Peza bucks DOF on tax perks overhaul
The Philippine Economic Zone Authority (Peza) is asking Congress to limit the power that the Department of Finance (DOF) would have over tax breaks, pitting itself against the seat of power in Duterte’s economic team.
The Peza recently submitted its final position on the Citira, or the the Corporate Income Tax and Incentives Rationalization Act, after being requested by the House of Representatives.
The bill will slowly lower the corporate income tax for companies that do business in the Philippines, an aspect that many players welcome since the tax rate is currently the highest in Southeast Asia.
But the bill, which was already passed by the Lower House but is still pending in the Senate, has drawn a lot of criticism for its move to rationalize tax incentives.
“Allow me to inform the Secretary that these enhancement provisions are the result of the various consultations Peza undertook over the last month [with foreign business groups],” a letter from Peza Director General Charito Plaza read.
The letter, dated Nov. 18, was addressed to Trade and Industry Secretary Ramon Lopez.
The Peza’s position paper edited House Bill No. 4157, amending the bill in a way that would help the investment promotion agency, which had struggled to attract new investment commitments for the past two years in a row now.
The paper, a copy of which was seen by reporters, removed all provisions pertaining to the Fiscal Incentives Review Board (FIRB), which would have had the power to approve or disapprove what tax breaks could be granted to eligible projects.
It also removed provisions referring to any transition period for existing companies in economic zones, a move to ensure that the bill would be able to exempt these firms—which have already signed contracts with the government—from unwanted changes.
This is despite an agreement with Lopez, who chairs Peza, that the agency would no longer ask for an exemption.
If the FIRB provisions in the Citira were kept, the secretary of finance would be chair of the FIRB, while many, if not all, investment promotion agencies would have a representative in the board. INQ
