PEZA firm on its stand to keep investors’ perks

CEBU, Philippines — The Philippine Economic Zone Authority (PEZA) has reiterated its stand on retaining the incentives enjoyed by investors especially those in economic zones, amid a pending measure that wants to scale back these incentives.

PEZA director general Charito Plaza made this call at a Cebu Business Month event last week, saying incentives have to be retained to keep and attract investors.

In particular, the country's top investment promoter said income tax holidays have to stay.

The government is pushing for the second package of its comprehensive tax reform program.

Part of the proposal is to cut income tax holidays and duty-free imports, causing worries on the investors.

Named as the Trabaho bill, the measure also seeks to cut corporate income taxes, raising hopes the country will soon be at par with its Southeast Asian neighbors being currently having the highest rates in the region.

The Philippines is in the midst of an ambitious tax reform to raise revenue to help pay for its $180-billion infrastructure spending.

The Department of Finance had eyed to take away tax breaks given to businesses, valued at over P300 billion a year or about 2% of gross domestic product.

In previous statements, the DOF insisted that its proposal is to rationalize tax incentives now enjoyed by just a select group of mostly big businesses located in large cities, and level the playing field for some 90,000 small and medium enterprises (SMEs) all over the country that currently pay the corporate income tax rate of 30%, the region’s highest.

It said the second package is not eliminating tax incentives altogether, as the proposed bill will actually continue to provide incentives to businesses, including SMEs that will lead to increased investment inflows and create more jobs. (FREEMAN)