Exporters to continue enjoying income tax holidays, says BOI

Published by rudy Date posted on January 17, 2011

MANILA, Philippines – Exporters are assured that they will still receive tax breaks such as the income tax holiday (ITH) despite government moves to rationalize the fiscal incentives, the Board of Investments (BOI) said.

“We need incentives in order to support the exporters,” BOI Executive Director Efren V. Leano said in an interview.

According to Leano, they will be meeting with Finance officials this week in order to come up with one position on the incentive scheme of the government. “There are already two bills filed before the House of Representatives. We want to come out with a unified position,” he said.

“Incentives are really necessary,” Leano stressed. He noted that in the P13 billion worth of incentives granted, trillions worth of investments have already come in. “We did the cost benefit analysis and across all industries we can say that the benefits of incentives outweigh the costs.”

In a separate interview, Trade Secretary Gregory L. Domingo said the government is looking at changing how they value the investments because it is an inefficient measure to check how much a particular project contributes to the country’s economy.

“We need to check the value added contribution to the economy and not simply record how much the investments are,” Domingo said.

Domingo noted that not all investments have equal weight in terms of the value added and contribution to the economy. For instance, investments like those in the business process outsourcing (BPO) or tourism have a higher multiplier effect in the economy because aside from the actual investments it also creates more jobs.

Domingo said he is looking at forming a committee who will be putting in weights on the investments based on its actual contribution to the economy. The factors to be considered will be employment and its actual impact to the economy among others, Domingo explained.

Aside from giving a clearer picture on the actual investments, Domingo said that this can also help in the rationalization of fiscal incentives. Domingo said that investments with higher multiplier effects will be given income tax holidays while those with low multiplier effects may be given less or no incentives.

“This is a good cost benefit analysis,” Domingo said. The valuation of the investments can be compared to the incentives given. If the investment does not trickle down to the people or if it has little effect to the economy then it does not deserve to have big incentives. –Ma. Elisa P. Osorio (The Philippine Star)

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