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The Department of Finance (DOF) wants President Rodrigo Duterte to have a direct role in granting tax incentives to investors who would attract more investments during the COVID-19 contagion.
The Secretary of the Treasury, Carlos G. Domínguez III, at a meeting of the Inter-institutional Working Group on Emerging Infectious Diseases (IATF-EID) on Tuesday, urged lawmakers to pass the Corporate Income Tax and Incentives Reform Law ( Citira) pending before Congress continues to rest on June 3.
The bill had already been passed by the House of Representatives, but the Senate sat on it amid concerns that investors would flee the country when tax benefits were cut and jobs were lost.
But financial officials said Citira’s goal was clear: to provide rational tax incentives while lowering the corporate income tax rate from 30 percent, the highest in Southeast Asia, to 20 percent with time.
Last week, Domínguez said the DOF was open to cutting corporate income tax rates “faster than originally planned” through Citira.
Domínguez said on Tuesday that Citira will now “include flexible tax and non-tax incentives so that we can target specific companies that we want to invest here.”
When asked to elaborate, Domínguez responded: “Flexibility refers to mechanisms that will allow the government to adapt incentives, fiscal and non-fiscal, to specific investors whose relocation to the Philippines can generate significant economic benefits for the country.”
“The benefits would include good jobs for our workers and the co-location of key players in the cutting edge industries,” he said.
“One of the structural problems of our current system is limited space for the type of negotiations that our neighbors are having to attract potential investors,” said Domínguez.
“Our menu of incentives should not be a one-size-fits-all approach. There are potential investments that uniquely deserve incentives for reasons that serve the public interest, but their needs do not match the type of incentives specified in our laws, “said Domínguez.
“Under Citira’s original proposal, the President may extend the duration of the incentives on the recommendation of the Fiscal Incentives Review Board (FIRB),” he added.
“Improvements under a version of the bill that is more responsive to COVID-19 could include the power of the President, on the recommendation of the FIRB, to provide a combination of incentives that are better tailored to the unique needs of an investor,” said Domínguez.
Currently, the DOF-chaired board only awards tax subsidies to state corporations, but Citira will empower the FIRB to approve investor tax benefits, as well as make it the oversight body for 13 investment promotion agencies ( IPA) that grant tax incentives. .
“We are already exploring this proposal with relevant committees and Congressional leaders. That would make the system more responsive to investments that will serve our people well, “said Domínguez.
Domínguez, chief economic director of the Duterte administration, had said that Citira can also serve as a stimulus for a post-pandemic economy, as it will attract more investment and create jobs.
Edited by TSB
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