Business groups seek amendments to tax perk bill

The Philippine business groups and Joint Foreign Chambers (PBG-JFCs), a coalition of 14 local and foreign business groups, is now seeking amendments to the proposed bill on corporate tax incentives to make it really more favorable to the private sector.

In a letter submitted to the House and Senate Committee, PBG-JFCs said the proposed Tax Incentives Management and Transparency Act (HB 2492 and SB 2669) clearly need amendments.

The business groups, while lauding the overall objective of the bill, recommends to the Congressional Committees that it should amend the Declaration of Policy of the bill to reflect the State policy to attract, promote and welcome productive investments from foreign nationals in activities, among others.

It also suggested that the requirement of electronic filing of income tax returns (ITR) be removed and that lower penalties should be implemented for a company’s failure to submit application for incentive claims with the Board of Investments (BOI) and other Investment Promotion Agencies (IPAs), among others.

“The JFC-PBG also proposed the inclusion of taxes directly paid by the IPA-registered enterprises or taxes remitted by them on behalf of other taxpayers [e.g., withholding tax on compensation, fringe benefits tax, etc.] in the data analysis,” PBG-JFCs said.

The group also said that the bill should clarify the role of the Bureau of Internal Revenue vis-à-vis BOI and IPA as regards incentives.

“In many instances, and this has become a consistent practice of the BIR, the BIR disallows incentives even if these are already approved by the BOI or IPAs. The BOI and relevant IPAs have exclusive jurisdiction to determine eligibility for investment incentives,” the group claimed.

“In at least two decided cases, the Supreme Court held that the BIR cannot question the incentives given by the BOI/IPAs as this is beyond the BIR’s authority. Notwithstanding these decided cases, the BIR continues to encroach on the BOI/IPAs jurisdiction to determine eligibility for incentives,” it further said. The signatory organizations include the American Chamber of Commerce of the Philippines, Australian-New Zealand Chamber of Commerce of the Philippines, Canadian Chamber of Commerce of the Philippines, European Chamber of Commerce of the Philippines, IT and Business Process Association of the Philippines. Japanese Chamber of Commerce and Industry of the Philippines, Korean Chamber of Commerce of the Philippines, Management Association of the Philippines, Philippine Association of Multinational Companies Regional Headquarters, Philippine Chamber of Commerce and Industry of the Philippines, Philippine Exporters Confederation, Semiconductor and Electronics Industries in the Philippines Foundation, and Tax Management Association of the Philippines were also part of the signatories.