THE Department of Trade and Industry (DTI) is batting for a longer transition period for investors in labor-intensive firms as legislation makes its way through Congress to reduce the duration or take away incentives.

Trade Secretary Ramon M. Lopez told reporters last week that he generally supports a five-to-seven year transition period for the Comprehensive Income Tax and Incentive Rationalization Act (CITIRA), and is pushing for a seven to 10-year transition period for firms that create at least 3000 jobs.

CITIRA rationalizes tax incentives and gradually reduces the corporate income tax rate. The proposed bill approved by the House of Representatives currently gives companies two to five years.

“With the transition, we would minimize that risk [of impact on jobs] — allowing maybe a minimum of five years and even longer seven years for major export-oriented firms. Let’s say you’re 90% and above export-oriented and employ maybe 3,000 — those are the big numbers when it comes to job creation,” Mr. Lopez said.

He said that segmenting the transition periods between large and small employers will minimize the risk of losing locators.

“If you really want to count or give value to the jobs generated, that’s the measure. If we want to minimize risk, let’s protect the big employers.”

Mr. Lopez added that CITIRA will ultimately encourage more investment as corporate tax rates fall. He has asked the Board of Investments (BoI) to simulate how many businesses could come in as a result of falling taxes.

He also noted that approval of incentives, a power which CITIRA grants to the Fiscal Incentives Review Board (FIRB), should remain with investment promotion agencies (IPAs) up to a threshold of $1-3 billion in investment.

He said that given the large number of applications, FIRB should evaluate and approve incentives above the threshold, and have authority to review applications recommended by IPAs below the threshold.

As directed by Senator Pilar Juliana S. Cayetano, who chairs the Senate Ways and Means Committee, Mr. Lopez said that DTI will engage with the Department of Finance to finalize the CITIRA transition periods. — Jenina P. Ibañez