The Philippine Economic Zone Authority (PEZA) yesterday defended the need to maintain the status quo in providing tax perks to locators to encourage investments and promote ease of doing business, as well as avoid possible corruption and leakages.

As the Department of Finance (DOF) questioned the investment promotion agency’s objection to the proposed changes in incentives under the second package of the government’s tax reform program, PEZA director general Charito Plaza said there is a need to exclude ecozone locators from the coverage of the bill and keep tax incentives for the country to continue to attract investments.

Under the proposed second package of the government’s tax reform program or the Comprehensive Income Tax and Incentive Rationalization Act (CITIRA) bill, the five percent tax on GIE paid by PEZA-registered firms in lieu of all local and national taxes after their income tax holidays (ITH) have been used up, would be removed.

“The GIE is one of its highlight incentives attracting investors, so it is very crucial because revenues paid to national and local government are deducted outright from the gross income of companies,” Plaza said.

In addition, she said the GIE makes it easier for investors to do business in the country, as the payment of such spares firms from having to go to different government agencies.

With the payment of the five percent tax on GIE, two percent is remitted directly to the local government, while three percent is given to the national government.

“However, the removal of the GIE, as proposed by CITIRA, would be a possible ground for corruption, leakages and inconvenience because investors would have to deal with various levels of bureaucracy,” Plaza said.

She said PEZA’s incentives have been tried, tested and proven to be competitive in attracting investors.