Presidential investment adviser Frederick D. Go said he is making it a priority to address investor concerns by implementing reforms such as restoring the power of the investment promotion agencies (IPAs) to grant incentives and simplifying value-added tax (VAT) rules for locators in economic zones.
The head of the Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA) on Wednesday said he is spearheading reforms and programs to make sure the Philippines becomes globally competitive.
In particular, Mr. Go said his office is working with Congress to tweak provisions of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law and Tax Reform for Acceleration and Inclusion law.
“Both laws have generated serious concerns for foreign direct investors, particularly exporters, and I have put this on top of our to-do list. So, we are working with Congress to bring back certainty in our laws, providing confidence to investors of predictability and firm implementation of policies that protect their investments,” he said at the Ease of Doing Business Briefing organized by the Anti-Red Tape Authority.
Mr. Go said he wants to give back IPAs their “powers” over locators in their economic zones, in order to “protect companies from regulatory inconsistencies and ambiguities and excessive bureaucracy and red tape.”
“This will reduce the processing time for incentive applications and revert us back to the pre-CREATE regime,” he added.
The House Ways and Means Committee on Tuesday approved the CREATE MORE bill, which amends provisions of the CREATE law. The bill seeks to reinstate the power to grant tax incentives to IPAs, which was removed under the CREATE law and transferred to the Fiscal Incentives Review Board (FIRB).
Mr. Go said his office will work with Congress to clarify and simplify VAT zero-rating rules for locators in economic zones.
“We’re working with Congress to address the ambiguity on the coverage of VAT zero-rating incentives, ensuring that the law is clearly worded to avoid room for conflicting interpretations by the implementing agencies,” he said.
“This will streamline the advisory process by limiting required documents and reasons for denial to those specified by law and allowing claimants the opportunity to request for reconsideration before a final decision is made,” he added.
Another issue being prioritized by OSAPIEA is the clarification of transitory provisions under the CREATE law.
“For this, we are also working with Congress to explicitly state that the non-income tax-based incentives, particularly VAT zero-rating and VAT and duty exemption, are not subject to the sunset period and that registered business enterprises may enjoy them for as long as they are registered in good standing with an IPA,” Mr. Go said.
Mr. Go said he is also considering a sunset period of 12 years for enterprises to enjoy pre-CREATE incentives.
At the same time, Mr. Go said that his office will also pursue other reforms to address long-standing issues in Customs administration to curb smuggling, reduce misdeclaration, and prevent the entry of substandard goods.
“Through the proposed implementation of green border inspection and digitalized invoicing, we hope to institute a proper and efficient oversight of tradable goods coming into the country,” he said.
The OSAPIEA is also looking into several reforms to boost listings and participation in capital markets.
“We have since taken action on various recommendations to reduce frictional costs, improve ease of doing business and boost the Philippine stock market through a whole-of-government approach,” Mr. Go said.
The OSAPIEA is considering proposals to reduce sales tax, harmonize withholding taxes, and cut broker’s commissions, he added.
For the Philippines to secure much-needed investments, Mr. Go said it is important to “harmonize inter-agency activities.”
“My office has identified our priority sectors. First, mining, particularly nickel and copper; second, semiconductors or microelectronics; third, agriculture; fourth, steel and fifth, the pharmaceutical industry,” he said. — J.I.D.Tabile