THE Philippine Economic Zone Authority (PEZA) and the Department of Finance (DoF) on Monday expressed reservations about Senate and House bills seeking to expand the powers and function of the Authority of the Freeport Area of Bataan (AFAB).
Senate Bill No. 1747, introduced by Senator Richard J. Gordon, seeks to expand the territory of the Freeport Area of Bataan (FAB) to include land and water areas in Mariveles, Bataan not covered in the FAB main zone. Its counterpart measure in the House of Representatives, House Bill No. 6524, was approved on third and final reading.
The proposed bill will give the AFAB the power to impose its own conditions on the administration, implementation and monitoring of fiscal incentives to registered enterprises operating within the economic zone. AFAB itself will also be exempted from payment of all national and local taxes. The economic zone will also be given authority to grant income tax holiday and net operating loss carry over.
During the Senate hearing on the proposed measures, PEZA legislative liaison officer Francis James Brillantes said the proposed amendments to Republic Act No. 9728 or the Freeport Area of Bataan (FAB) Act of 2009 duplicate PEZA’s functions.
“On behalf of PEZA, our stance is that we believe there is no longer need for legislation because the current proposed expansion of AFAB territory and jurisdiction can already be performed under the mandates and charter of PEZA,” he said.
He said AFAB should work through PEZA on national and local initiative to promote investment as the current proposal will mean more costs for the government.
AFAB chairman and administrator Emmanuel D. Pineda said the Bataan economic zone needs the expanded powers due to its secluded location, which he said raised difficulties in attracting investors.
“It would be hard for investors to consider Bataan (because) it’s at the end of the road. We don’t have seaport or an airport,” he said.
Department of Finance (DoF) Research and Information Office Director IV Juvy C. Danofrata opposed the provisions granting tax exemptions to the AFAB. She said it will raise policy issues since similar government-owned and controlled corporations (GOCCs) do not have that kind of tax exemption.
“With respect to the tax treatment of other government entities, what would prevent IPAs (investment promotion agencies) from clamoring for the same tax exemption as well?” she said.
Ms. Danofrata also said the proposed measures also run counter to package 2 of the tax reform law, which aims to rationalize the fiscal incentives regime. — Camille A. Aguinaldo
