to firms performance-based, targeted, time-bound and transparent.

The CITIRA bill has been approved on third and final reading at the House of Representatives, while the bill is still pending at the Senate.

There are some differences in the House of Representatives’ version and the Senate’s, including the transition period given to firms.

Under the House version, firms enjoying the five percent tax on gross income earned (GIE) incentive could continue to do so for two to five years, depending on how long they have been availing of such.

In the Senate version, existing registered activities with the five percent tax on GIE would be allowed two to seven more years as transition period based on how long they have been receiving that incentive and if they meet certain conditions such as exporting 100 percent of their goods and services, employing at least 10,000 Filipino workers, or engaging in highly footloose activities.

Even as there are differences in the House’s and Senate’s bills, Salceda said he is willing to accept the Senate’s version in order to get the measure approved into law.

“I will accept the entire Senate version now for the sake of speed, for the sake of $12 billion. Let the next President revise it if he wants to,” he said.

Once the Senate approves the CITIRA, he said the House of Representatives would adopt it and there would be no need for a bicameral conference committee since there are no conflicting provisions to be discussed.

After adopting the Senate version, the bill would be transmitted to the President for his approval.

CITIRA is among the priority legislative measures identified by President Duterte.

“I hope that the Senate will be able to approve it next week,” Salceda said.

Once the CITIRA is signed into law, he said the country could see the $12 billion potential investments being made within the first year of implementation of the law.