May 29, 2020 | 6:27 pm
The outsourcing industry is requesting the government for a longer transition time before changing the current incentives system, while supporting the move to cut corporate income tax to 25% from 30% in July.
The Information Technology and Business Process Association of the Philippines (IBPAP) said in a statement on Friday that the proposed Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act would help attract foreign direct investments into the country.
The earlier proposal, CITIRA, proposed to cut corporate income tax to 20% gradually over a decade. CREATE lengthens the sunset provision for enterprises enjoying incentives to four to nine years.
But IBPAP also asked that existing investors be given an additional five years before any changes in the current incentives system prior to the proposed sunset provisions.
“Grant existing investors and locators with a 5-year deferment of any changes to current incentives to counterbalance serious uncertainties brought about by the health crisis and give them ample time to recoup losses. After this much-needed deferment, we can then proceed with the sunset provisions.”
IBPAP also said new investors and locators should be offered at least 10 years of incentives to help the Philippines compete against other countries.
The group also said the Fiscal Incentives Review Board should have jurisdiction over “very large” investments, suggesting investments worth $1 billion or more. They said investment promotion agencies should cover all investments under the threshold.
“Keep the one-stop-shop nature of the Philippine Economic Zone Authority (PEZA) as they have been an effective proponent of the country as a premier investment destination.”
The expanded functions of the Fiscal Incentives Review Board (FIRB) under the bill would put it in charge of approving incentives and overseeing the investment promotion agencies.
The Makati Business Club has also recommended that the FIRB approve large investments.
Trade Secretary Ramon M. Lopez in a statement on Thursday said CREATE would be a “key answer” to attract foreign direct investment.
“Non passing of corporate tax reform… creates uncertainties in the business environment and we have to address this,” he said.
He said the ability to grant tailor-fit incentives to investors would help the Philippines match countries that offer flexible incentives packages. — Jenina P. Ibañez
Source: https://www.bworldonline.com/ibpap-seeks-transition-period-for-create-incentives-system/