The Finance Department will ask the Senate to consider its proposed bill phasing out the grant of income tax holidays to prospective foreign and local investors to raise revenues.
Finance Undersecretary Gil Beltran told reporters that the department had already made representations with the Senate committee on ways and means headed by Senator Panfilo Lacson on the importance of the rationalization of fiscal incentives.
“We will try to convince them. We hope we will be more successful in the Senate,” Beltran said.
The House of Representatives passed on second reading a bill rationalizing fiscal incentives but retaining the grant of six-year income tax holiday and lowering the income tax rate to 15 percent or 5 percent tax on gross income earned.
Beltran said income tax holiday should be completely phase out after six years from the effectivity of the law, or when the ratio of infrastructure spending to gross domestic product of 5 percent had been attained whichever comes first.
He added that the grant of tax incentives in the form of reduced income tax to domestic enterprises should be limited to those locating in the 30 poorest provinces only.
He said the grant of tax incentives to “strategic” domestic enterprises should also be jointly recommended to the President and by the secretaries of Finance, Trade and Economic Planning.
Beltran said the Philippines could save between P10 billion and P30 billion by rationalizing the fiscal incentives extended to both foreign and local investors setting up shop in the country.
The amount, Beltran said, could be used to bankroll much needed infrastructure in the Philippines.–Lawrence Agcaoili, Manila Standard Today