ABOUT $12 billion in investment over two years has been left hanging due to the delay in passing the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA), a senior House legislator said.
Representative Jose Maria Clemente S. Salceda of Albay, who chairs the House Ways and Means Committee, said: “Mga $12 billion ang notional na… imbes na pumasok, sa tingin ko mga $12 billion… within two years,” he told reporters on the sidelines of the Makati Business Club meeting Thursday.
Mr. Salceda said if passed, CITIRA, passed by the House in September but stalled in the Senate, can make up for those frozen investments within a year.
He said that he is open to accepting the Senate’s version of CITIRA “for the sake of speed” and for the sake of bringing in the investment left hanging by the uncertainty over the measure’s passage.
CITIRA proposes to reduce corporate income tax rates while also rationalizing the incentive system. The legislation has proved contentious after failing to pass during the previous sitting of Congress, when it was known as the TRABAHO bill.
“I want speed more than being ticklish about any other issues. I will accept the… entire Senate version now, for the sake of speed, for the sake of $12 billion. Let the next President revise if he wants to,” he said.
Mr. Salceda added that Malaysia, Singapore, and Thailand can more speedily pass investment incentive regulation than the Philippines.
“Kasi kung sa Malaysia yan pag sinabi ng kabinete na CITIRA, bukas pasado na yan. Sa Singapore ganun din, sa Thailand ganun din. Sa mga presidential form of government talaga nagkakaroon ng problema. Pag sinabi nila na we will have a new investment incentive regulation, natatagalan. Dito, dahil po dalawang taon na inapprove siya sa kabinete…nakabitin. So gusto malaman ng tao, pag pumasok ba ako dito sa Pilipinas, ano ba ang babayaran ko? (In Malaysia, if the Cabinet proposes a measure it would pass tomorrow. Same with Singapore and Thailand. In countries with presidential government there have been problems. Any new investment incentive regulations are delayed. The legislation has been greenlit by the executive for two years now and remains hanging. If I were an investor I would want to know what taxes I would pay if I invested in the Philippines)” he said.
He said that Congress will no longer need a bicameral conference committee for CITIRA because he is willing to adopt the Senate version.
“I hope the Senate will be able to approve it next week. We will adopt it, so there’s no bicam, then it’s law,” he said.
CITIRA proposes to gradually bring down corporate tax rates to 20% by 2029 from the current 30% while rationalizing incentives, is awaiting Senate approval after having been passed by the House in September.
In an aide memoire dated Feb. 19, Mr. Salceda said that both the Senate and the House versions of CITIRA “aim to make the corporate income tax and incentives system simpler, fairer, and more efficient.”
“Both bills aim to make incentives performance-based, targeted, time-bound, and transparent. Both bills will instill more accountability in the grant of incentives, by expanding the Fiscal Incentives Review Board (FIRB) to cover registered business enterprises (RBEs) that receive incentives from investment promotion agencies (IPAs),” he added.
He added that the Philippines’ incentives system “will no longer be granted in perpetuity” under CITIRA.
“Both versions disperse development in the countryside through a tiered system of granting more incentives the farther one locates from Metro Manila and highly-urbanized areas. Both versions encourage the use of domestic inputs, job creation, training, and research and development through a simple system of enhanced deductions,” he said. — Genshen L. Espedido