Lopez claims: P1 tax incentive brings P2.3 in additional revenues
Trade and Industry Secretary Ramon M. Lopez yesterday said that for every P1 tax incentive granted to investor, the government generates P2.3 in additional tax paid to the government as he took the cudgels of the Board of Investments (BOI), the government’s premier investment generating agency, to which he serves as chairman.
Lopez delivered his speech at the House committee on ways and means to air BOI’s side on the planned Package 2 of the government’s tax reform program under TRAIN (Tax Reform for Acceleration and Inclusion)
For instance, Lopez explained that total income tax holiday granted to investors over a 10-year period using BOI 2015 data reached P52 billion. But this supposed foregone revenue was also able to generate additional tax revenue for the government of P300 billion or P6 billion in additional tax revenue for every P1 of tax incentive granted. As Congress moves to limit perpetual tax availments by introducing sunset clauses, Lopez stressed that BOI incentives are time-bound.
But Lopez said the his agency supports the proposed reforms on the existing incentive regime making it more modern, relevant, responsive, competitive, pro-business and pro-investments.
“We adhere to the principle that the incentives to be provided by the Investment Promotions Agencies (IPAs) will be focused, time-bound, performance-based and transparent,” he said.
What used to be a warring faction between the Department of Finance and the BOI when incentives granting were already brought up with the BOI defending its incentive packages to investors and DOF calling for their abrogation, this time Lopez said both agencies are now closely collaborating to come up with a unified version.
“We agree to a Strategic Investment Priorities Plan (SIPP) to be recommended by the Board of Investments to the President,” he said.
The SIPP will install the preferred areas of investment activity and the BOI will undertake inter-agency and stakeholder consultations, he said.
The SIPP also welcomes, he said the expansion of the available incentives to include a menu which will be more useful for project proponents pursuing strategic and socially relevant projects rather than officer ITH as a one-size-fits-all tool for attracting investments from across different sectors.
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