Investors tax perks from 2015 to 2016 hit P376B – DOF

By: Inquirer.net July 19,2018 - 09:37 PM

TAX incentives given away to investors — in turn, foregone revenues for the national government — totaled P376 billion from 2015 to 2016, such that the head of the Duterte administration’s economic team sought more support for the second tax reform package aimed at rationalizing these fiscal perks.

In a statement Thursday, Finance Secretary Carlos G. Dominguez III said that the income and customs duty perks granted by investment promotion agencies (IPAs) in 2016 reached P75 billion, citing the latest preliminary data generated under the Tax Incentives Management and Transparency Act (Timta Law).

In 2015, foregone revenues from fiscal incentives amounted to P301 billion, of which P104 billion were income tax and customs duties incentives.

A comprehensive review of the country’s tax incentives regime had been mandated under the Timta Law to give an overview of the benefits as well as the costs of giving away fiscal perks to investors.

However, reporting the foregone revenues from incentives covering value-added tax as well as local business taxes are not covered by the Timta Law.

“These initial findings underscore the importance of what we seek to achieve with [tax reform] package two. We should reorient our incentives regime to put into place the key ingredients of inclusive growth — the creation of good jobs for the Filipino worker; stimulating local economies, especially in lagging regions; and promoting research and development,” Dominguez told a group of economists during a meeting last Wednesday.

Dominguez noted that under the current incentives system, most businesses falling under the small and medium enterprise (SME) category pay a corporate income tax of 30 percent — the highest in Asean, while a “small, select few” enterprises located inside IPAs pay a preferential rate of only 6-13 percent and enjoy such low rates “forever.”

“With 123 laws that grant investment incentives and 192 others that provide non-investment incentives to this elite group, the system has become “fundamentally unfair,” especially for SMEs which pay the regular corporate income tax rate,” Dominguez said.

For Dominguez, “our fiscal incentives regime gives so much to a select few and asks so little from them, like promising forever to neglectful partners while the country fails to provide enough to secure the future of its own children.”

Subscribe to our regional newsletter

By providing an email address. I agree to the Terms of Use and acknowledge that I have read the Privacy Policy.
Read Next

Disclaimer: The comments uploaded on this site do not necessarily represent or reflect the views of management and owner of Cebudailynews. We reserve the right to exclude comments that we deem to be inconsistent with our editorial standards.

TAGS: 2015, 2016, DOF, hit, investors, P376B, Perks, tax

Subscribe to our regional newsletter

By providing an email address. I agree to the Terms of Use and
acknowledge that I have read the Privacy Policy.

We use cookies to ensure you get the best experience on our website. By continuing, you are agreeing to our use of cookies. To find out more, please click this link.