The Department of Finance (DOF) said the surge in approved foreign investments (FIs) in the first half of the year proves fears of investment flight with the expected passage of the Corporate Income Tax and Incentives Rationalization Act (CITIRA) are unfounded.
The Philippine Statistics Authority (PSA) recently reported the total approved FIs for the first six months of the year reached P95.6 billion, 112 percent higher or more than double from P45.2 billion in the previous year.
“It goes to show the noisy naysayers against the long-due efforts to reform the country’s convoluted corporate income tax (CIT) system are mistaken,” Karl Kendrick Chua, DOF undersecretary, said.
“Despite the persistent fear-mongering activities of certain groups, the international investment community continues to signal its confidence in the policies of the Duterte administration and in the strength of the Philippine economy and its workforce, as illustrated by the surge in FDI pledges in the year’s first semester,” Chua added.
The PSA reported approved FIs in the second quarter amounted to P49.58 billion, up 60.2 percent from P30.95 billion a year ago. This added to the P46 billion of pledges during the first quarter.
The report is based on data from six investment promotion agencies, which include the Board of Investments, Philippine Economic Zone Authority, Clark Development Corp., Subic Bay Metropolitan Authority, Authority of the Freeport Area of Bataan, BOI-Autonomous Region in Muslim Mindanao, and Cagayan Economic Zone Authority.
The CITIRA aims to gradually reduce the CIT rate from 30 percent to 20 percent. It also seeks to reform the country’s fiscal incentive system to make it performance-based, targeted, time-bound, and transparent.
The bill was approved on second reading by the House of Representatives on Monday night.