THE original value-added tax (VAT) waiver for Philippine Economic Zone Authority locators, which was in force before the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, needs to be restored, the Japanese Chamber of Commerce and Industry of the Philippines, Inc. (JCCIPI) said on Tuesday.
At a Senate Ways and Means Committee hearing on Tuesday, Shigeru Shimoda, president of the JCCIPI, said the chamber is asking senators to reconsider the imposition of a sunset period for the 5% tax on gross income earned granted to the projects and activities registered prior to the enactment of the CREATE law.
“Attractive incentives should be offered to invite investments in manufacturing to keep up with competitors from neighboring countries,” he said.
“In order to restore confidence in the investment environment in the Philippines, it is essential (for Congress) to reinstate the original PEZA incentives for the companies that had invested in the Philippines before the enactment of the CREATE Law.”
The Finance and Trade and Industry departments recently approved the amendment of Rule 18 Section 5 of the CREATE implementing rules and regulations, allowing transitory domestic market enterprises availing of the 5% gross income tax scheme to register as VAT taxpayers.
Senate President Juan Miguel F. Zubiri has said Japanese companies have threatened to leave the Philippines after encountering value-added tax refund issues after the CREATE Law came into force.
Last week, the House Ways and Means Committee approved the CREATE MORE (CREATE to Maximize Opportunities for Reinvigorating the Economy) bill, which aims to introduce a “simplified and streamlined” refund system.
The measure also seeks to give the President the power to modify, draft and grant incentive packages, without the recommendation of the Fiscal Incentives Review Board.
The House bill has yet to be debated in the plenary before the House gives its final approval, which is needed before the measure can be transmitted to the Senate.
“Incentives are one of the deciding factors for Japanese companies or foreign companies in expanding overseas,” Mr. Shimoda said. “I respectfully say that the Philippines should not miss this opportunity to invite a number of foreign investments.” — John Victor D. Ordoñez