Peza says DOF tax perks figures bloated

The cost of tax incentives shelled out by the Philippine Economic Zone Authority (Peza) reached only P40 billion in 2015, almost six times smaller than what the Department of Finance (DOF) paints it to be, a top official said.

Elmer San Pascual, manager of Peza’s promotion and public relations, said he did not know where the DOF got its figures. However, Peza and DOF should have the same figures since they both used the “same format” in filling out the data.

DOF has been making rounds among industry groups to lobby support for the second comprehensive tax reform package, which would lower corporate income tax while rationalizing tax incentives.

A common theme in these presentations is the cost of the tax incentives that the government gives to investors. Peza, one of the country’s top investment promotion agencies (IPAs), relies heavily on these perks to attract more business activities.

When all added up, DOF’s figures showed that Peza’s incentives cost a total of P235.31 billion in 2015, according to Peza Director General Charito Plaza.

“I don’t know where those [DOF] figures came from. We submitted a different figure. It’s smaller [at] P41 billion for 2015,” said San Pascual.

“We are the only one supposed to submit that data because IPAs are the ones supposed to submit for the tax incentives,” he said, noting that DOF was just one of several agencies that had a copy of Peza’s figures.

He added that they still haven’t had the chance to question the data with DOF.

Under the Tax Incentives Management and Transparency Act (TIMTA), the National Economic and Development Authority would make a cost-benefit analysis of investment incentives to determine their impact on the economy. With TIMTA passed in 2015, the base year for analysis would start with 2015 data.

This develops as the Duterte administration moves to reform the country’s tax rules. The uncertainty this brought about could be seen in the decline in Peza investment pledges in some important sectors last year, and the overall drop of pledges for the first two months of 2018.