The Philippine Economic Zone Authority (Peza) approved more than P13 billion worth of new investments early this month, including 11 projects in information technology and 11 in manufacturing for export purposes.
In a statement on Thursday, Peza said its board approved on March 11 a total of 33 projects, which would bring in P13.19 billion in investments and create 2,447 jobs once they become fully operational.
“We at Peza are doing our best to become part of the solution during these trying times. We will continue to turn the threats into opportunities and help the Philippines achieve its goal of becoming an investment haven in Asia and around the globe,” said Peza Director General Charito Plaza.
Investments reached just P16.4 billion by the end of the first quarter of 2020, marking a nearly 28-percent decline compared to the end-March figure in 2019. Plaza blamed the lukewarm reception of investors on uncertainties due to the pandemic and the government’s plans to rationalize tax incentives.
Create Act
But last week, Plaza finally expressed her support for the Corporate Recovery and Tax Incentives for Enterprises (Create) Act. President Duterte has yet to affix his signature to the measure, which Congress passed in February.
The Create Act would cut corporate taxes across the board and rationalize tax breaks. From 30 percent—Southeast Asia’s highest corporate tax—the rate would drop to 25 percent for large corporations and to 20 percent for smaller businesses.
The tax package went through different versions amid fears it would lead to massive job losses.
Three years since its conception, the final version ended up winning over even some of its early critics, including Peza, which opposed in particular the tax incentives clause.
“We recognize the need to change our national tax system, particularly the reduction of the corporate income tax especially during this time. We have seen the impact of the pandemic to our economy,” Plaza said in an interview with ABS-CBN News Channel last week.
Peza had fought to exempt registered companies, which account for bulk of the country’s exports, from the changes incorporated in the bill.
One key contention was the removal of the 5-percent gross income earned (GIE) tax, which companies in economic zones pay in lieu of local and national taxes.
To soften the impact of this clause, lawmakers agreed to allow companies with existing GIE taxes to retain the perk for 10 years.
“Our investors have spent years with a wait-and-see attitude with their application for new and expansion projects due to the uncertainties brought about by this reform,” she said.
“Peza has done its best to assist our locator companies who have kept afloat the economy during these trying times but Create will do more for them to really bounce back from this pandemic,” she added.