PEZA wants 'grandfather rule,' 15-year transition in CITIRA

With the forthcoming passage in the Senate of the Corporate Income Tax and Incentives Reform Act (CITIRA) bill, the Philippine Economic Zone Authority (PEZA) and industry partners have proposed that the bill must implement the grandfather rule and 15-year transition period to ensure there will be no displacement of workers and ease of doing business.

“While the agency supports the goals of CITIRA bill, PEZA aims to address the possible exits of foreign investors in the country’s ecozones towards other countries as this will result in massive job losses for thousands of Filipinos, thus affecting peace and prosperity in the country,” said PEZA Director General Charito B. Plaza.

Foremost, Plaza said they would like the CITIRA bill to implement the grandfather rule and extend the transition period for 15 years for the shift from PEZA’s current tax incentives to the new menu of incentives under the CITIRA bill.

In pushing for these enhancements to the CITIRA bill, Plaza explained that during their meeting with DTI Secretary and PEZA Board Chairman Ramon M. Lopez came on October 9 this year when they agreed to support the CITIRA Bill, they also agreed that PEZA will submit proposals for consideration by Congress.

Plaza said the proposed enhancement provisions to the CITIRA bill were based on ten principles which are important both to the agency and its valued partners. These are: eliminate the risk of massive unemployment in the CITIRA Bill; eliminate Red-Tape and the threat on the Ease-of-Doing Business in the CITIRA Bill; eliminate constitutional infirmities in the CITIRA Bill; eliminate un-competitiveness in the CITIRA Bill; eliminate complicated items in the CITIRA Bill; eliminate controversy in the CITIRA Bill; eliminate the shotgun approach in the CITIRA Bill; eliminate the risk of the backlash from the international and global export manufacturing and exporters of I.T. Services community; save the P21 billion intended for the Structural Adjustment Fund in the CITIRA Bill; and save the reputation of the Philippines and its Investments Promotion Agencies (IPAs) as honorable members of the global business community.

According to Plaza the refinements to the CITIRA bill based on these principles are the result of the various formal consultations PEZA undertook over the last month with its Export and IT Enterprises, Ecozone Developers, and industry partners namely: Philippine Ecozones Association (PHILEA), Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI), Information Technology and Business Process Association of the Philippines (IBPAP), Confederation of Wearable Exports of the Philippines (CONWEP), and the various Foreign Chambers to include the Joint Foreign Chamber.

Other groups like the Trade Union Congress of the Philippines (TUCP) also gave their recommendations to the bill from the perspective of labor. Their input aims to address the unintended consequences the bill might bring to the country like during the passage of the first Tax Reform for Acceleration and Inclusion (TRAIN) Act also known as TRAIN 1 and the Rice Tarriffication Law.

“Our proposed enhancements seek to answer the pleas of the industry and labor leaders who are now in agony due to the uncertainties CITIRA created since its pending passage in the past years,” explained the Director General.

Amid agreement on fine-tuning, Plaza said other affected parties like the Union of Local Authorities of the Philippines, Inc. (ULAP) still continue to push for a status quo on the current incentives.