MANILA – Foreign businessmen have asked Congress to rethink a bill that would fix the amount of tax incentives granted to investors for any given year.
In a February 9 letter to Marikina Rep. Miro Quimbo, the Joint Foreign Chambers said it is backing the Department of Trade and Industry’s (DTI) position on House Bill No. 2942 or the Tax Incentives Management and Transparency Act.
HB 2942 is aimed at rationalizing the way the country’s investment promotion agencies (IPAs) grant such incentives by making their award transparent, thus ensuring the benefits outweigh the costs.
Among the salient features of the legislation is the creation of a tax expenditure account (TEA) in the annual General Appropriations Act (GAA) that would account for the incentives, pinning more accountability to how IPAs administer and grant such incentives, providing the Bureau of Internal Revenue (BIR) authority to impose requirements before the award of such perks, among others.
In its position paper, DTI warned that HB 2942 could open the incentives-granting process to legal challenges. Specifying the amount of incentives, in so far as these are construed as subsidies, could also violate the country’s commitments to the World Trade Organization (WTO).
Moreover, giving Congress the power to grant the amount of incentives could weaken the administration of the perks and so hurt the country’s competitiveness. The latest government data show that foreign investment pledges dropped by more than a fourth in the final three months of 2014.
“We are not aware of any country in the world that includes the amount of fiscal incentives granted in its annual appropriations law,” the Joint Foreign Chambers said in its letter to Quimbo, who chairs the Ways and Means Committee.
“We are also concerned that the requirements imposed under the bill would cause additional burden to foreign investors and will not be good for the country’s national competitiveness,” the group said.
The Joint Foreign Chambers counts the American, Australian-New Zealand, Canadian, European, Japanese and Korean chambers in the Philippines and the Philippine Association of Multinational Companies Headquarters Inc. as members. The group has over 3,000 member companies engaged in over $230 billion worth of trade and $30 billion worth of investments in the Philippines.
Source: http://www.interaksyon.com/business/106126/bill-on-tax-incentives-could-hurt-philippine-competitiveness-foreign-businessmen-warn
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