PEZA chief changes tone on CITIRA bill

Philippine Economic Zone Authority (PEZA) Director General Charito Plaza has changed her tone on the proposed second tax reform package of the Duterte administration as she is now backing the Corporate Income Tax and Incentives Rationalization Act (CITIRA) bill.

In a statement on Wednesday, the PEZA announced that Plaza has guaranteed the Department of Finance (DOF) of the agency's support for the CITIRA bill.

Plaza was a staunch critic of the CITIRA bill as the proposed rationalization of fiscal incentives will reduce the country's attractiveness to foreign investors.

The second package of the government's tax reform program aims to slash the corporate income tax from 30% to 20% come 2029 and rationalize fiscal incentives by amending or repealing 123 laws on tax perks and consolidate it into a single omnibus incentive code.

Plaza's change of heart came after the PEZA chief and Trade Secretary Ramon Lopez agreed to cooperate in fine-tuning the measure to "consider concerns of PEZA and its industries."

“PEZA is 100% supportive of the CITIRA bill’s objectives and goals and wants to contribute in its enhancement and final version to ensure that it will remove the fear of its existing locators that it’s not a major tax revamp, but an enhanced one and it will continuously attract more investors to the country and empower the Filipino-owned companies, the SMEs, the farmers, and every Filipino to become part in fully industrializing the country," she said.

The PEZA chief said that the agency's registered enterprises can choose between a longer transition of 5 to 10 years, "which can ensure existing investors of the grandfather rule, or may shift to the new incentive system under CITIRA.”

Plaza is also suggesting that its proposed increase of its current gross income earned tax regime from 5% to 7% will be considered in CITIRA instead of the corporate income tax rate in order to retain the one-stop-shop of PEZA for enhanced ease-of-doing-business in the ecozones.

PEZA also recommended the following to "fine-tune" the CITIRA bill in favor of the agency:

• A fixed 10-year or 15-year transition period to be extended to the locators on a per project basis to provide for a common sunset period considering the usual term for the end of life of products and useful life of equipment.
• Continued enjoyment of tax and duty free importation of production-related materials by ecozone locators to put them on equal footing with free port-registered enterprises.
• Recognition of locators’ indirect/constructive exports as part of export sales since inter-zone sales create local value-adding and backward linkages.

“PEZA wants to end the agony of waiting and uncertainty caused by pending tax reform that has affected new investments and expansion projects of current PEZA-registered industries," Plaza said.

“We want to ensure continuous investments for the Philippines and for the jobs of Filipino people," she added.

PEZA said it relies on the wisdom of the Senate and the House of Representatives to finalize the CITIRA bill.

Nevertheless, Plaza thanked the DOF and the DTI for their openness to consider PEZA concerns on the changes of tax incentives.

“We intend to help craft a landmark legislation that will enhance and promote investments to the Philippines to achieve the overall welfare and good of the country and the people,” she said. — MDM, GMA News