Below is a summary of the economic team’s proposed amendments to Senate Committee Report No.

50, the
current Ways and Means committee report on CITIRA:

o An immediate 5 percentage point cut in the corporate income tax (CIT) rate starting July 2020. The
corporate income tax rate will be reduced further by 1 percentage point every year from 2023 to 2027. In the
second half of this year alone, this will result in a reduction of government revenues estimated at around PHP
37 billion that all firms, especially the country’s micro, small, and medium enterprises (MSMEs), can use to
fund their operations and retain employees. For the succeeding 5 years, the total estimate is about PHP 476.8
billion in foregone government revenues that these firms can invest in the revitalization of their businesses and
to create even more jobs for Filipino workers. This unprecedented investment reflects our resolve to vigorously
fight the impact of COVID-19 and get businesses back on their feet as quickly as possible.
o Maintaining for up to 9 years the status quo for registered business activities enjoying the 5 percent tax
on gross income earned (GIE) incentive. The sunset period is prolonged by two years, from 2 to 7 years in
the previous version, to 4 to 9 years under this proposal. This is a generous compromise for businesses that
have been enjoying forever incentives, some for more than 40 years, which no other country offers.
o More flexibility for the President to grant a combination of fiscal and non-fiscal incentives, which will be
critical as the country competes internationally for high-value investments.
Even with these amendments, we maintain that the reform must continue to adhere to the basic principles of a
system that is performance-based, targeted, time-bound, and transparent. These principles have been
unanimously recognized by stakeholders during hearings and consultations. We believe that these amendments
balance the interests of all stakeholders, while remaining faithful to the fundamental principles and mindful of
the country’s fiscal challenges.

Provision CITIRA CREATE (Revised CIT

Tax benefit for business enterprises

Accelerated CIT rate reduction 1 ppt per year: Outright drop to 25% until 2022

29% – 2020; a 1 ppt reduction yearly until 20

28% – 2021; 25% – July 1, 2020

27% – 2022; 25% – 2021

26% – 2023; 25% – 2022

25% – 2024; 24% – 2023

24% – 2025; 23% – 2024

23% – 2026; 22% – 2025

22% – 2027; 21% – 2026

21% – 2028;
 20% – 2029 onwards 20% – 2027 onwards

An outright 5 percentage point reduction in the tax rate will benefit all business enterprises in the country that have not enjoyed

income tax incentive. The reduction will boost the efforts of enterprises, especially MSMEs, to protect jobs and recover from the

they have encountered due to COVID-19.

The accelerated reduction in CIT also boosts the country’s bid to attract multinational firms seeking to diversify their production

The larger reduction also brings the country closer to the ASEAN CIT rate average of around 22% and will boost cost competiti

doing business. A lower CIT rate, combined with the country’s strong demographic and financial fundamentals, will strengthen

case for more and better investments.

Flexibility in the grant of incentives

Recommend to the President the

appropriate non-fiscal support, b

Power of the FIRB (Board) None
SIPP, for highly desirable projec

specific industrial activities.

Modify the mix, period, or mann

availment of incentives for highl

Modify the period or manner of availment of projects or specific industrial act

Power of the President
incentives; availment of up to 40 years create high-value jobs and attrac

foreign capital or investment; in

availment of up to 40 years.

May contain recommendations f

non-fiscal support needed to cre

Strategic Investments Priority Plan (SIPP) None
value jobs and attract significant

capital or investment.

To allow the Philippines to take advantage of opportunities to attract especially large or particularly attractive investments, the F
composed of the Secretaries of Finance, Trade and Industry, and NEDA, will have the authority to recommend to the President a

non-fiscal support, in addition to tax incentives. Such support may include facilitation of registration and certification requireme

government agencies; logistics support; customs facilitation; product testing and certification; training support; and shared/comm

facilities for targeted investors.

Upon the recommendation of the FIRB, the President can approve a set of incentives with longer periods of availment, if necess

highly-desirable investments that will bring more employment, higher level of skills training, and greater value-added to the eco

The flexibility accorded to the President is neither novel nor unique. Among our ASEAN neighbors, the Malaysian, Indonesian,

Vietnamese authorities have been exercising a similar level of discretion in granting incentives to boost their attractiveness and a

economic objectives.

● Our proposal is to work within the boundaries of a performance-based, targeted, time-bound, and transparent system, but not b

a “one-size-fits-all” type of incentive regime that we have at present. As economic trends evolve faster than regulation can keep

believe that this ability to tailor-fit incentives will help us attract highly desirable investments.

Longer sunset period for firms currently enjoying incentives

Additional 2-year sunset provision for firms Under 5% GIE: Under 5% GIE:

currently registered with the various Sunset No. of years under GIE Sunset No. of years under GIE
Investment Promotion Agencies (IPAs)

2 More than 10 4 More than 10

3 5 to 10 5 5 to 10

5 Below 5 7 Below 5

7 100% exporter; with at least 9 100% exporter; with at

10,000 employment; footloose 10,000 employment; fo

 projects or activities projects or activities

By extending the sunset period for IPA-registered firms, we directly address their requests for ample time to adjust to the new in

scheme.

Even with the extended sunset period, we believe that many, if not most, firms will find the modernized incentives system more

and better suited to their needs. We have thus maintained the option to shift to the new tax incentives regime, instead of availing

period.