Business groups bat for lowering corporate income tax

The country’s largest business groups on Thursday expressed support for the pending measure aiming to reduce corporate income taxes and rationalize fiscal incentives system.

“We, the undersigned business and professional organizations, jointly  express  our  support  for Senate Bill (SB) No. 1357, the Senate version of the Corporate Income Tax and Incentives Reform Act (CITIRA) which is a core component of the Duterte administration’s Comprehensive Tax Reform Program that seeks to make the corporate tax system simpler, fairer, equitable, regionally competitive and more efficient,” the joint statement read.

Signatories in the joint statement include Anvil Business Club, Bankers Association of the Philippines, Federation of Filipino Chinese Chambers of Commerce & Industry, Financial Executives Institute of the Philippines, Foundation for Economic Freedom, Management Association of the Philippines, Makati Business Club, Organization of Socialized Housing Developers of the Philippines, Subdivision and Housing Developers Association, and UP School of Economics Alumni Association.

“We support CITIRA as it seeks to reduce the corporate income tax (CIT) rate from 30% to 20%, a rate that will eventually put us within the ASEAN range, and at par with our closest regional counterparts Thailand, Vietnam and Malaysia,” it said.

The business group said the CITIRA will not only make the Philippines more competitive in attracting foreign investments, but it will also make our domestic corporations more competitive as they expand their operations or bring their goods in the international market.

“We support the CITIRA as it will modernize the fiscal incentives system,” it said.

“We believe in the underlying principles of having a tax incentives system that is transparent, performance-based, targeted and time-bound. We believe in the equitable sharing of the tax burden, as we believe in the equitable enjoyment of living in an orderly, healthy and prosperous society,” it added.

The business groups noted that the SB 1357 addresses refinements that the private sector previously proposed, such as:

• The scheduled CIT rate reduction is fixed for the first five years to reduce uncertainty, which is detrimental to doing business.
• An extended transition period of seven years is provided to certain firms under the gross income earned (GIE) tax regime to adjust their operations and prevent dislocation.
• CITIRA keeps the current one-stop shop approach for registered enterprises. This would allow them to deal with only one tax agency, in effect avoiding the inconvenience of going through difficult processes and different rules of local government units.

“This structure of the CITIRA under SB 1357 will help create an enabling environment for Filipino businesses, generate quality jobs, and spur growth that is felt throughout the entire archipelago,” the statement read.

“The passage of the law is a necessary step towards achieving the country’s shared vision of prosperity and a comfortable life for all Filipinos by 2040.  It is also timely.  The current disruptions in supply chains bring opportunities for the Philippines to attract foreign direct investments,” it said.

The business groups said that passing the law will provide long-delayed certainty that will help the Philippines compete for job-creating investments.

“Thus, we humbly request the Senate and the House of Representatives to move quickly and decisively to push the CITIRA forward,  and ensure its passage at the soonest possible time. The uncertainty over CITIRA must end,” it said. — MDM, GMA News