Acorporate tax and : ; ‘ ince itive reform? prehensive Income Tax and Incentives Rationalization ‘Act (CITTRA) bill has died down. Corpora- tions used to be up in arms against it. After reading the version that was crafted by the Senate ways and ‘means committee, the reason is crystal clear. have wondete why the ==. er ine Com ‘year starting 2020 with a final reduction to 20% in 2029, (The Committee Bill in the Senate mistakenly placed the corporate {ax rate at 35%). In 10 years, the income tax rate on corporations ‘would be at par with ‘Taiwan, Thailand and Vietnam where a 20% corporate income tax is imposed. tt wil stil be below Singapore's Theme cat seeniey= FROM BOTH corporate income tox incense ade z ifie thaie cob SIDES NOW me have their cake and kkong’s 16.5%. featittoo. The income MIWIDAM.GUEVARL But, BOI-promoted fax exemption has een maintained, Tn addition, scr significant pelege hat fen estored. Ther purchases EeS'now exempt from the VAT ana ade a), snd tet eat Sent re mw zar rate iayaevec air Cacrenety, omigtexporcers enjoy. a VAE onoeranine, Tt slats that no VAT ls levied on Shel eaporal roe exporters can Gaimafefund nll he VAT that fas pald on their inputs As pro= Posed, this "prvlege™ is being Granted toal frm that ae pro= Sored by government, regardless fot whether they are exporters ot ‘ow (BIW, zero-ratingisnotre- diya tpenege "The Pilippines follows the destination rue out ‘Yarsyster. Goods are subject to VAT in the country where they Mee consumed, Singe exports are foe consumed here, no VAT on Srported goods is levied) Tn effec, the proposal veers away ftom the destination Tule {Dreyucs Ua revenues tha were Comeciea from noncexportersy Shad complicates administration Bur tie tore important resus the worsening inequity between prion eides eomated a es Seas apieecee pees tage ever tr compensa pista etapa givers sous aetenae oer develo Secrmsckerpdon can ony be ranted on "goods and services tata aireciy and exclusively ‘used in the registered project or acuvity located in an ecorone oF Freeport” But, who determines wena is *aiect and exclusive"? ‘nce, an opportunity forthe use firms will continue to enjoy an income tax exemption. {Under the eurrentlaw, firms that are classified as “pioneer” are given an exemption for 6 years Shd non pioneer firms are given ‘fr years. The exemption can be ‘extended for 3 more years if they “expand” or “modernize Firms that are promoted by PEZA and those in ecozones are given a sunset provision, ie. they ‘an continue to enjoy the 5% tax ‘on their modified gross income. ‘Those that have enjoyed the pref- erential treatment for more than. 40 years are given 2 more year ‘sunset clause of 5 years is given ‘to those that have registered for 5 to 10 years; and 5 years 10 those that have been under the special ‘tax regime for less than 5 years. Firms that are exporting 100% of their products or services have ‘created 10,000 jobs, and “highly footloose sectors” are given 7 vyears. 3 ‘But this is not all. The pro- fncentives iranced bus ‘ions. How can they qualify? ‘must prove to the Fiseal Incen~ tives Review Board chaired by the