Some profitable firms enjoyed P86.3 billion worth of tax perks in 2015, even if they did not need government support, the Department of Finance said Thursday.
Citing government data, Finance Undersecretary Karl Kendrick T. Chua said the same companies that received fiscal incentives actually paid out a bigger P141.8 billion in dividends to their shareholders that year.
“Such data showing that certain enterprises declared dividends that are way above the incentives they receive from the government prove that many of them are inherently profitable and no longer need such perks for their businesses to prosper here in the Philippines,” Chua said.
In the manufacturing sector, Chua said P37.3 billion in tax incentives was given away to some “favored and highly profitable” firms even as they disbursed P63.9 billion in dividends.
As for the services sector, fiscal perks amounting P31 billion were received by corporations that handed out dividends worth P47 billion, Chua added.
“A total of P16.6 billion of income tax incentives were granted to the nonmanufacturing sector, which declared P30.5 billion in dividends. In the agriculture sector, companies received P500 million of such incentives and paid out P400 million in dividends, while an unspecified number of firms that reported no dividends were given income tax incentives amounting to P900 million,” according to Chua.
For Chua, this tax incentives regime was “grossly unfair” to small-and-medium enterprises (SMEs).
The pending Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill contained the Duterte administration’s second tax package aimed at slashing the corporate income tax rate from 30 percent at present—the highest in Asean, while rationalizing the fiscal incentives being enjoyed by investors, as such perks are foregone revenues for the government.