The Board of Investments (BOI) is pushing for a tax perk to encourage companies in economic zones to use more local materials.
BOI Managing Head and Trade Undersecretary Ceferino Rodolfo estimated that for every dollar in exports, local added value—mainly labor—only accounted for 25 cents.
“There is a big multiplier effect if you can develop the local supplier base for that 75 centavos that you are currently importing,” he said.
This was why the Department of Trade and Industry was pushing for the inclusion of such a perk in the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill.
However, the bill failed to get passed in the 17th Congress, despite the Duterte administration’s efforts to push for its legislation.
Apart from lowering the corporate income tax for companies outside economic zones, the Trabaho bill will rationalize tax incentives, a feature that did not sit well with export-oriented industries such as electronics firms.