ECCP raises concerns on fiscal incentives cap

To compensate for the higher cost of doing business in the country, the European Chamber of Commerce of the Philippines (ECCP) has stressed the need for the government to continue granting incentives to investors.

During the group’s meeting with Sen. Juan Edgardo “Sonny” Angara, the ECCP expressed concerns on the proposed rationalization of fiscal incentives, which the government claimed would make the country’s investment climate more attractive to foreign investors.

The group told Angara that “we accepted the arguments that incentives should be time-bound. We also outlined the need that incentives (granted by the Philippine Economic Zone Authority) can be changed but that the grandfather-rule needs to be applied.” The latter means past incentives granted to enterprises will remain legally binding. Thus, new laws can’t be retroactively applied.

Under the proposed modernization of the fiscal incentive regime, the government is looking to put a cap on the imposition of incentives—a move seen to generate roughly P35 billion in savings for the government. This means incentives will be time-bound or effective only for a limited period unlike the present regime wherein many of the fiscal incentives granted by the different investment promotion agencies are “perpetual” in nature.

The ECCP also raised concerns on other tax reforms. On  the value added tax refund, it said there was a “need to make the rules easier so that the promised VAT refunds can be enjoyed.”