CITIRA a step closer to ‘A’ credit grade

Incentives will be granted based on the number and quality of jobs that will be created, the investments made on research and development and skills training

The Corporate Income Tax and Incentives Reform Act (CITIRA) that recently made it through the House of Representatives (HoR) is seen helping boost the country’s chances of achieving superior credit stature from the various sovereign rating agencies.

This was learned from Finance Secretary Carlos Dominguez III who said the proposal to lower the corporate income tax (CIT) will help make the country’s business landscape more attractive to investors.

“A reduced corporate income tax and a simplified, fair and accountable tax incentives system will benefit tens of thousands of small and medium enterprises (SME), as the President pointed out in his latest SONA, and attract investments that will create quality jobs, enhance the skills of our workforce and bring in new technologies,” Dominguez said.

“More importantly, passing the CITIRA bill will make the Philippines more attractive to investors by gradually lowering the (CIT) rate from 30 to 20 percent and rationalize the system of granting fiscal incentives to companies,” he added.

Also, Finance Undersecretary Karl Kendrick Chua said the swift approval of both the CITIRA bill and the measure imposing higher taxes on alcohol products, reflect the commitment of Ways and Means Committee chairman Joey Salceda to adopt the reforms by end-September.

He reiterated the country’s CIT is significantly higher than its ASEAN peers, blunting investments in the process.

“The Philippines’ 30 percent CIT rate is the highest among countries in the ASEAN region, thereby blunting the country’s competitiveness in attracting foreign direct investments or FDI,” Chua said.

As a result, CITIRA aims to gradually reduce the CIT rate by 2 percent per year beginning 2021 until it reaches 20 percent in 2029. Also, the bill will make fiscal incentives for corporations performance-based, time-bound, targeted and more transparent.

“Incentives will be granted based on the number and quality of jobs that will be created, the investments made on research and development and skills training, the capital invested for countrywide infrastructure development, among other criteria,” the Finance executive explained.

Moreover, with the speedy passage of the bill in HoR, Dominguez expressed his gratitude to the lawmakers as well as to Albay Rep. Joey Salceda, who serves as the chairman of the House ways and means committee.

“We thank Representative Salceda, the various sponsors of the CITIRA bill and the members of the House Ways and Means Committee for heeding the call of President Duterte in his SONA on the swift approval of this measure, which represents Package 2 of his Comprehensive Tax Reform Program,” Dominguez said.

To recall, the Cabinet official called on a closer coordination between the lawmakers and the government to speed up the legislation of President Duterte’s priority bills.