Foreign chambers back PEZA firms’ exemption from CITIRA bill
THE Joint Foreign Chambers (JFC) said Tuesday they support the exemption of the Philippine Economic Zone Authority (PEZA) from the coverage of the Corporate Income Tax and Incentives Rationalization Act (CITIRA) bill.
The CITIRA bill, or House Bill 4157, proposes to reduce the corporate income tax to 20% by 2029 from the current 30%. The measure will also remove redundant fiscal incentives.
The bill is in keeping with the general goal of the tax reform program to make incentives more rational. It also removes the perpetual 5% tax on gross income earned and limits income tax holidays to three years.
“The Joint Foreign Chambers support the amendment to exempt PEZA from HB 4157 CITIRA because it preserves the immense gains over several decades of PEZA as a reliable and competitive administrative option for our investors seeking a foreign location for their manufacturing and IT/BPO (Information Technology-Business Process Outsourcing) projects,” the foreign chambers said in a statement issued Tuesday.
“Currently, the country is not benefitting from the relocation of manufacturing out of China. The amendment will give the Philippines a better chance to attract many billions of dollars of new and expansion foreign investments and a large number of new jobs,” the JFC also said, noting PEZA-accredited zones benefit over 3,000 foreign companies.
The chambers also said the enactment of the proposed measure will put an end to the uncertainty that has deterred foreign investment in the last two years. In the 17th Congress, the equivalent measure hurdled the house of Representatives; but failed to make it out of committee in the Senate.
The foreign chambers that proposed the amendment were the American Chamber of Commerce, Australian-New Zealand Chamber of Commerce Philippines, Canadian Chamber of Commerce of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines, Korean Chamber of Commerce Philippines, and Philippine Association of Multinational Companies Regional Headquarters, Inc.
The CITIRA bill is among the measures proposed by the JFC and other business groups for the 18th Congress. It is also among the measures cited by President Rodrigo R. Duterte in his July 22 State of the Nation Address.
Mr. Duterte asked Congress to approve the remaining packages of the comprehensive tax reform program, beginning with CITIRA. Other packages propose to increase the excise tax on alcohol products and e-cigarettes, centralize real property valuation and assessment and simplify the tax structure for financial investment instruments.
The government has so far passed Republic Act 10963, which slashed personal income tax and increased or added levies on several goods and services; RA 11213, which offers an estate tax amnesty and amnesty for delinquent accounts that remained unpaid even after final assessment; and RA 11346, which will gradually increase excise tax on tobacco products to P60 per pack by 2023 from the current P35. — Charmaine A. Tadalan