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Trabaho bill threatens PH electronics industry’s existence

Electronics manufacturers, the country’s largest exporters, fear that the industry “might dwindle and eventually disappear” in the long term if the Trabaho bill gets passed in its current form.

In a briefing on Thursday, the Semiconductor and Electronics Industries in the Philippines Foundation Inc. (Seipi) aired its reservations on the second tax reform package.

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Seipi president Danilo Lachica said the industry had been feeling the “pinch” of the US-China trade war, marking a different scenario from the time when the industry thought it was “impervious” to the trade tensions.

This and the decline in global demand are Seipi’s concerns for the short term. For the long term, Lachica and the industry were worried about the impact of the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill.

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Although the bill failed to pass in the 17th Congress, Lachica claimed that some companies—which he refused to name—had decided to shift a total of $1 billion worth of expansion plans elsewhere last year because of the tax package.

“I’m not predicting gloom and doom because we’re continuing to talk with our partners in the government to come up with a reasonable solution… But we’re looking at the worst case scenario,” he said.

“If we don’t get a reasonable solution to the Trabaho bill…the biggest industry we have today will dwindle and eventually disappear. That’s the long-term [impact],” he added.

As a compromise, he said Seipi was willing to pay more taxes under the new tax package, but not as much as the current bill provided.
Seipi’s position on the issue involves the 5-percent gross income earned (GIE) tax, which many companies in economic zones pay in lieu of local and national taxes.

The bill seeks to phase out this tax perk.

He said Seipi would rather pay a 7-percent GIE, hiking costs by about 40 percent, instead of shifting to a corporate income tax which, at 18 percent, could increase costs by 60 to 80 percent.

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TAGS: ‘trabaho’ bill, Electronics manufacturers
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