PH loses P30B to tax perks, but hopes to attract tenfold in new investments
MANILA -The Marcos administration gave up P29.97 billion in potential revenue through tax perks granted through the Fiscal Incentives Review Board (FIRB) over the past 13 months, according to the Department of Finance.
Finance Secretary Benjamin Diokno, who is also FIRM chair, told reporters that these incentives were granted to proponents of 25 projects tagged with investment inflows totaling P287.95 billion.
These projects are expected to create direct employment for a total of 24,617 workers on an average of 985 jobs per project.
The 25 projects are distributed across companies that are into the business of data centers, manufacturing, tourism, infrastructure, hospitals, mass housing, energy and business process outsourcing.
In terms of the amount of investment, the five biggest are Unity Digital Infrastructure Inc.’s P147.5-billion multisite telecommunications infrastructure project; LGS Digital Infrastructure Corp.’s P36-billion multisite telecommunications infrastructure project; Enovate Motors’ P16-billion energy project; Century Summit Carrier Inc.’s P15.8-billion energy project, and Evolution Data Centres Philippines’ P9.7-billion data center project.
In terms of foregone government revenues, the biggest tax perks were granted to Unilever Philippines Inc. (P9.4 billion), Century Summit Carrier (P2.3 billion), Sumi North-Philippines Wiring Systems Corp. (P1.8 billion), Enovate Motors (P1.7 billion) and Century Peak Energy Corp. (P1.6 billion).
In terms of direct jobs created, the biggest are the projects of Century Summit Carrier (10,023 jobs), Shin-Etsu Magnetic Philippines (3,935 jobs), Sumi-North Philippines Wiring Systems (3,287 jobs), ING Business Shared Services (2,971 jobs), and Asia Pacific Medical Center-Iloilo (830 jobs).
Sweeteners
The incentives come in the form of income tax holidays (as long as six years), “enhanced deductions” or tax rates (five years), duty exemption on importation (as long as 15 years), special corporate income tax (10 years), zero rating for value-added tax on local purchase (as long as 16 years), and zero rating for value-added tax on importation (as long as 16 years).
Diokno said that in addition to tax incentives, the Corporate Recovery and Tax Incentives for Enterprises (Create) law—which was passed in March 2021—grants the President of the Philippines the power to endow financial support to a project using government resources such as land use, water appropriation, power provision and budgetary support provision under the yearly national budget law. However, this applies only to any project with an investment capital of P50 billion and which will create at least 10,000 direct jobs.
Earlier, Diokno emphasized that fiscal prudence must be exercised in granting tax incentives.
“What we aim through the Create Act is to attach accountability and responsibility for every tax exemption given, since the incentives we give out entail important costs to the government,” he said.
“The government is obligated to exercise prudence in determining which financial resources to forgo in favor of higher economic returns that will benefit the taxpaying community,” he added. INQ
READ:
Marcos vows reform of tax incentives law
Foreign investments flow into PH down by a third in March
