MANILA, Philippines — Exporters have outlined their wish list in the proposed second tax reform package which seeks to rationalize incentives for companies.
Included in their wish list is the grant of incentives to micro, small and medium enterprises (MSME)-exporters, particularly those located outside economic zones.
In a position paper, the Philippine Exporters Confederation Inc. (Philexport) said the inclusion of fiscal and non-tax incentives for MSMEs in the proposed second tax reform package would help reduce cost and improve the ease of doing business in the country.
Philexport said fiscal incentives for registered export firms located outside economic and freeport zones should include tax deductions for research and training, value-added tax (VAT) exemption on customs duty for imported export inputs, and exemption from wharfage and export tax.
Packaging materials, moulds, tools and utilities used for export production should also be included in the list of raw materials that are VAT-exempt, the group said.
“This will level the playing field in providing same footing of competitiveness for our SME-exporters regardless of their location. Likewise, this is part of the effort to reduce the cost of doing business,” it said.
Philexport is also pushing for the inclusion in the proposed second tax reform package of non-tax incentives, such as simplification, reduction, and harmonization of procedures and time-bound processing of documents.
“When added to the incentives in the bill, (these) will, likewise, help facilitate the ease of doing business in the country,” the group said.
The export group further proposed that incentives should be based on threshold or performance history of at least 50 percent and suggested the same threshold for export traders.
Philexport said the group is amenable to include a clause imposing conditions for lowering criterion during meritorious cases.
“This is particularly relevant when global demand is weak and challenging, especially when financial or economic crises arise. We believe this is also the position of the Department of Trade and Industry,” it said.
The export group, however, said it would be of “critical help” to waive the performance threshold for start-up entrepreneurs, particularly MSMEs, which “understandably cannot comply.”
“This threshold requirement may be imposed only after a period of three years when the enterprise would have established a better bearing in the markets it serves,” Philexport said.
Likewise, the country’s umbrella organization of exporters said expansion projects and activities, particularly of MSMEs, should continue to be entitled to incentives as long as they satisfy the conditions the Department of Finance (DOF) will promulgate.
“MSMEs have remained a major driver of economic activities, jobs and livelihood opportunities, particularly in the countryside,” the group said.
Under package two, the DOF seeks to lower the corporate income tax rate to 25 percent, while rationalizing incentives for companies to make them “performance-based, targeted, time-bound, and transparent.