MANILA, Philippines - Foreign businessmen are concerned over a proposed measure seeking to include the amount of fiscal incentives granted to firms in the annual appropriations law, as doing so could affect the country’s competitiveness.
In a letter dated Feb. 9, 2015, to Marikina Representative Miro Quimbo, who chairs of the ways and means committee at the House of Representatives, the Joint Foreign Chambers (JFC) said they support the position taken by the Department of Trade and Industry (DTI) on House Bill 2942 or the Tax Incentives Management and Transparency Act.
The proposed measure, which aims to promote proper management and grant of tax incentives, seeks to create a Tax Expenditure Account in the General Appropriations Act, from which tax incentives granted by the investment promotion agencies and government agencies are accounted.
Under the proposal, the tax expenditures are automatically appropriated and the Bureau of International Revenue commissioner could exercise his or her authority to make assessments and prescribe additional requirements for tax administration and enforcement.
In its position paper on the proposed measure, the DTI said it sees possible legal challenges to HB 2942 as the appropriation of funds should be used for public purposes as required by Presidential Decree No. 1445 and not for private purposes.
The DTI also said provision on the amount of incentives under the proposal shows clear evidence of subsidies granted to registered enterprises and such may drag the country to dispute for possible violation of commitments to the World Trade Organization.
As the Congress may not grant the amount of incentives programmed, the DTI said the proposal could likewise weaken the administration of incentives and damage the country’s investment image.
“We are not aware of any country in the world that includes the amount of fiscal incentives granted in its annual appropriations law,” the JFC said.
It noted that incentives are granted for private purposes and not for public purpose as intended by the amounts in the appropriations law.
“We are also concerned that the requirements imposed under the bill would cause additional burden to foreign investors and will not be good for the country’s national competitiveness,” the JFC said further.
The JFC, which counts the American, Australian-New Zealand, Canadian, European, Japanese and Korean Chambers in the Philippines and the Philippine Association of Multinational Companies Headquarters Inc. as core members, represents over 3,000 member companies engaged in over $230 billion worth of trade and $30 billion worth of investments in the Philippines.
As the JFC seeks to promote an environment conducive for investments here, it has come up with a list of recommendations through the Arangkada report launched in 2010 covering the following sectors: business process outsourcing creative industries, infrastructure, manufacturing and logistics, mining, and tourism, medical travel and retirement.