Peza justifies tax perks, cites recipients’ contributions to economy

by Roy Stephen C. Canivel, Philippine Daily Inquirer, Aug 09, 2019

The Philippine Economic Zone Authority (Peza), getting fed up of being “demonized” for giving out tax incentives, stressed that its registered companies had poured into the economy more than P10 trillion in recent years.

In a strongly worded statement on Thursday, Peza Director General Charito Plaza said the investment promotion agency (IPA) had been made to appear as if it were “the evil three-headed dragon devouring money that should have gone to the people.”

Her latest comments seem to throw shade at the statement released by the Department of Finance earlier this week, which said that from 2015 to 2017, the Peza gave away P879.1 billion worth of tax incentives.

The amount, the DOF said, accounted for the lion’s share of the tax incentives and exemptions given away by the country’s IPAs during that period, totaling P1.12 trillion that “could have gone to constructing roads, classrooms or health centers.”

Peza’s contributions to the economy, however, are much larger than that at P10.05 trillion in the same three years, it said.

Plaza said some statements about the agency did not give credit to the contributions of Peza firms to the economy.

“These kinds of misleading information only seek to poison the minds of readers and gain public sympathy at the expense of Peza and its valued investors,” she said.

“Our companies have been consistently pictured in a very negative and undesirable way. Our companies are demonized,” she added.

This develops as the fate of companies in economic zones remains uncertain as the administration renews its push to pass its second tax reform package, which will lower corporate income taxes while rationalizing the tax incentive system.

Peza-registered companies are required by law to export most of their output, making them a critical part of the country’s export industry.

Their exports accounted for 70 percent of the P10.05 trillion contribution of Peza firms to the economy during the three-year period, followed by salaries and wages (12.46 percent), local purchases (7.6 percent), investments (7.5 percent) and other taxes paid (2.7 percent).

Exports made by Peza-registered firms account for the bulk of the country’s exports. In 2015, Peza said these companies were responsible for 59 percent of total merchandise exports, 65 percent in 2016, and 64 percent in 2017.