MANILA, Philippines — A European firm has put on hold a planned investment worth up to P25 billion amid concerns on proposed changes in the incentives regime under the government’s second package of tax reform.

European Chamber of Commerce of the Philippines executive director Florian Gottein said there are European firms holding off investments until the middle of the year due to concerns on the Tax Reform for Attracting Better and Higher Quality Opportunities (TRABAHO) bill.

He said there are less than 10 companies, most of whom are engaged in manufacturing, that are putting investments on hold for now.

“The largest one, we’re talking about P24-to P25-billion,” he said.

Under the TRABAHO bill approved on third and final reading at the House of Representatives, the corporate income tax rate would be reduced gradually to 20 percent by 2029 from 30 percent at present.

Also part of the bill are changes in the incentives regime.

In particular, there would be a shorter period for firms to enjoy income tax holidays and the five percent tax on gross income earned (GIE) incentive which companies registered with the Philippine Economic Zone Authority (PEZA) can avail of, would be removed.

The five percent GIE has been considered a crucial incentive by firms opting to register with the PEZA.

“Most locators say, you offer us this, we set up our business here, and now you want to change the rules. So, that is not very pleasant for us,” Gottein said.

The ECCP promotes European interests in the Philippines and vice versa.

At present, it has close to 800 members and offers strong business network that holds great potential in translating to tangible business opportunities.

Source: https://www.philstar.com/business/2019/01/28/1888676/investment-plans-hold-due-tax-concerns