DTI hopes for CITIRA approval in 1st quarter

MANILA, Philippines — With government unable to pass the Comprehensive Income Tax and Incentives Rationalization Act (CITIRA) bill this year, the Department of Trade and Industry (DTI) is hopeful the proposed measure would be approved within the first quarter of next year to put an end to investor uncertainty affecting investments being made in the country. 

Trade Secretary Ramon Lopez said the agency would want the CITIRA bill to be approved in the first quarter of next year. 

Under the CITIRA bill approved on third and final reading at the House of Representatives, the government would gradually cut the current corporate income tax rate from 30 percent to 20 percent over a 10 year period as fiscal incentives for investors are rationalized. 

As part of the changes in the incentives regime, the five percent tax on gross income earned (GIE) paid by firms registered with the Philippine Economic Zone Authority (PEZA) would be removed. 

The five percent tax on GIE is paid by PEZA-registered firms in lieu of all national and local taxes after their income tax holidays have been used up. 

While the CITIRA has hurdled the House of Representatives, the proposed measure would still be deliberated at the Senate. 

Lopez said the non-passage of the CITIRA bill has not affected investments being registered with the Board of Investments (BOI), but has had an impact on investments being made in economic zones and filed with the PEZA. 

Investments for projects registered with and approved by the BOI have reached an all-time high of P1.040 trillion as of end-October, well above the P434 billion in the same period last year. 

Meanwhile, investments approved by the PEZA were down 13 percent to P109.19 billion in the January to November period from P122.98 billion a year ago. 

“What we are seeing now, the uncertainty is on the non-passage,” Lopez said. 

With some investors holding back on investing in the Philippines while waiting for the final form of the bill, he said the BOI is still encouraging firms to invest. 

This, as the BOI has recommended that there should be a provision in the bill which would allow new investors to choose whether to be part of the current incentives regime or the new system.

Lopez said he is hopeful the recommended provision would be part of the CITIRA bill to be filed by Sen. Pia Cayetano at the Senate.

“We’re hoping there is that provision where you can select, at least for the recently approved [investments] so they will not be on a wait-and-see,” he said. 

Apart from the provision allowing firms with new investments to choose, Lopez earlier said the DTI is also hoping the Senate version would integrate the agency’s recommendations to address concerns raised by stakeholders on the House version.