BIR favors withdrawal of tax, other perks to several sectors

MANILA, Philippines - The Bureau of Internal Revenue is in favor of lifting the tax and financial incentives given to several industries which include agro-industrial businesses to boost tax collections of the government.

Internal Revenue commissioner Kim Jacinto-Henares said tax perks should only be granted to export-oriented enterprises and pioneer investors as the government moves to shore up state coffers.

The BIR is targeting to collect P1.6 trillion by 2015 or more than double its tax take in 2010.  For this year, the agency is tasked to collect P1.253 trillion or 18.5 percent higher than the P1.057 trillion collected in 2012.

“We should give incentives only to exporters who export finished or semi-finished products. If you’re investing because you want to take advantage of the domestic market, you should only give incentives to pioneer companies that come and set up,” Henares said.

For a pioneer investor, Henares said the duration of the tax breaks should not go beyond five years.

Henares is hopeful lawmakers will finally pass the fiscal incentives rationalization bill, which has been pending in Congress for more than 15 years now, noting that the government has been unnecessarily granting tax breaks to businesses that can stand on their own.

Finance Secretary Cesar V. Purisima earlier said incentive-giving bodies should stop giving tax perks to industries that are already mature and viable as it distorts the government’s main purpose of bringing more benefits to the Filipino people.

Food producers and traders earlier asked the Supreme Court to scrap the tax incentives granted to Thai multinational conglomerate Charoen Pokphand Foods Philippines Corp. (CP).

CP was granted pioneer status by the Board of Investments last year, making it eligible for tax incentives.  Its swine project in Pampanga obtained a four-year income tax holiday while its broiler in Bulacan was given a six-year income tax holiday.

On both projects, the company was granted duty-free importation of capital equipment but is made to pay the 12 percent value-added tax (VAT).

The passage of the fiscal incentives bill, identified as among the priority measures of the Arroyo Administration, is seen to result in P19 billion in additional revenues for the government.

The bill seeks to remove various incentives that are deemed either excessive or no longer necessary to avoid redundancies and lost revenues for the government.

The DOF wants certain industries like shipbuilding, iron and steel and vehicle manufacturing excluded from the government’s 2013 Investment Priorities Plan (IPP), saying these sectors have long enjoyed various fiscal incentives for several years now.