Oil and gas companies yesterday added their voice to those of businesses worried about the scrapping of tax perks through the proposed Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) bill, saying this could hinder new investments.
According to the Petroleum Association of the Philippines (PAP), the bill as it stood at the House of Representatives was “expected to cause uncertainty among existing and prospective investors” as it was seen leading to large-scale revenue reduction and job losses because of damaged investor confidence.
“Many elements in the Trabaho bill clearly aim to raise revenues for the government’s infrastructure development plan but many of these elements, particularly those that reduce or even scrap certain tax incentives, may drive away foreign investors,” PAP vice president Ed Cutiongco said in a statement.
Cutiongco said that while the House bill no longer touched incentives to oil and gas contractors provided under Presidential Decree No. 87, petroleum companies were still wary that the Senate version will still push for the repeal of such perks.
Cutiongco also said that the oil and gas sector was already reeling from a low success rate brought about by inherent low prospectivity of petroleum resources in the country along with relatively “dismal” exploration activity as compared to those in neighboring countries.
Last June, the PAP called for the retention of incentives for their sector, saying this was needed especially in light of the looming depletion of output from the Malampaya natural gas field.
PAP chair Rufino Bomasang said major exploration companies have all adopted a wait-and-see attitude and nobody was actively looking for indigenous oil or for the “next Malampaya” because of “apparent instability of government policies.”