Tax incentives retention to attract more investors

THE retention of tax incentives for industries registered under economic zones (ecozones) of the Philippine Economic Zone Authority (Peza) is seen to attract more investors.
Peza Director General Charito Plaza, who was in Bacolod City last week, said that under the recently passed Tax Reform Acceleration and Inclusion (Train) law, the agency succeeded to retain all incentives for ecozone industries, including business process outsourcing (BPO) in status quo.

Plaza said industries registered under Peza ecozones are availing value added tax (VAT) exemption particularly in their local purchases.

“Through the retention, we hope to invite more investors who will put up industries here resulting to more local jobs for the Filipinos,” she said, adding that the Peza is currently evaluating the package 2 of the Train law.

The tax reform law initially sought to impose a 12-percent tax for local purchases, but BPOs and other ecozone industries were worried.

Plaza said it would mean additional production cost and pricing on their goods, making them less competitive.

Peza records showed that the local purchases made by Peza registered industries were pegged at P253 billion in 2016.

“We will lose this amount if they decide to import instead of purchasing it locally because of the 12 percent VAT," Plaza said.

She added that “it is good that the Finance Department and the Senate listened to us."

Under the next package, the Peza head said the Department of Finance (DOF) is proposing to have a rationalization.

Though it will not yet happen until it becomes a law thus, it needs more study and deliberation, Plaza said.

“We are fighting to retain the incentives especially the zero VAT under the tax reform package 2. Changing the direction in the middle of the game will drive away investors," the Peza official said.
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