Tax perks are not investors’ main concern – DOF
The proposed removal of fiscal incentives for businesses would not discourage investors in the Philippines because their primary concerns are the country’s poor infrastructure, inefficient bureaucracy, corruption and high cost of doing business, the Department of Finance (DOF) said.
Finance Undersecretary Karl Kendrick T. Chua pointed this out as he dismissed claims that the proposed corporate income tax (CIT) reforms would drive away businesses that are already in the country or thinking of setting up shop.
He cited the 2017 World Economic Forum survey showing that tax rates and incentives only ranked fifth among investors’ concerns.
Chua also clarified that the government will not put “a stop to current incentives,” noting this is a “misconception” of the proposed modernization of fiscal incentives.
“This is simply not true. Incentives will remain to be granted, but more judiciously this time so that there is a better balance between the investment and fiscal sustainability goals,” Chua said. “The DOF recognizes
the role of incentives to encourage investments.”
The Duterte administration is pushing income tax reforms in the corporate sector to level the playing field of business and make this system equitable and transparent and more accountable.
The government wants to remove perpetual tax holidays enjoyed by only a select group of investors, which Chua said is unfair especially to smaller enterprises that pay regular tax rates.
The government merely wants to harmonize and modernize such perks under Package Two of the Comprehensive Tax Reform Program (CTRP) to ensure that these are “targeted, time-bound, transparent and performance-based,” Chua said.
The finance official said a proper cost benefit analysis is now being done to determine the fiscal incentives that should be given to certain businesses.
"Rather than provide incentives in perpetuity to only a select set of industries without any accountability," Chua said "the government must address the more urgent concerns of modernizing infrastructure and investing in education and health.”