DOST not keen on granting tax incentives to Pinoy inventors

MANILA, Philippines - Department of Science and Technology (DOST) Secretary Mario Montejo yesterday said the agency is ready to help Filipino inventors develop and prototype their inventions and innovations but is not keen on granting them tax incentives.

Montejo issued the statement in response to the call issued by the Filipino Inventors Society (FIS) for President Aquino and the DOST to fully implement Republic Act No. 7459, or the Inventors and Inventions Incentives Act of the Philippines.

Signed in 1992 by the late President Corazon Aquino, the law gives incentives, particularly tax exemptions, to inventors and innovators and their products.

Montejo challenged the member-inventors of the FIS to come up with better inventions and products that will be accepted and supported by the market, and will not need tax exemption incentives.

“If they have a better product, they will get support,” he said, adding that the DOST will support any Filipino inventor who has a good idea.

Montejo, who developed steel straps and harnesses used for “tree drop” and zip line adventure tourism activities, said the DOST is also monitoring the abuse of tax exemptions granted in RA 7459 by unscrupulous groups involved in smuggling.

Earlier, FIS president Bormeo Modanza lamented that Filipino inventors are deprived of the benefits provided by the law due to the non-compliance of the DOST and the Bureau of Internal Revenue.

Modanza stressed that RA 7459 is clear in its declaration that inventors are eligible for tax exemptions on “any income derived from these technologies” they have developed.

“They are invoking a supposed legal opinion issued by Malacañang during the time of former President Gloria Macapagal-Arroyo which says that the exemption is only for income taxes,” Modanza said.

“Effectively, they are violating the law, or misinterpreting it to the disadvantage of Filipino inventors,” he added.

Modanza cited Section 6 of the law which says that “tax exemptions are being awarded to promote, encourage, develop and accelerate commercialization of technologies developed by local researchers or adapted from foreign sources including inventions.”

He said the law states that “any income derived from these technologies shall be exempted from all kinds of taxes during the first 10 years from the date of the first sale, subject to the rules and regulations of the Department of Finance, provided that this tax exemption privilege pertaining to invention shall be extended to the legal heir or assignee upon the death of the inventor.”

The issue was raised during the closing ceremonies of a recent joint strategic planning workshop of the FIS and the FIS Producer Cooperative at the FISPC showroom in Quezon City.

Francisco Pagayon, FISPC chairman, said RA 7459 limited the tax exemption benefit to 10 years to help inventors during the initial years of the manufacture and commercialization of their inventions and products.

“The tax exemption benefit is reasonable, it’s only for the first 10 years of an invention’s commercialization,” he said.

Pagayon said the early years of an invention’s manufacture and distribution are challenging years in which tax exemptions are badly needed.

“The manufacture of our inventions into commercial products generates jobs for hundreds, if not thousands, of Filipinos. However, it also entails huge capital investments and every cent counts to make the operations of inventors profitable,” Pagayon said.