Joint chambers ask government to expand incentives list

The Joint Foreign Chambers (JFC) is asking the government to expand the list of industries to be given tax breaks.

The request was made in the midst of government moves to rationalize fiscal incentives.

The JFC has requested a meeting with Board of Investments (BOI) managing head Elmer C. Hernandez. No specific date has been set yet for the meeting. 

Meanwhile, the BOI said they are getting close to rationalizing the country’s fiscal incentives program as the consolidated version of the bill is expected to be presented in the House of Representatives “very soon.” 

Last year, JFC asked the president to issue a directive making it clear that the government will continue providing income tax holidays (ITH) to spur economic activity in the country.

 “We urge the Office of the President to issue a directive making clear that it is administration policy to continue ITH for targeted economic priority activities and to encourage the DOF (Department of Finance) and DTI (Department of Trade and Industry) to reach a single agreed position on the rationalization of fiscal incentives legislation,” the position paper submitted by JFC to congress stated.

The House is studying four bills that all aim to rationalize the fiscal incentives given by the government.

The four are HB 1757 “The Consolidated Investments and Incentives Code of the   Philippines” introduced by Rep. Exequiel B. Javier;  HB 2278 “Rationalizing the Grant and Administration of Fiscal and Non-fiscal Incentives, and for Other Purposes” introduced by Rep. Exequiel B. Javier; HB 2530 “The Investments and Incentives Code of the Philippines” introduced by Rep. Junie Cua; and HB 2712 “Rationalizing the Grant and Administration of Fiscal and Non-Fiscal Incentives, and for Other Purposes” introduced by Rep. Thelma Almario

All the bills agree that there is a need to rationalize incentives in numerous laws that drain needed revenues, allow redundant incentives and have created a myriad of incentive-awarding authorities. 

The measures call for limiting the award of ITH, monitoring the application of incentives; and the creation of an agency to promote investment, especially to foreign investors.

According to JFC, it is not proper for a service enterprise that gets 70-percent of its revenues from domestic sales to be given the same fiscal incentives as an export enterprise.

JFC said there should be a threshold of 70 percent foreign currency generated revenues from non-resident clients.

They are also proposing that a registered firm be not automatically be given eight year ITH. Instead, an ITH of four to six years must be given initially with possible extension of two additional years.