House bill seeks to extend income tax holiday to 12 years

Congressman Joey Salceda of Albay has filed a bill in the House of Representatives proposing the extension of the maximum period for the income tax holiday offered especially to desirable investors from the current eight years to 12 years.

Salceda said there is a need to align the country’s income tax holidays with that of its neighboring countries.

He cited the fact that in Singapore and Malaysia, the income tax holiday given to desirable investors is up to a maximum of 12 years. In Taiwan, he said, the maximum is eight years, while in the US and in some countries in Europe, the income tax holiday can be extended to as long as 15 years.

"By matching this incentive being offered by other countries, we stand a sufficiently even chance of attracting investments that will be crucial in our drive for development," Salceda explained.

To be able to avail of the maximum 12 years income tax holiday, Salceda’s proposed changes to the Omnibus Investment Act requires that the project must have minimum investment of "at least $25 million."

The project must manufacture products that are distinctly and completely new in the Philippines and would export at least 70 percent of total production.

The bill also clarifies that a new registered enterprise engaged in information technology and IT-related projects may be granted a maximum 12 years income tax holiday without securing prior approval from the DOF and compliance with the conditions.