PEZA firms enjoying incentives for at least 15 years to be reviewed
Many companies in the Philippine Economic Zone Authority (PEZA) will undergo review as they have been enjoying incentives for at least 15 years, the Department of Finance (DOF) said on Wednesday.
The review will be part of the government's effort in pushing for the passage of the package 2 of the Comprehensive Tax Reform Program now pending at the House of Representatives. Package 2, previously called as the Tax Reform for Acceleration and Inclusion 2 (TRAIN 2), is now known as the Tax Reform for Attracting Better and High-Quality Opportunities, or TRABAHO.
Citing the Tax Incentives Management and Transparency Act (TIMTA 2), Finance Chief Economist and Undersecretary Karl Kendrick Chua said that there were 645 firms "enjoying incentives for at least 15 years."
"So we think they are the first one that we're going to review, but it doesn't mean that they will lose their incentives because some of them are really beneficial to our country," he said in a press briefing in Malacanang.
Of the 645 companies receiving incentives for at least 15 years, 466 of them were from PEZA, DOF said.
Of those in PEZA, 347 firms have been enjoying incentives for 15-20 years; 97 companies, for 21-25 years; 12 for 26- 29 years; five for 30-35 years; and 5 for 36-40 years.
For other investment promotion agencies, there are also firms, which will be subject of review for receiving incentives for at least 15 years.
The companies come from Subic Bay Metropolitan Authority (124), Clark Development Corporation (45), and Authority of the Freeport Area of Bataan (10).
"If the incentives are being enjoyed by a company for a long time, it might be unnecessary already because they have been helped, have grown already and we hope that they will assist the government or our country," he said.
The DOF said the estimated foregone revenue due to tax incentives to 2,844 firms has amounted to about P3.102 billion if to be based in 2015 data.
Under the current system, Chua said there is "huge inequality" in the tax treatment between firms with no incentives and firms with incentives.
The firms with no incentives, including some 90,000 small and medium enterprises, pay the regular rate of 30 percent of net taxable income, while firms with incentives, only pay between 6 percent and 13 percent.
With the possible passage of the TRABAHO bill, asked if there would be job losses, Chua said it could be "very minimal."
Further pressed on the job losses, he said there was no estimate, noting there would be a standby fund, which could be extended to companies or industries to be affected with the new law.
"It is like a safety net just in case," he said. Celerina Monte/DMS