PEZA keeps 15-year Citira transition period

Citira aims to rationalize the tax incentives and cut corporate income tax to 20 percent from the existing 30 percent.

The Philippine Economic Zone Authority (PEZA) is keeping its stance for a 15-year transition period for investors whose business operations will be affected by the tax incentive overhaul in the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA).

The PEZA, in a statement on Thursday regarding its submission of proposed refinements for the Citira bill, said the extension provides the cushion for export-oriented companies who foresee massive job losses in the measure.

Citira aims to rationalize the tax incentives and cut corporate income tax to 20 percent from the existing 30 percent. The measure is currently being discussed in the Senate after swiftly hurdling the House of Representatives in September.

Citira, the second package of the Duterte administration’s comprehensive tax reform program, imposes two- to five-year transition period for export-oriented firms benefiting from the 5-percent tax income on gross income perk given by PEZA.

The perk is also among those to be scrapped under the measure, a point of contention between PEZA and other government agencies in October realigned its stance to support the measure after a meeting with its parent firm Department of Trade and Industry (DTI).

But while the PEZA earlier said it has reconciled its support for Citira with the DTI, it noted that aside from the longer transition to shift to the new incentives menu, its proposal is also aimed at implementation of a grandfather rule.

“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 Filipino, thus affecting peace and prosperity in the country,” PEZA director general Charito Plaza said in the statement.

She said the refinements are the result of consultations with industry stakeholders Philippine Ecozones Association, Semiconductor and Electronics Industries in the Philippines Foundation Inc., Information Technology and Business Process Association of the Philippines, Confederation of Wearable Exports of the Philippines and the Joint Foreign Chamber.