BoI eyes flexible incentives

The Board of Investments plans to give companies flexibility in their fiscal incentives to support them amid the difficult business environment.

Trade Undersecretary and investments board managing head Elmer Hernandez told reporters that the agency’s management committee had reviewed measures that could be implemented on an interim period while industries grapple with the global economic downturn.

“The global financial crisis can be considered as force majeure, we are thinking along those lines but there’s nothing definite yet,” said Hernandez.

He said the committee would submit the proposed measures to the agency’s board next week for approval.

Hernandez said the board might move the effective period for income tax holiday enjoyed by registered companies to later date and defer the start of commercial operations of a registered project until the global credit crunch eased.

“Trade embargo is considered force majeure, this is even worse than a trade embargo,” said Hernandez.

He said with bleak prospects, a company enjoying an income tax holiday might find no use for the fiscal inventive if it incurred losses anyway. The incentive allows a company to forego tax payments on incomes posted during the period of availment. The agency normally applies the incentive over a certain period even if the company was registering losses.

Hernandez said the agency might also allow companies to push back the timetable of their commercial operations under their commitment with the investments board.

“We have done the same during the Asian crisis, and this is even worse because it’s global. In the past, the policy was crafted in the aftermath of the Asian crisis, this time, we don’t know how long before recovery would set in and how hard the impact of the crisis would be,” said Hernandez.

He said a registered enterprise availing of the remedial measures must show that its capital was impaired and that its operation was severely hit because of weak demand for products or services.

The agency also plans to come up with guidelines to determine when an industry is considered distressed. Only the garments industry is considered distressed by the investments board.

“The guidelines may be crafted on a sectoral basis given that each sector has its own peculiarity, or it could be a general policy for any industry to be declared as distressed,” said Hernandez.–Elaine Ramos Alanguilan, Manila Standard Today