Retain tax incentives, business groups urge Congress
By Christine Cudis
While business groups support the general economic thrust of the Duterte Administration, they are calling on legislators and other policy-makers to reconsider any bid to cut tax incentives because such a move may drive investors away.
In a media interview, groups representing economic zone developers and locators raised on Thursday concerns over the possible implications should the expanded tax reform measure, now dubbed as Trabaho Bill, be refiled in the 18th Congress.
“Everybody is on the same side as the government, but there are certain considerations we are hoping we can continue to dialogue with legislators,” Philippine Ecozones Association (PHILEA) president Francisco Zalarriaga said.
“We would like to add to the additional revenue but we want to maintain our competence among other countries,” he said.
In August 2018, the Coca-Cola FEMSA sold its 51-percent stake as it exited the Philippines due to higher excise taxes slapped on sugar beverages as the new tax law took a toll on its operations.
The groups urged lawmakers to take alternative measures aside from the proposed tax incentive reduction under the Trabaho bill to sustain the country’s present momentum of economic growth, especially after surviving jitters from the recent mid-term elections.
“We understand the desire of the government to raise revenues and strengthen our fiscal position and we believe there are ways of achieving this goal that do not jeopardize the jobs, investments and tax revenues that the country already has,” read a collective statement issued by business groups including PHILEA, Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI), IT and Business Process Association of the Philippines (IBPAP) and Confederation of Wearable Exporters of the Philippines (CONWEP).
The TRABAHO Bill seeks to reduce the country’s corporate income tax rate while rationalizing fiscal incentives.
The income tax holiday (ITH) is the centerpiece among all the incentives, followed by the 5 percent gross income earned (GIE) tax and customs duty exemption.
The GIE is given indefinitely and is in lieu of income, value-added tax (VAT), and local taxes.