by Bernie Magkilat
March 4, 2015
The Philippine Economic Zone Authority (PEZA) yesterday strongly urged that government maintain the current incentives regime stressing the limit on the 5 percent tax on gross income earned on its registered enterprises would make it more difficult to attract foreign investors into the country as other ASEAN countries sweeten their incentive packages.
PEZA Director-General Lilia B. De Lima told reporters covering the 4TH Arangkada Anniversary Forum 2015 of the apprehension by its export-oriented registered enterprises if the proposed new incentive packages are passed into law.
“What will happen after 15 years?” De Lima asked. Already, the Department of Trade and Industry, which chairs PEZA, and the Department of Finance, have agreed to cap the perpetual GIE incentives on PEZA enterprises to 15 years renewable by another 15 years depending on some performance indicators. Also, PEZA’s income tax holiday has been slashed to four years only from a maximum of 8 years.
The fear among PEZA enterprises is that after 15 years of GIE, the local government units will come in and subject them to all kinds of taxes.
“At least we have to something to navigate with the current incentives scheme,” De Lima said.
De Lima has been vocal against changing the incentive package because other ASEAN countries are making their incentives regime sweeter. She noted that Indonesia is overhauling their entire incentives regime after Vietnam granted a very generous set of incentives just to win the $2 billion manufacturing investment of Samsung.
The Vietnamese government has granted Samsung preferred corporate income tax of 10 percent for 30 years, tax exemption of four years and 50 percent tax reduction for the next 12 years, and 50 percent tax reduction for another three years.
Samsung is also exempted from paying land rental. The Vietnamese also granted 50 percent subsidy on payment for infrastructure tax.
“No matter how we try to promote our country if we have very few to offer, it is very difficult to compete,” De Lima stressed.
Meantime, Senate President Franklin Drilon in a speech before the Arangkada forum has vowed for the passage of various pending economic bills that should make the Philippines more competitive but was non-committal regarding the passage of the proposed Fiscal Incentives Rationalization Bill.
“We will give it our best shot,” Drilon said noting that the bill has been reviewed constantly by the previous administrations but never acted upon.
He, however, said “We will try to come up with rationalized fiscal incentives which will take the interest of the public and the private sector including the foreign chambers, but we must come up with a measure that will rationalize fiscal incentives.”
Drilon said that rationalization of the fiscal incentives has been the most difficult bill Congress has been tackling upon noting that past administrations had reviewed the law but never acted upon.
The Senate President further assured the business community that incentives to be granted to investors under the proposed Tax Incentives Management Transparency bill will not be appropriated under the General Appropriations Act but a tax incentive information sectioned in the annual budget of the BESF (budget of expenditures and sources of financing) will be created to monitor these incentives. This will ensure transparency among investment generating agencies in the grant of tax incentives.
These bills that he vowed to pass in June this year or within this current Current Congress include the Competition Bill, Department of ICT, Basic Bangsamoro Law, Tax Incentives Management and Transparency Act, Bangko Sentral Capitalization to P200 billion, creation of Philippine Trade Representative Office, and Cabotage Law.
Source: http://www.mb.com.ph/peza-wants-incentives-scheme-status-quo/#aiccQqV1aGtJ8Cqy.99
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