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Trade Secretary Ramon M. Lo-
pez said senators are working on a
magic numberfor the sunset period
to be given to existing locators in
giving up their incentives. In lat-
vot. rs ro.
By ELTIAH FELTCEE. RosaLES t @allasjah
I
CONOMIC zone locators will "Ar !uch, we are working
onr numberthatwould
most likely end up with'seven years notbetoo shortand not
toolong,and right now
to relinquish all of their fiscal s€ven years mightbethat
magicnumber."-lopez
incentives
tives under the Senate version of the
Corporate Income Tax and Incentives
Rationalization Act (Citira) bill, the registered here," Lopez told the
BUSINESSMIRRoR.
country's trade chief has disclosed. Under this proposal, economic
zone firms will be provided with
, .r :. :,t ., 1,
seven years to drop all of their in-
est discussions among legislators, Citira bill. centives, and this applies to every-
firms operatingin economic zones "There are talks among sena- one without regard to the number of
will most likely end up with seven tors lto grantlocators] sevenyears years registeredwith the Philippine
years before they surrender all of straight with no discrimination Economic Zone Authority (Peza).
their tax perks as required by the on the number of years they are sEE "EcozoNE,"A5
\*e^oUl6. .Al€tisu Nt=v"r p4e€ pu,'+
tr)
EcOzOneo . o corirrwueornoMrr
This is totally different from the
. so long. They want it [sunset perioh]
sunsetperiod in the Citirabill version
passed by the House of Representa-
tives last September.
. 'The House version-House Bill
4135-requires locators to give uP
thiir incentives in two years, for those
opirating in Peza zones for more
than 10 years; three Years, for those
between five years and 10 Years; and
five years, for those below five years.
Lopez has been pushing for the
extension of the sunset Period to 10
years. On the other hand, Peza Direc-
tor General Chalito B. Plaza is ask-
ing lawmakers to give economic zone
firms up to 15 years to cushion the
impact of the lifting of tax Perks.
"Senatorswant to remove that dis-
criminationbetweennewlyregistered
companies andthosein Pezazonesfor
standardizedat sevenyears. Theysaid
itm ightbecomplicatedto manage d if-
ferent transitions," Lopez said.
"l thinkeven at the Senate, itwon't
flyif the sunsetperiod is too quick' as
shown during the first hearing there
on rheCitirabill. Everybody's just con-
cerned about adjusting the sunset pe-
riod to minimize job lossed, especially
in footloose industries,' he added.
Estimates by the Joift Foreign
Chambers of the Philippines put job
lossesat above 700,000 ifthe Citirabill
is passed into law, as a consequence of
locators exiting the country en masse
on removal of their incentives.
"That's the concern, that five
years could be too short ofa tran-
sition for some firms, particularly
for those involved inlabor-intensive
l#c-r\oud€
activities. Most of these firms are
operating factories in other coun-
tries, and they can just transfer
[their production] volume there,"
the trade chief argued.
'As such, we are working on a num
ber that would not be too short and not
too long, and right now seven Years
mightbe that magic number," he added.
Government economists and sena-
tors are workingon the adjustments to
be introduced to the Citirabill. These
changes are part of the comPromise
reached by the DePartments of Fi-
nance (DOF) and of Trade and Indus-
try (DTI) with the Peza, resulting in
Plaza-theCitirabill's strongestcritic
from within government ranks-sup-
porting the measure.
Last week saw LoPez-sitting
as chairman-convening the Peza
nleLDJo
(42
Board in a special meeting to stress
the importance of getting the Citira
bill passed in Congress.
With no more opPosition from
within official ranks, the trade chief
expecting smooth sailing in enact-
is
ingthe Citira bill, removingalso in the
pro(ess the u ncer ta inties spookingthe
country's investment climate. These
uncertainties led to a 12 71-percent
decline in investments approved by
the Peza last year, to P68.32 billion
from P78. 2Tbillion, accordingto Phil-
ippine Statistics Authority data.
The Citira bill, which hurdled the
House in September, will reduce cor-
porate incometaxrateto20 percentby
2029, from 30 percent al. present -the
highest among SoutheastAsian coun-
tries-and will rationalize tax perks
granted to economic zone firms.