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| Income Tax Singapore |
"BOI would now be more flexible," said Cristino Panlilio, managing head of the agency.
Panlilio said BOI can grant a 10 percent to 15 percent income tax rate, which is half of the current rate of 30 percent.
"It’s now 30 percent or zero (for those enjoying ITH), but it does not necessarily have to be zero," he said.
Panlilio said there are a lot of proposals on the table but that the BOI would defend the position that "the best incentive scheme is that we become competitive against other countries and we address our budget deficit."
BOI executive director Efren Leano said the agency’s position is that domestic-oriented projects should still get income tax holidays of four to six years.
However, it is also open to cutting the corporate income tax rate by half for a period of 15 years for domestic-oriented companies.
For exporters, the BOI proposes a maximum of six years of income tax holidays plus a 5-percent tax rate on gross income earned (GIE) for a period of 19 years, regardless of their location.
This means incentives to exporters would no longer be in perpetuity and would be enjoyed for 25 years or half the life of a company. The proposed menu of incentives would be applied by all investment promotion agencies.
Leano said the Department of Finance (DOF) has agreed in principle to the lower tax rates, especially for domestic-oriented firms.
It was the DOF that proposed the removal of income tax holidays, a position taken by Sen. Ralph Recto, one of the sponsors of the incentives rationalization bill.
But Leano said giving a preferential tax rate would be a meaningful incentive to local firms which have to compete with imported goods that come in at zero duty.
Leano said countries in the region like Singapore give even more superior incentives by granting income tax holidays, a 17-percent tax rate of up to 15 years, and with flexibility to sweeten the package depending on the industry.
He said the Singapore government even offers to take equity in certain projects to entice proponents.
Leano said the BOI believes that revenue losses from a lower tax rate for a limited period would be smaller than merely removing income tax holidays or giving preferential tax rates in perpetuity.
Leano said the BOI is now talking with legislators to ensure the passage of a bill rationalizing incentives that would be favorable to both domestic and export companies.
BOI is pushing for parity incentives on export firms regardless of location; perks to qualified domestic-oriented projects to level the playing field vis a vis imports; more incentives to less developed areas, and autonomy to other investment promotion agencies except on policymaking.
BOI noted the need to grant similar incentives to export firms, ecozone and non-ecozone locators alike, using only one menu of incentives to harmonize perks.
The agency also cited the need to continue granting incentives to domestic-oriented companies as they compete with imports that come in tax- and duty-free.
As a form control, only domestic-oriented enterprises whose activities are qualified under the Investment Priorities Plan or are located in less developed areas or are deemed strategic would be granted incentives.
Sources: http://www.malaya.com.ph
