Philippines To Rationalise Investor Tax Incentives

by Mary Swire, Tax-News.com, Hong Kong

30 November 2010

The Philippines' Department of Finance, the Department of Trade and Industry and the National Economic and Development Authority are to produce a joint plan to rationalize the tax incentives available to local investors.

Following the announcement of President Benigno Aquino III’s public-private partnership project, it has been agreed that incentives, such as income tax holidays and the duty-free importation of project equipment, will still need to be available to attract investors.

However, the Finance Secretary, Cesar Purisima, has disclosed that it is intended that those incentives should be given to investors who would only be drawn to projects in the Philippines because there are incentives, and not to local investors who would fund projects in the country in any case.

While the various incentives given to investors should be rationalized, reduced in number and provided through fewer government agencies, Purisima has also said that tax incentives should be more flexible in their provision for investments only if necessary, and should contain “sunset provisions” by which each particular incentive would lapse on a specific date.

The three Philippine agencies have constituted a working group to produce their new proposals which, it was reported, will then be submitted to the country’s legislature in the first quarter of 2011.

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