DOF seeks transparency in grant of incentives

MANILA, Philippines – The Department of Finance (DOF) is calling for increased transparency, particularly on the grant of fiscal and non-fiscal incentives to various industries as part of the government’s good governance reform program.

Finance Secretary Cesar Purisima said the government would be lobbying for the passage of several bills, among which is the Tax Incentives Monitoring and Transparency Act , which will require incentive-giving bodies to disclose the kind of incentives being given out.

The bill, when passed, would improve transparency, accountability and inclusiveness of government institutions and processes, Purisima said.

“Basically when you give incentives right now there is no accounting and therefore there is no transparency so our proposal is that the incentives given out by our incentive-giving bodies be included in the budget so that we know how much and we know the target results,” Purisima said.

Purisima said the government is also pushing for the rationalization of the fiscal incentives law aimed at enhancing transparency, boosting state coffers and leveling the playing field.

He said the DOF wants a uniform policy on the issuance of fiscal incentives to businesses to avoid redundancies and lost revenues for the government.

The DOF and BOI have been in disagreement over fiscal incentives with the former wanting to limit the grant of perks to domestic companies.

In particular, the DOF wants certain industries like shipbuilding, iron and steel and vehicle manufacturing excluded from the government’s 2013 Investment Priorities Plan (IPP), saying these sectors have long enjoyed various fiscal incentives for several years now.

The IPP, issued annually, lists preferred investment activities that qualify for government incentives. It serves as the country’s platform to attract strategic investments with the aim of boosting countryside development and generating employment.

Instead of continuing to extend tax breaks to these sectors, the DOF proposed that IPP status benefits be instead given to export-oriented investments, qualified micro and small enterprises and research and development activities.

According to the DOF, priority must be given to small enterprises in line with the objectives of creating job opportunities, supporting countryside development and pursuing inclusive growth.

On the other hand, the BOI, which leads the inter-agency efforts to annually craft the IPP, on the other hand, wants the four sectors retained in the list if the country wants to attract more investments.

Purisima said the government is also considering lifting foreign ownership restrictions in some areas to accelerate growth. One of these includes the practice of professions. –Zinnia B. Dela Peña (The Philippine Star)