THE electronics industry said it supports separate tax regimes which would allow the export sector to retain its current incentives while applying a different system for domestic-only producers.

The Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) in a statement Tuesday said that it supports the Philippine Economic Zone Authority’s (PEZA) appeal for two separate tax regimes.

“Retain the current incentives and separate the incentives for domestic versus export industries like electronics,” SEIPI said.

The Corporate Recovery and Tax Incentives for Enterprises Act pending at the Senate proposes to cut corporate income tax as well as rationalize tax incentives.

SEIPI had asked for a “grandfather” clause that would allow current investors to keep their incentives. Currently, investors pay 5% tax based on gross income earned in lieu of national and local taxes — after an initial income tax holiday period.

“Without competitive incentives compared to Vietnam and other ASEAN countries, there will be a small probability of expansion in the Philippines,” SEIPI said.

PEZA in a separate statement Monday said exporters should not be treated equally to companies producing for the domestic market.

“The exporters compete in a global market and face tougher competition from international competitors, while the domestic market only focuses on local consumers with few competitors,” PEZA said.

“In terms of tax incentives, it is a crucial factor for export-based investors as part of ease and cost of doing business. Investors compare tax incentives in different countries.”

PEZA cited the cost-benefit analysis produced by the National Economic Development Authority, which found that incentives increased production, investment, and tax revenue. — Jenina P. Ibañez