Senate eliminates Bataan freeport incentives from bill

THE Senate passed on second reading a bill strengthening the powers and functions of the Authority of the Freeport Area of Bataan (AFAB) with its proposed fiscal incentives removed.

The chamber deleted the fiscal incentives proposed in Senate Bill No. 2133 for registered enterprises within the Freeport Area of Bataan (FAB), such as the subsidies for research and development, cost of power and lease of properties as well as the deduction of the cost of necessary infrastructure projects within the area.

Other proposed fiscal incentives, such as the generation of up to 100% income for sources within the customs territory without losing incentives for FAB enterprises engaged in priority investments, was removed.

The provision exempting the AFAB itself from payment of all national and local taxes was removed as well.

Senate Minority Leader Franklin M. Drilon earlier raised concerns that the bill, if enacted, may run into conflict with the government’s second package of the tax reform program, which seeks to rationalize the country’s fiscal incentives system and to lower corporate income tax.

In response, Senator Sherwin T. Gatchalian, chair of the Senate committee on economic affairs, moved for the removal of the fiscal incentives proposed in the bill, after consultation with the AFAB and the bill’s co-author Senator Richard J. Gordon.

“After an extensive meeting with the management of AFAB, the management and also the proponent of this bill, as well as this sponsor agrees that we will remove the proposed fiscal incentives. And in effect, the fiscal incentives will be status quo as to the previous law,” Mr. Gatchalian said during the Feb. 6 Senate session.

The proposed measure seeks to expand FAB’s territory to include the rest of Mariveles outside the former Bataan Economic Zone and its municipal waters as well as the alienable and disposable public lands and municipal waters of the expansion areas.

Proposed additional powers to the AFAB include the authority to authorize or undertake the establishment, operations, and construction of airport operations, shipping, and other similar services.

The bill also gives AFAB the authority to operate or to license tourism related activities such as games, amusements, nature parks, recreational and sports facilities, online gaming, and other related activities.

The roles of the AFAB administrator and chairman were separated as well to balance the additional powers of AFAB.

Its counterpart measure in the House of Representatives, House Bill No. 6524, bagged third reading approval last Nov. 27, 2017. —