MANILA — The Department of Trade and Industry (DTI) sees the rationalization of fiscal incentives under second package of the Comprehensive Tax Reform Program (CTRP) as more relevant.
DTI Secretary Ramon Lopez said Thursday that the Board of Investments (BOI), the country’s leading investment promotion agency (IPA) under the department, has heard the investors’ concerns on the CTRP Package 2.
But he added that the BOI contributed inputs in reforming the fiscal incentives regime, making perks more relevant to the needs of the economy and making incentives more fair among investors.
“As we rationalize, it is unfortunate that there will be companies or individuals that will be hit. But this is exactly the necessary corrections to spread more evenly the gains and remove the years of biases, and make incentives more strategic,” said Lopez.
“The provisions in the draft tax reform Package 2 included DTI-BOI inputs that makes incentives more relevant, even removes the bias against foreign investors and between export and domestic market orientation,” the top trade official said.
In a tax forum early this week, Department of Finance (DOF) Undersecretary Karl Kendrick Chua said the CTRP Package 2 will offer a single menu of incentives across 14 IPAs nationwide.
Under the proposal, the DOF still retains the income tax holiday as incentive.
It also considers other income-based perks such as investment tax allowance, double deduction for research and development and training expenses, 50 percent deduction for labor, deduction for infrastructure and reinvestment of profit.
Customs duty exemption is also being eyed.
However, the 5-percent gross income earned (GIE) tax shall be replaced by a special corporate income tax rate of 15 percent for five years.
The reform also eyes to eliminate value-added tax (VAT) and local tax incentives.
“Bottomline [is] we are rationalizing the incentive to prevent unnecessary perpetual incentives but enriching quality and relevance of incentives, time-bound, more performance-based, and focused on selected strategic industries,” Lopez said. (Kris Crismundo/PNA)
