PEZA DRAWS FANGS IN FIGHT TO KEEP FIRMS’ TAX PERKS

More than a month after giving up the fight to protect companies from losing their perks under the latest iteration of the tax reform bill, the Philippine Economic Zone Authority (Peza) is once again at odds with President Duterte’s economic managers.

The investment promotion agency said in a statement it wanted to include in the Comprehensive Income Tax and Incentive Rationalization Act (Citira) a grandfather clause, which exempts people or companies from new rules.

The bill targets to lower the corporate income tax, which is currently one of the highest in Southeast Asia. But it has drawn a lot of criticism for rationalizing tax incentives, which critics fear would lead to job losses if companies fail to cope with the rising costs of doing business.

Peza did not explain its sudden change of heart, which came more than a month after the agency suddenly made a turnaround following a one-on-one meeting between Peza Director General Charito Plaza and Trade Secretary Ramon Lopez. The latter is also chair of the Peza board.

“Again. That is not we discussed in the board. She is speaking for herself again,” Lopez said on Friday, when asked for comment.

At the same time, Peza also wants a 15-year transition period under the Citira, which is thrice as long as the current bill allows. The Department of Trade and Industry, which also has reservations on this provision, only wants a transition period of at least 10 years.

“While the agency supports the goals of the Citira bill, Peza aims to address the possible exits of foreign investors in the country’s ecozones toward other countries as this will result in massive job losses for thousands of Filipino, thus affecting peace and prosperity in the country,” Plaza said in the statement.

Peza believed adding the two provisions in the Citira would “eliminate” certain risks, such as massive job losses and the backlash from manufacturers and business process outsourcing companies.

Peza said the move was to “save the reputation of the Philippines.”