‘20% cor­po­rate in­come tax with­out con­di­tions’

CCCI ON PRO­POSED TRAIN 2

Cebu Daily News - - ENTERPRISE - By Jose Santino S. Bu­na­chita REPORTER

See­ing the ben­e­fits to small and medium en­ter­prises (SMEs), the Cebu Cham­ber of Com­merce and In­dus­try (CCCI) has ex­pressed its sup­port for the pro­posed Tax Re­form for Ac­cel­er­a­tion and In­clu­sion (Train) Pack­age 2.

But the cham­ber pointed out sev­eral con­cerns with the pro­posed bill, which is cur­rently be­ing de­lib­er­ated in Congress, in­clud­ing fur­ther re­duc­tion of cor­po­rate in­come tax (CIT) and to re­tain some in­cen­tives by ex­ist­ing cor­po­ra­tions for a cer­tain pe­riod.

“At the out­set, we pledge our full sup­port to the govern­ment’s Com­pre­hen­sive Tax Re­form Pro­gram. We will­ingly em­brace the ob­jec­tives of the Duterte Ad­min­is­tra­tion to gen­er­ate sub­stan­tial rev­enues in order to at­tain the AMBISYON 2040 to end poverty in the coun­try,” read CCCI’s po­si­tion pa­per sub­mit­ted to the De­part­ment of Fi­nance (DOF).

It was signed by CCCI Pres­i­dent An­to­nio Chiu.

CIT rates

The pro­posed Train 2 aims to grad­u­ally re­duce CIT rates to no less than 25 per­cent from the cur­rent 30 per­cent, which is one of the high­est rates in the South­east Asian re­gion.

How­ever, the CCCI said that even at 25 per­cent, the coun­try’s CIT will still be the high­est in the re­gion. Sin­ga­pore has a CIT rate of 17 per­cent while Thai­land, Cam­bo­dia and Viet­nam have CIT rates of 20 per­cent.

“If the Philip­pines will adopt a higher CIT rate than Thai­land, Viet­nam, and even Cam­bo­dia, how can we com­pete with these coun­tries in at­tract­ing for­eign in­vestors? Not to men­tion the fact that un­der the pro­posed pack­age, ex­ist­ing in­cen­tives will have to be ra­tio­nal­ized i.e. lim­ited, re­stricted or re­moved,” the CCCI said.

The CCCI sug­gested that the CIT rate should be re­duced from 30 per­cent to20per­centand­couldbe un­der­taken in a span of 10 years with­out con­di­tions.

Yes­ter­day after­noon, the DOF held an in­for­ma­tion drive in Cebu about the ex­ist­ing Train law and the pro­posed Train 2.

In­cen­tives

Ar­ne­lyn Ab­don, direc­tor IV of DOF’s strat­egy, eco­nom­ics, and re­search group, ex­plained that the law would not out­right re­move tax in­cen­tives cur­rently be­ing en­joyed by big cor­po­ra­tions and multi­na­tional com­pa­nies that are do­ing busi­ness in the coun­try.

In­stead, she said that Train 2 aims to “ra­tio­nal­ize and har­mo­nize” in­cen­tives to make it per­for­mance­based, tar­geted, time­bound, and trans­par­ent.

“We want every­one to con­trib­ute. In pack­age one, we asked house­holds to con­trib­ute with higher ex­cise taxes. In pack­age two, we ask cor­po­ra­tions to con­trib­ute by mod­ern­iz­ing cash in­cen­tives,” she said in a press con­fer­ence at Henry Ho­tel.

Based on govern­ment databackin2015,the­gov­ern­ment has given out P300 bil­lion worth of in­cen­tives to less than 3,000 com­pa­nies with its “com­plex” sys­tem of in­cen­tives.

She said there are over 200 dif­fer­ent laws giv­ing out in­cen­tives through 14 dif­fer­ent in­vest­ment pro­mo­tion agen­cies (IPAs).

Sev­eral stake­hold­ers have al­ready ex­pressed con­cern over the Train 2 pro­posal es­pe­cially in the in­for­ma­tion tech­nol­ogy (IT) and busi­ness process man­age­ment (BPM) sec­tors, which are one of the big­gest job gen­er­a­tors in Cebu.

Con­cern raised

Wil­fredo “Jun” Saa Jr., man­ag­ing direc­tor of the Cebu IT-BPM Or­ga­ni­za­tion (CIB.O), said they have been re­ceiv­ing feed­back from in­dus­try play­ers that they are “con­cerned” on the pos­si­bil­ity of in­cen­tives be­ing taken away.

He said the CIB.O is ex­pect­ing Philip­pine Eco­nomic Zone Au­thor­ity (PEZA) Direc­tor Gen­eral Char­ito Plaza to up­date them about de­tails on the in­cen­tives un­der Train 2 on July 12.

How­ever, Ab­don as­sured yes­ter­day that not all in­cen­tives will be taken away. In­stead, there will be just one com­pre­hen­sive “menu” of all in­cen­tives that can be of­fered by the govern­ment.

Who gets them

Cur­rently, she ex­plained that there are some firms get­ting in­cen­tives for more than 20 years al­ready, while there are also some in­cen­tives that are given for life.

With the new set of in­cen­tives, she said pri­or­ity will be given to com­pa­nies that gen­er­ate em­ploy­ment and ex­port, and es­pouse in­no­va­tion and re­search and de­vel­op­ment, among other con­sid­er­a­tions.

“Every peso we give as in­cen­tive is a peso that govern­ment can­not col­lect to spend on other pro­grams. So we want that peso to ben­e­fit the econ­omy more,” Ab­don said.

Part of the Train 2 pro­posal is the for­mu­la­tion of a Strate­gic In­vest­ment Pri­or­i­ties Plan (SIPP) that will list all the pre­ferred ar­eas of in­vest­ment ac­tiv­ity. It will be crafted by the Board of In­vest­ments and the De­part­ment of Trade and In­dus­try.

Ab­don said that the govern­ment will also take in to con­sid­er­a­tion the con­tri­bu­tions of the IT sec­tor and the BPM sec­tor in the SIPP.

CDN PHOTO/JUNJIE MENDOZA AND CDN FILE PHO­TOS

Ar­ne­lyn Ab­don, De­part­ment of Fi­nance’s strat­egy, eco­nom­ics, and re­search group’s direc­tor IV (above), ex­plains the ben­e­fits of the pro­posed Tax Re­form for Ac­cel­er­a­tion and In­clu­sion pack­age 2 in a fo­rum in Cebu City. Cebu Cham­ber of Com­merce and...

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