Despite much being said by foreign, mainly Manila based foreign business chambers against the Corprate Income Tax Incentives Reform Act (CITRA) bill provisions,the truth is that lowered corporate income taxes will be especially beneficial to countryside businesses who often cannot qualify for the special incentives like perpetual tax exemptions the foreign coubterparts enjoy.
Here are other truths: The old tax system favored perks and incentives for larger foreign companies and brought the burden upon local Small and Mediun Enterprises to fill in the gaps left by the tax breaks. Those in the provinces especially had to deal with having to pay higher taxes compared with foreign counterparts.
Another truth about incentives is that they must be time bound, therefore good only for start ups. Once the conpanies start earning, they need to pay taxes like the rest of us. Otherwise, they can be accused of being a long term subsidy, and worse, anticompetitive, since if they are given to others and not all, it favors the grantee against the others.Incentives without a tine limit are "forever provisions" and are anticompetititve behavior inconsistent with the Philippine competition Act, a law meant to foster competition.
A third truth is that most incentives are given to companies near large urban areas and have not resulted in spreading the opportunity to areas like Mindanao. A fiscal incentives review board can harmonize many incentives and enable others to partake of them.
The fourth truth is that income taxes are now simpler, what with easier taxes on gross income better to compute when compared with the old system with its complicated forms. These will be refined further.
Citira provisions mirror, if not are even superior to incentives offered by our ASEAN neighbors like Thailand, where general motors has closed their assembly plant. The Thais impose higher taxes after an initial period contrary to the opinions offered by biased sources.
With the effects of the US China Trade war clearly apparent, and the NCOV scare worrying ba ks and investors, the current trend is to offer incentives like CITIRA that can are clear and fair to all, so that all businesses can grow and strengthen the exonony in tbe face of these threats That is the emerging trend. CITRA has captured it.
A fairer, simpler tax system for all businessses, not only the big foreign companies, is what the CITIRA bill aims to build. its time we pass it.