The investment community, particularly foreign fund managers, support the reforms being made under the banner of the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA).
According to the Department of Finance (DoF), this was even reflected in the report of the Philippine Statistics Authority (PSA) showing foreign investment pledges doubling during the first semester.
Finance Undersecretary Karl Kendrick Chua said this serves a viable proof against a purported capital flight should the proposed tax regime affecting foreign investors in the Philippines muster Congress.
“We are glad that investors are aware of, and appreciate, the huge strides made by the Duterte administration in implementing its Zero-to-Ten-Point Socioeconomic Agenda, which include the massive “Build, Build, Build” infrastructure program, improvements in ease of doing business, and the anti-corruption and peace and order measures of the President,” Chua said.
“Despite the persistent fear-mongering activities of certain groups, the international investment community continues to signal its confidence in the policies of the Duterte administration and in the strength of the Philippine economy and its workforce, as illustrated by the surge in FDI pledges in the year’s first semester,” he added.
Chua said recent foreign direct investment (FDI) data “show that the noisy naysayers against the long-due efforts to reform the country’s convoluted corporate income tax (CIT) system are mistaken.”
Under CITIRA, the CIT is reduced to just 20 percent from 30 percent, admittedly the highest in the region.
Data from the PSA show FDI pledges in the second quarter totaled P49.58 billion, a 60.2 percent hike from only P30.95 billion in the same period last year.
“This added to the P46-billion of pledges in the first quarter, bringing the total pledges in the first half to more than double (reaching 112 percent) the amount last year,” the DoF said.
“The report is based on 6 of the 7 investment promotion agencies monitored by the PSA, which include the Board of Investments, Philippine Economic Zone Authority, Clark Development Corporation, Subic Bay Metropolitan Authority, Authority of the Freeport Area of Bataan, BoI-Autonomous Region in Muslim Mindanao and Cagayan Economic Zone Authority,” the DoF added.