DOF tax policies seen driving away foreign investors

The tax policy of the Department of Finance (DOF) is driving away investors that the Department of Trade and Industry (DTI) has been taking pains to attract and nurture, according to foreign car manufacturers.

Specifically, foreign car manufacturers are dismayed over the DOF’s recent moves aimed at the local automotive industry which has been cited as one of the country’s major economic drivers.

While Trade and Industry Secretary Manuel Roxas II had been trying to convince foreign can manufacturers to make the Philippines their regional production hub, the DOF has chosen to remove the incentives and exemptions that Roxas had been willing to grant the car manufacturers.

First and foremost that car manufacturers are lamenting is the removal of the tax exemption on Asian utility vehicles.

Roxas, they point out, had wanted to promote AUV exports and, thus, was in favor of continued tax exemption for AUVs.

However, because of the DOF’s inability to keep a lid on the budget deficit, government decided to include AUVs in the tax net by shifting the excise tax system from engine-base to value-base.

Furthermore, the DOF is opposing the proposal of Roxas to grant tax credits for vehicle exports fo local car manufacturers.

Because of such moves, earlier plans of some car manufacturers to make the Philippines their regional hub for AUV production has been put on the back burner.

Mitsubishi Motor Corp. (MMC) has publicly announced its decision to rethink it plan to make the Philippines its AUV production regional hub.

Toyota Motor Corp. Philippines, which is the country’s sales leader in AUVs, is still keeping a close eye on the government move on AUV taxes before deciding if the Philippines will still be ideal site for AUV production in the ASEAN region. – Marianne Go