The Philippine Economic Zone Authority (Peza) has warned that companies might eventually pull out of the country if the government puts a stop to its current tax incentives, noting that the move to cut on perks is sending “worries” to investors.
In a press briefing on Monday, Peza Director General Charito Plaza said that other countries in the region are currently beefing up their tax incentive packages in order to attract more foreign direct investments.
The Philippines, meanwhile, is mulling to cut down on its current tax perks, she noted.
“Once we remove or put a stop to these incentives, what will happen? They will pull out. Those who are already here will start preparing to close and look at other areas because the Philippines is no longer monopolizing economic zones,” Palza pointed out.
The rationalization of tax incentives is one of the main goals under the second comprehensive tax reform package of the Department of Finance (DOF). The proposed tax package aims to lower corporate income tax under the condition that tax incentives would also be reduced.
“Most – if not all countries – are now building ecozones and coming up with incentive packages that will attract [more investments] in their country. We are thankful for the TRAIN law, but the [second package] is still sending worries to investors,” Plaza said.
While DOF wants to remove tax perks, Peza is working on a counter-proposal that would give the agency more tax incentives to offer to companies. While planning to offer more perks, Plaza said that their “new” packages would be based on DOF’s four-point criteria: performance-based, time-bound, transparent, and targeted. /kga