The National Competitiveness Council (NCC) is urging the Duterte administration to start working on the rationalization of existing fiscal incentives not only to make the country a more attractive destination for foreign investments, but to also make it more competitive compared to neighboring economies in the Asean region.
According to NCC co-chair Guillermo Luz, now is the right time for the government to rationalize incentives for businesses while it is also fixing its comprehensive tax reform package.
He noted neighboring countries Vietnam, Thailand and Malaysia were already in the thick of expanding their business perks list. He said the Philippines needed to keep an eye on what other countries were doing.
On one hand, “one school of thought is that if we were to improve certain elements or factors in the country, then we would not have to lean on incentives as (heavily as) we have had to,” he added.
He said the trade and finance departments have been debating for years over the necessary rules to follow. “The incentives have been able to attract investments into the country but these may be too open-ended or too liberal,” Luz said.
Luz said the government should make the rules less confusing and easier to administer.
He said all the rules must also have sunset clauses, which meant a certain sector would not perpetually get special provisions.
He said cutting the income tax holiday should also be studied and a slew of other “practical” perks must be considered.