Business
DTI, DOF explain
TRAIN package 2 to
Japanese investors
Ceferino Rodolfo explained further that the second tax reform package
will in fact provide better incentives.
“First, investors will no longer be limited to just the Income Tax
Holiday (ITH) and the 5% tax on Gross Income Earned (GIE)—but will now
be able to choose other incentives that may be more relevant, including
long enough Net Operating Loss Carry-over, accelerated depreciation,
and double-deduction of certain expenses critical to upgrading
competitiveness such as R&D, training, and others,” said Usec. Rodolfo.
“Equally important, the TRAIN Package will remove the nationality
bias as well as the export bias of incentives. This means that as long as
an activity is listed under the Strategic Investments Priorities Plan (SIPP),
this will be eligible for incentives regardless of citizenship of owners or
the markets they will serve. For Japanese companies, they can receive
incentives even if they will sell to the domestic market,” Usec. Rodolfo
added.
Meanwhile, DOF Director Juvy Danofrata noted the concerns of
investors on the sunset provisions for existing tax incentives. Danofrata
said, “While transition mechanisms will be provided including
replacing the 5% GIE with a reduced 15% corporate net income tax,
we are open to suggestions on how we can design better transitions, as
long as these will comply with the basic principles of being time-bound,
performance-based, focused, and transparent.”
The discussion was part of the agenda of the 10th Philippine-Japan
Economic Partnership Agreement (PJEPA) Sub-Committee on the
Improvement of Business Environment (SC-IBE) Meeting on 22 March
co-chaired by Sec. Lopez and Japanese Ambassador Koji Haneda. Officials
from the Philippine Board of Investments, Philippine Contractors
Accreditation Board, Construction Industry Authority of the Philippines,
National Economic Development Authority, Philippine Economic Zone
Authority, Bangko Sentral ng Pilipinas, Department of Public Works and
Highways, Department of Finance, Department of Labor and
Employment, Manila International Airport Authority, Metro Manila
Development Authority, Bureau of Internal Revenue, and Subic Bay
Metropolitan Authority were also present during the meeting. dti.gov.ph
Board of Investments (BOI) Managing Head
and DTI Undersecretary Ceferino Rodolfo
I
n efforts to enhance trade and investment relations between the
Philippines (PH) and Japan (JP), Department of Trade and
Industry (DTI) Secretary Ramon Lopez together with officials
of the Department of Finance (DOF) addressed the issues and
clarified the concerns raised by Japanese investors on the Tax
Reform Acceleration and Inclusion (TRAIN) Package 2, which
rationalizes tax incentives to investments.
“We would like to highlight the aspects of TRAIN Package 2
that would benefit new and existing investors. While Japan is our
number one source of investments, there are still a large number
of Japanese investors who have not located in the Philippines. The TRAIN
Package 2 provides us with the mechanisms both to encourage existing
investors to further expand their business, and to attract new investors
into the country,” said Sec. Lopez.
During the discussion, Japanese investors expressed their concerns
on the new tax incentives for new and existing investors as well as the
preferential corporate income tax.
According to Lopez, the proposed legislation is not meant to remove
incentives, but in fact recognizes the important role of incentives and
the need to make them more responsive, relevant and effective, i.e. they
should conform to the principles of being performance-based, time-
bound, focused, and transparent.
Board of Investments (BOI) Managing Head and DTI Undersecretary
68
“First, investors will no longer be limited
to just the Income Tax Holiday (ITH) and
the 5% tax on Gross Income Earned
(GIE)—but will now be able to choose
other incentives that may be more
relevant, including long enough Net
Operating Loss Carry-over, accelerated
depreciation, and double-deduction of
certain expenses critical to upgrading
competitiveness such as R&D, training,
and others,” said Usec. Rodolfo.