Philippine Economic Zone Authority (PEZA) director-general Charito Plaza on Thursday questioned again the proposals to rationalize tax perks for select firms even as the Department of Trade and Industry (DTI) insisted that changing the system of fiscal incentives was necessary.
In a statement, Plaza said that rationalizing incentives was not needed and may end up harming the country’s attractiveness to investors.
“Why are we changing the rules in the middle of the game? What are we fixing when there is nothing wrong in our incentives? In fact, it continuously attracts investors and existing investors to expand,” Plaza said.
The PEZA director-general also noted that her agency expected DTI Sec. Ramon Lopez — as chair of the PEZA — to defend the agency’s programs and the investors benefiting from them, instead of backing proposals to rationalize incentives.
However, the DTI chief said that Plaza’s claim that he never listened to PEZA investors was “unfounded, totally not fair, and uncalled for.”
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“As chairman of the PEZA board, I have been hearing the side of industries and locators. In fact, we have conducted several industry consultations around the country, not only for BOI-registered companies but also including those from PEZA, Subic, Clark and other Investment Promotion Agencies. We also met with Japanese and Korean locators in our recent visits to Japan and Korea,” said Lopez.
He added that the government was not taking away incentives, “but making these more efficient and effective” and that the PEZA needs to back the government’s tax reform program.
“As long as PEZA is a government agency and a custodian of fiscal incentives, it is part of an overall tax reform that the government has adopted, which will bring benefits for the greater majority,” Lopez said.
Plaza denied that the PEZA bypassed Lopez’s authority as PEZA chairman when the agency pushed to amend the PEZA law to strengthen the body.
The agency is looking to further strengthen its mandate and institutionalize incentives.
Lawmakers are now tackling a tax reform bill seeking to rationalize the system for tax perks given to thousands of firms, while reducing the corporate income tax rate.
Several business groups have warned that removing incentives will lead many export-oriented firms to shut down their operations in the country and cause thousands of job losses.
