Eleven business groups and economic think tanks on Monday threw their support behind the proposed Corporate Income Tax and Incentives Rationalization Act, saying this will make the local market more competitive.
“We support the overall corporate income tax framework proposed under the Corporate Income Tax and Incentives Rationalization Act bill lowering the corporate income tax and at the same time widening the tax base and promoting discipline in tax expenditure through a more prudent, targeted and transparent fiscal incentives system,” the 11 groups said.
These prominent business groups include the Bankers Association of the Philippines, Cebu Business Club, Federation of Filipino Chamber 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 of the Philippines, Subdivision and Housing Developers Association, Tax Management of the Philippines, UP School of Economics Alumni Association and the Women’s Business Council Philippines.
They said in a joint statement that reducing the corporate income tax rate under CITIRA from 30 percent to 20 percent in a span of 10 years would put the Philippines at par with its ASEAN neighbors.
“This will not only make us more competitive in attracting foreign investments, but it will also make our domestic corporates at par with their counterparts, thus making them more competitive as they expand their operations outbound under an integrated ASEAN market,” the groups said.
CITIRA also proposes the rationalization of tax incentives that several companies oppose.
“We are aware that the tightening of tax incentives is not welcomed by certain sectors within our ranks, but we believe in the underlying principles of having a tax incentives system that is transparent, performance-based, targeted and time-bound,” the groups said.
“We believe in the equitable sharing of tax burden, as we believe in the equitable enjoyment of living in an orderly, healthy and prosperous society. We support the enhancement and modernization of tax reporting system through the use of electronic sales reporting system, thereby reducing compliance costs,” they said.
Considering the opposition expressed by several sectors against CITIRA, the business groups proposed several refinements on the current form of the bill. “The scheduled CIT rate reduction should be fixed and not conditional, although an acceleration of rate reduction, should fiscal circumstances warrant, is welcomed to be competitive with ASEAN peers. Uncertainty is the biggest nightmare in doing business,” they said.
They also asked the government to provide a reasonable fixed transition period for concerned firms under the gross income earned regime to adjust their operations and prevent dislocation.
“We are supportive of 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,” they said.