DTI, DOF finally agree on tax perks

is in lieu of the income-tax holidays (ITH) of up to eight years currently enjoyed by BOI-registered firms.

The DTI and DOF, long at loggerheads over the nature of perks that should be given to new qualified investments, have been directed by Congress to immediately come up with a compromise provision on the tax break under the fiscal incentives rationalization bill.

In an interview, Trade Secretary Gregory L. Domingo said the earlier proposal to scrap the ITH and replace it with lower corporate income tax has moved forward, with the DTI and DOF agreeing on a maximum effectivity period of 15 years.

It’s going to be 15-percent corporate-income tax for 15 years. The previous proposal was 10 years; now it’s 15 years. That’s still more agreeable to the finance department than the ITH,” Domingo said.

The trade chief explained that the longer period would be more attractive, considering it is almost double the maximum period allowable for ITH at eight years. Also, compared to the ITH, the new proposal would ensure the DOF would realize their tax dues immediately.

Currently, a registered pioneer enterprise with pioneer incentives is entitled to six years of ITH, which can be extended to eight years. A non-pioneer enterprise is allowed up to four years of ITH and additional two-year bonus.

The prevailing corporate-income tax for enterprises, foreign and domestic, is 30 percent.

Domingo earlier also said firms under certain industries waste the first few years, as they hardly make a profit in their first few years of operations.

The trade head insisted there has already been a “meeting of the minds” between the two contending departments, and the joint position would be submitted to Congress before the resumption of sessions on January 19.

“As of Christmas time, there was already an agreement. It’s final, we will submit the joint draft bill before January 19,” Domingo said.

Both the House and the Senate versions of the fiscal incentives rationalization bill are still in the committee level handled by the respective chambers’ ways and means committee.

The Senate committee is chaired by Sen. Juan Edgardo “Sonny” M. Angara, while the House counterpart is headed by Rep. Romero “Miro” S. Quimbo.

Source: http://www.businessmirror.com.ph/dti-dof-finally-agree-on-tax-perks/