Investment pledges under the Philippine Economic Zone Authority (Peza) dropped nearly 27 percent as of October, as the government kept pushing the rationalization of tax breaks, even when critics said these incentives helped attract foreign investors into the country.
Peza-registered investment commitments in January to October dropped to P72.65 billion, from P99.32 billion in the same period last year. Sharing the figures in an online event on Friday, Peza Director General Charito Plaza appealed to the government to spare the agency from an ill-timed tax reform.
For more than two years, the Duterte administration has been pushing to rationalize tax incentives for companies inside economic zones, while cutting taxes for those outside them. After failed attempts to pass the bill, momentum grew again in the latest iteration of the tax package now called the Create bill, or the Corporate Recovery and Tax Incentives for Enterprises Act.
Create bill was already passed in the House of Representatives, but it is still being deliberated in the Senate. Plaza reiterated her appeal to lawmakers and to President Duterte during the general membership meeting of the country’s electronics exporters group, which would also be affected by the bill.
“We are still in this pandemic,” she said. “If we can [look] around … everybody is struggling to survive. So while other countries are lowering their taxes, adding more business relief and assistance by granting more incentives … here we are, changing the rules in the middle of the pandemic,” she said.
In the meantime, the Joint Foreign Chambers of the Philippines, which represents over 3,000 companies nationwide, backed a proposal of Sen. Ralph Recto to apply the grandfather rule in the implementation of the rationalization plan so that existing investors would remain covered by the old incentive system.
“We believe Sen. Recto’s proposal for grandfathering incentives will ensure that existing investors will continue to invest in the country in the long-term and signals to prospective investors that there is stability and consistency in the implementation of policy in the country,” they said in a statement on Friday.
“While it has been a long and exhausting process to get the Create bill close to the finish line, we trust that in the following weeks the immense effort that the Senate has expended on the measure will pay off in a law that will not only benefit foreign and Filipino companies but, more importantly, continue to allow global export firms to provide jobs to millions of Filipinos and help to power up the restart of the Philippine economy,” they said.