MANILA, Philippines – Discussions have begun between the Departments of Finance and Trade for another bill which they aim to present to Congress to rationalize fiscal incentives.
“We are talking and for our part, we already started the review (of incentives),” Trade Secretary Ramon Lopez told reporters yesterday.
“We want to rationalize the incentives without losing our competitiveness because we know that relevant incentives are there also to help us create jobs,” Lopez said on the sidelines of an event at the Bureau of the Treasury.
The DTI and the DOF have historically been at loggerheads when it comes to incentives granted to investors.
The DTI has consistently highlighted incentives as a way to lure more investments and help in hiring more people.
But the DOF flagged these incentives as revenue-eroding and that the country is offering too much than what it gets back from tax exemptions that could last up to four years.
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The previous administration tried but failed to fix the disagreements among agencies, which started as early as the Ramos administration. Lopez said he is optimistic.
“What is important is we are talking and that we agree that we have to revisit it. We share the same objective (with the DOF). There is already meeting of minds,” he said.
While incentives are necessary, Lopez admitted they should “not be perpetual” and that sunset provisions should be imposed. Any approved changes will be applied prospectively as well.
Finance Secretary Carlos Dominguez, who was at the same event, declined to talk to reporters yesterday. His spokesperson, Paola Alvarez, also did not reply to calls and texts.
In a recent study by the Board of Investments under DTI, the government gave out an average of P43.08 billion in income tax perks from 1995 to 2003.
The real cost of incentives will soon be known after the Philippine Economic Zone Authority (PEZA) ordered ecozone developers and operators to submit a list of tax perks they received and their amounts last year by Sept. 15.
The order is in compliance to RA 10708 or the Tax Incentives Management and Transparency Act.