MANILA, Philippines - European Chamber of Commerce of the Philippines (ECCP) president Michael Raeuber told reporters at the group’s business luncheon Tuesday they welcome the Senate’s move to water down the Tax Incentives Management and Transparency Act (TIMTA), which aims to promote proper management and grant of tax incentives by including the tax incentives granted by investment promotion agencies and other government agencies in the General Appropriations Act (GAA), but they remain concerned about the government’s move to rationalize fiscal incentives.
“Senator (Juan Edgardo) Angara has reiterated today that the incentives will not be part of the budget and will only be an addendum. The way it was explained to the business community, it is more for statistical purposes and not for approval purposes,” he said.
Raeuber said that the business community is concerned about the proposed measure as it could create additional burden on investors seeking incentives for their projects.
Angara said during the same event that the Senate has rejected the version of the bill which wanted incentives to be included in the GAA.
“We rejected that version. The version we reported to plenary is the version which just provides it as an addendum to the budget,” he said.
Even as the incentives to be granted to investors would no longer be appropriated in the national budget, Angara said it is also important for government to be able to track incentives granted to firms.
Raeuber said that while the move of the Senate on the TIMTA is a positive development, the group continues to have concerns on the proposal to rationalize fiscal incentives.
“The business community is guarded with the rationalization bill. We have to see the final version,” he said.
Trade Secretary Gregory Domingo said earlier the Finance and Trade departments have come up with a draft bill for the rationalization of fiscal incentives.
Under the proposal, he said Philippine Economic Zone Authority (PEZA)-registered firms would have the option to enjoy income tax holidays (ITH) for the first four years of operation and have the next 11 years either be subject to lower corporate income tax rate of 15 percent or five- percent levy on gross income earned, or to enjoy the 15-percent income tax rate for 15 years.
The incentives for PEZA-registered firms, he added, could be extended.
Firms registered with the Board of Investments, meanwhile, would be subject to the 15-percent corporate income tax rate for 15 years, which cannot be renewed.
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