MANILA, Philippines – The Department of Finance (DOF) hopes Congress can pass the fiscal incentives bill before the May 2013 elections.
“We were hoping it would also pass this Congress,” said Finance Assistant Secretary Teresa S. Habitan when asked about the other proposed revenue-generating measures the government wants to implement following the passage of the controversial sin tax law.
The fiscal incentives bill, which is pending in Congress, seeks to rationalize and simplify the grant and administration of fiscal and non-fiscal incentives to promote foreign and domestic investments in the country.
Habitan said the DOF wants a uniform policy on the issuance of fiscal incentives to businesses to avoid redundancies and lost revenues for the government.
“We want to streamline the fiscal incentives system since we believe there are some redundancies already,” Habitan said.
The DOF wants to assign all incentive-granting functions solely to the Board of Investments. Several agencies of the government including the Philippine Economic Zone Authority, the Bases Conversion Development Authority and other economic zones, currently give different sets of incentive packages, making the incentives regime largely uneven.
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According to the DOF, tax subsidies should only be given to qualified investors instead of a straight income tax holiday.
The tax subsidy would be similar to the tax allowance that government-owned corporations receive. Under this plan, investors would have to settle their tax duties and get the refund later when tax payments have been paid and collected.
The American Chamber of Commerce earlier said foreign investors prefer existing fiscal incentives be retained given the intense tax competition to attract investors in the Philippines.
Government officials said the proposed measure is expected to boost revenues and eventually help the Philippines achieve the much-coveted investment grade status.
The National Economic and Development Authority (NEDA) last week said the bill is expected to benefit the fiscal sector once signed into law, allowing the country to sustain its robust fiscal performance beyond 2016 or Pres. Aquino’s end of term.