Citira improves incentives to priority industries
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Mon, 07 Oct 2019 16:40:04 +0000
THE country’s fiscal incentives system, which treats more than two-thirds of the economy as priority industries, will be improved under the proposed Corporate Income Tax and Incentives Rationalization Act (Citira Bill), the Department of Finance (DoF) said.
In a statement, the Finance department revealed that its recent study showed that the priority industries, covered by the 2017 Investment Priorities Plan, account for a total of 69.4 percent of the whole economy in terms of gross value added.
Finance Undersecretary Karl Kendrick Chua, for his part, said the DoF “cannot dispute that the many industries receiving incentives have made valuable contributions to the economy and to the Filipino people.”
Chua, however, pointed out that while many of these industries are important, “policymakers need to make tough choices between which industries and activities to prioritize if we are to ensure that every peso given away as a tax incentive yields a net positive benefit to society.”
This is because the current system is poised to subsidize more than two-thirds of the economy, he said.
The Finance department official stressed that this problem will be addressed by offering superior incentives targeted towards industries and areas that are truly deserving.
He said the proposed Package 2 of the Comprehensive Tax Reform Program of the Citira Bill aims to make the incentive system performance-based, targeted, time-bound, and transparent.
“Such a system will allow us to actually prioritize and provide superior incentives to specific industries, areas, and activities for the right reasons, such as the creation of quality jobs, investments in research and development, and expansion in less-developed areas and areas recovering from calamity or armed conflict, among others,” Chua explained.
For example, he said, companies eligible for incentives may choose to avail of up to 50-percent additional deduction on direct labor expense, up to 100-percent additional deduction on training and development expenses, and up to an additional 50 percent on top of the 100-percent deduction now allowed on the purchase and use of inputs from domestic suppliers, which will benefit local industries and producers.
The Citira bill was approved by the House of Representatives last month and is now being discussed at the committee level in the Senate.