The Philippine Economic Zone Authority (Peza) is willing to compromise on an important tax perk that the Department of Finances wants to remove, a move which could give local governments a bigger slice of tax collections.
This was according to Peza Director General Charito Plaza last week, who hinted that the agency was not willing to let go of this incentive in its entirety but can still make some adjustments.
Plaza was referring to the 5-percent gross income earned (GIE) tax which many companies in economic zones pay in lieu of local and national taxes.
The DOF, which said tax incentives should be time-bound, wants to remove this specific perk since it could, under law, last forever.
The compromise, according to the Peza chief, is to raise the tax rate and make the perk time-bound, without having to scrap the incentive in its entirety.
“We can raise it. I’d like to increase it to 7-percent GIE tax so that the local government will have a bigger share,” she said.