THE Department of Finance (DOF) again assured that the proposed Tax Reform for Acceleration and Inclusion (Train) 2 package will not weaken the growth of the businesses.
Arnelyn Abdon, strategy, economics and research group director at DOF, yesterday said the government is not scrapping the incentives but rather harmonizing the incentive regime to promote a level playing field.
Abdon said that currently, large corporations and multi-national companies are the ones that benefit the most from the incentive package.
With the Train 2 bill, they hope to see more small and medium enterprises (SMEs) enjoy the same perks as that of big companies.
“We are trying to offer one menu of incentives for all,” she said during the DOF’s Train Information Awareness roadshow in Cebu yesterday.
Train 2 seeks to rationalize fiscal incentives and reduce corporate income tax rates gradually to no less than 25 percent from 30 percent.
The bill also seeks to harmonize incentives for companies to make these “performance-based, targeted, time-bound, and transparent.” Various industry groups, including that of IT and business process management, have lobbied for the retention of the incentives to make the country attractive to foreign investors.
But Abdon said the country has granted incentives that are unnecessary while some have been granted for a lifetime such as the five percent gross income earned (GIE) tax.
In 2015 alone, the country granted P300 billion worth of incentives to fewer than 3,000 firms.
The passage of the Train 2 bill, according to the DOF, will benefit 800,000 registered local corporations that have been paying regular taxes.
Abdon added that there are four government agencies that have been working for the creation of a strategic investment priority plan, which would identify priority industries to be granted incentives.
The four agencies are the DOF, Deparment of Trade and Industry, Board of Investments, and National Economic and Development Authority. The agencies will propose a three-year strategic investments priority plan (SIPP) to specify which industries require more incentives.
Abdon said there is no timeline yet when the plan can be presented but said it would be ideal to make these public before implementing the second tax reform package.
The DOF official noted that they just want to make sure that every peso being given as an incentive will benefit the economy more.
Finance Secretary Carlos Dominguez III, in his speech during the first congressional hearing of the Train 2 package, noted that incentives are not the only factor that drive investments.
He said the Duterte administration also aimed to provide a safe place for businesses by maintaining peace and order, wiping out corruption, and eliminating red tape.