Business groups call on Congress to pass corporate tax bill

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Big business groups are now calling for Congress to pass the corporate income tax reform bill, saying this could attract investments at a time when global trade is down in the wake of the coronavirus outbreak.

Metro Manila (CNN Philippines, March 6) — Big business groups have called on the Senate to pass a bill reducing corporate income taxes, saying this could attract investments at a time when global trade is slumped due to the coronavirus outbreak.

Ten business chambers issued a joint statement on Thursday to call for the approval of Senate Bill 1357 or the Corporate Income Tax and Incentives Reform Act (CITIRA). The groups said they are looking forward to ending investor uncertainty as the measure remains hanging for years now.

The CITIRA bill, which is the second tax package after the Tax Reform Acceleration and Inclusion (TRAIN) law, will trim the corporate income tax rate from 30 percent to 20 percent over 10 years, while gradually removing tax breaks for investors. This is expected to make the country a more competitive investment destination versus its neighbors like Thailand and Vietnam.

The Senate bill reduces the tariff to 28 percent beginning 2021, and down one percentage point every succeeding year until it hits 20 percent by 2029. However, there's a caveat: rate reductions beyond 2025 may be suspended by the President if the government exceeds its annual budget deficit due to lower revenue collection.

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The Anvil Business Club, Bankers Association of the Philippines, Federation of Filipino Chinese Chambers of Commerce & Industry, Inc., 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 the UP School Of Economics Alumni Association signed the appeal to lawmakers just days before Congress goes on break.

The groups prefer the Senate version, saying the scheduled tax rate reductions in the first five years would "reduce uncertainty" among players. The seven-year transition would also prevent dislocation and give time for companies to adjust operations.

"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 groups said. "It is also timely. The current disruptions in supply chains bring opportunities for the Philippines to attract foreign direct investments."

The Philippine Chamber of Commerce and Industry (PCCI) also said it backs the group's call for the passage of the bill.

“We support the lowering of CIT from 30% to 20% and the modernization or rationalization of the country’s fiscal incentives regime that will ensure big and small businesses compete on a level playing field,” said Benedicto Yujucio, PCCI president.

If enacted into law, the CITIRA could help turn the country into a "global manufacturing hub," the organization said in a separate statement.

The global outbreak has constricted supply chains, with electronics firms hit hardest as shipments of raw materials from China dwindle amid flight cancellations.

The groups said the bill must be passed at the soonest possible time to end market jitters.

Albay Representative Joey Salceda, who chairs the House Committee on Ways and Means, earlier said he is willing to adopt the Senate version of CITIRA.

READ: Bill cutting corporate taxes clears House