Pia Cayetano sponsors bill to reduce corporate income tax, reform fiscal incentives

Senator Pia Cayetano on Wednesday urged colleagues to approve the bill seeking to reduce the corporate income tax (CIT) rate in the country and reform the fiscal incentives system.

In her sponsorship speech, Cayetano, ways and means chairperson, described Senate Bill No. 1357, or the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA) as fair and the best deal for all.

Under the bill, the CIT rate will be gradually lowered by one percent every year, from 30 percent to 20 percent by 2030.

It will also rationalize fiscal incentives given to firms to make these “performance-based, time-bound, targeted, and transparent.”

The bill intends to prioritize incentives to business activities that generate domestic employment; promote research, development and innovation; promote agribusiness; and invest in areas that are less developed or are recovering from disasters and conflicts, among others.

It will also offer additional tax deductions to reward corporations’ good behavior, such as local job creation, exports, and investment in high technology.

The committee is also proposing to implement sunset provisions for firms currently enjoying fiscal incentives to help them transition to the new tax regime under CITIRA.

“After listening to the concerns and apprehensions of existing investor groups that will be affected by this bill, we came up with terms that address their request for a smoother transition period. This addresses our objective, which is to keep companies and investors here in the country while rationalizing the incentives that we give them,” Cayetano said.

The proposed CITIRA seeks to expand the functions of the Fiscal Incentives Review Board (FIRB), which presently grants incentives to government-owned or controlled corporations.

If passed, CITIRA shall mandate the FIRB to approve all incentives, including those given to private companies, as recommended by the different Investment Promotion Agencies (IPAs), said Cayetano.

The measure also allows the Philippine President to grant incentives for a longer period of up to 40 years for highly desirable projects, as long as they will primarily benefit the Filipino public. — BM, GMA News