By Arjay L. Balinbin, Reporter
The European Union (EU) business community in the Philippines on Tuesday, May 29, vowed that they will “continue to strongly engage with the government against the removal of fiscal incentives” under the proposed second package of the Tax Reform for Acceleration and Inclusion (TRAIN 2).
European Chamber of Commerce of the Philippines (ECCP) President Guenter Taus said this when sought for comment in response to the Department of Finance’s (DoF) move to rationalize the fiscal incentives under the proposed tax reform measure.
“The Philippines does not exist in a vacuum, it stands in competition with other countries in the region almost all of which offer attractive fiscal incentives to investors. As noted by several investment rating agencies, Philippine corporate income tax is still one of the highest in ASEAN despite the proposed reduction. This further highlights the importance of fiscal incentives to help the country keep up with attractive investment destinations. Even the possible removal of incentives has stopped new investors in their tracks while investors already in the country are halting expansion plans and considering more favorable climates,” Mr. Taus told BusinessWorld in a text message.
He added that apart from attracting investments, fiscal incentives also allows Philippine products to compete in the global market. “Given the government’s thrust towards increasing the quantity of exports and moving up the global value chain, the retention of these incentives is important in maintaining the profitability of the Philippine exporters,” he said.
“Considering all of the above, the EU business community asserts that fiscal incentives are a pillar of Philippines competitiveness and their benefit to Filipinos should be measures in terms of the development and jobs that they bring. We continue to strongly engage with government against the removal of fiscal incentives under TRAIN 2. We are confident that the legislative will recognize the positive effect of fiscal incentives on the lives and wellbeing of the average Filipino,” Mr. Taus also said.
In a press briefing at the Palace on Monday, May 29, Finance Assistant Secretary Paola A. Alvarez said that TRAIN 2 gets “positive” feedback from the “chambers of commerce.”
For her part, Finance Assistant Secretary Maria Teresa S. Habitan said: “For the locators of the Philippine Economic Zone Authority (PEZA), at first, they thought that all incentives will be removed, but as Assistant Secretary Paola A. Alvarez explained, it is not the thrust of the government. We will still retain the incentives, but we will change how these are going to be administered. So, it is important that it is performance-based, time-bound, transparent, and targeted.”
When sought for comment, PEZA Director-General Charito B. Plaza did not respond to calls.