DTI, DOF want PEZA to run incentive program

MANILA, Philippines – The government is looking at removing from the Board of Investments (BOI) the power to grant incentives and instead give this right solely to the Philippine Economic Zone Authority (PEZA).

The joint position of the Department of Trade and Industry (DTI) and the Department of Finance (DOF) to be submitted to the Senate states that PEZA will be in charge of administering the tax incentives to enterprises registered with PEZA and other Investment Promotion Agencies (IPA) created under the Bases Conversion Development Authority (BCDA) law and registered non-zone enterprises.

On the other hand, the BOI will remain as the investment incentives policy-making body. It will also be responsible for industry development and investment promotion.

BOI and PEZA are attached agencies of the DTI. The DOF has been after DTI to remove or at least rationalize the incentives in order to increase the government’s tax revenues.

This means that the incentives granting will be centralized to PEZA and the BOI will lose its regulatory function.

Trade Secretary Gregory L. Domingo was said to be amenable to the set up but sources said PEZA and even the foreign chambers are against the idea.

The source questioned PEZA’s capability of monitoring all the BOI registered companies. The source said that in the past, PEZA has been monitoring ecozones in a fenced area. However, BOI companies are scattered all over the country. This makes monitoring more difficult. The BOI has deputized some DTI officers to monitor compliance and even has three extension offices. PEZA has none.

At the same time, export companies undergo simple evaluation unlike domestic firms that need to undergo various evaluation processes.

The joint DTI-DOF proposal will re-focus BOI as the national agency in charge of investment promotion strategy, industry development and investment incentives policy formulation. This proposal will address the question of how to achieve consistency between promotion strategy and tax incentive administration.

On the other hand, PEZA will be reconstituted as the national body responsible for incentives administration and management to ensure uniform application of tax incentives.

This proposal will address the issue on competition and consistency in the administration of tax incentives with multiple IPAs and let them focus on their role in attracting investments by promoting benefits of the Philippines. –Ma. Elisa P. Osorio (The Philippine Star)