DTI, DOF agree on ecozone incentives

MANILA, Philippines – The Trade and Finance departments, traditionally at odds on the grant of incentives granted to investors, have reached a common ground to modernize fiscal perks for economic zone locators.

Trade Secretary Ramon Lopez said both agencies have agreed to modernize — not rationalize — the country’s fiscal incentive regime by adding incentives that are not being provided today.

“We are changing what it is called to modernizing incentives. It’s more appropriate because when you say rationalization, that means cutting of incentives but with modernizing, it means making it more relevant to what’s needed by investors,” Lopez said.

“We are adding relevant incentives like net operating loss carry over, accelerated depreciation, and including inclusive business as part of incentive plan,” he added.

Lopez said the income tax holiday (ITH), which has been a major issue of contention in the past, will stay but the period will have to be discussed further with the DOF.

“DOF has already accepted that ITH is needed. If you don’t offer it and othercountries are offering it, it can become a decision factor and they may not come here. So we’re okay on that already,” Lopez said.

“Let’s just say without putting numbers, we’re considering lengthening incentives in general, with ITH possibly included but time bound,” he added.

Lopez said the DOF is already amenable in principle to the additional incentives and both agencies are likely to submit a joint position to lawmakers by October or November this year.

“They are open to modernizing. What we’re saying is before we propose to Congress,  let us come up with a joint position because it has been said in the past that what DTI and DOF present are different. Now, hopefully one proposal then we submit,” he said.

In the past, the DTI has underscored the importance of incentives as a way to lure more investments and help create more jobs in the country. The DOF, however, saw these incentives as revenue-eroding.