DOF backs grant of tax perks to organic farm production

MANILA, Philippines – The Department of Finance (DOF) has expressed support for a proposal seeking to provide tax incentives to organic farm production in the country.

The National Tax Research Center (NTRC), the in-house think-tank of the DOF, said the department agreed with the need to promote and support organic agriculture in the Philippines as this would help reduce pollution and destruction of the environment.

A proposal at the House of Representatives seeks to extend incentives for the production and propagation of organic farm inputs by maximizing their use in all government and government-supported agricultural production and research programs.

According to a still unnumbered House bill entitled “An Act Providing for the Promotion of Organic Agriculture in the Philippines,” incentives shall also be provided to farmers whose farms have been duly certified as compliant with the Philippine National Standard.

Provisions of the proposal include granting exemption from the payment of duties on the importation of agricultural equipment and machinery.

The proposal also seeks for tax incentives, including tax holiday, in accordance with the Omnibus Investment Code as well as subsidies for certification fees and other support services to facilitate organic certification.

In its position paper, the NTRC said the department supports the proposal because of the need to balance ecological protection and economic considerations in the agricultural sector of the country.

However, the NTRC said the proposed tax exemption from the payment of duties on the importation of agricultural equipment and machinery is already provided for by Republic Act 8435 or the Agriculture and Fisheries Modernization Act of 1997.

Nonetheless, the NTRC said if the bill wishes to reiterate these tax exemptions, the Finance department has no objections.

Furthermore, NTRC said “the proposal to give local tax incentives as identified by concerned local government units to organic input production and utilization is laudable considering the health and other benefits that organic farm produce can provide.”

NTRC said options include lowering the business tax rate imposed on organic farm produce or organic fertilizers being sold in the market.

“On the other hand, the real property tax levied on land, building and machineries utilized for organic farming can also be reduced,” NTRC said.

It said that these incentives are seen to help small-time farmers.