5% GIT perk for local ecozone investors
May 18, 2015 at 10:50
by Bernie Magkilat
The Philippine Economic Zone Authority (PEZA) has proposed the granting of 5 percent gross income tax (GIT) incentive to investors in the planned domestic economic zones, which are to be located in the “poorest of the poor” areas of the country.
PEZA Director-General Lilia B. De Lima said the minimal 5 percent GIT incentive should be good enough to attract both local and foreign businesses to invest in these domestic ecozones where they are also allowed to sell their produce in the domestic market. At present, the regular corporate income tax is pegged at 32 percent.
Of the proposed 5 percent GIT, 2 percent will go to the host local government unit and 3 percent to the national government.
PEZA has also proposed to limit the availment of the 5 percent GIT to a period of 15 to 20 years, which is enough time for companies to establish their businesses comfortably. Trade and Industry Secretary Gregory L. Domingo, who also chairs PEZA, has initially proposed for 5 years GIT period.
In proposing for a 5 percent GIT, De Lima said that PEZA has also considered the issue of maintaining a level playing field for all investors in the country whether they are inside the export economic zone, domestic economic zone or outside of these ecozones.
“That is why we cannot give so much incentives to locators in the proposed domestic ecozones so as not to disrupt the level playing field because we also have to establish the difference between locating outside the ecozone and outside of it as there are also producers that are not located inside domestic ecozones,” De Lima said.
An incentive is also needed for these locators especially that these domestic ecozones are planned to be implemented in the “poorest of the poor” areas in the country.
The incentive should make up for the poor infrastructure in these areas and to ease the high cost of doing business.
In addition, business processes will also be facilitated by PEZA. This way, locators will also be spared from the inconveniences of dealing with the local government units.
Locating in poor communities could generate new economic activities and create employment opportunities in these depressed areas. In return, host LGUs will get the 2 percent of the 5 percent GIT.
De Lima said the proposal is undergoing some refinements with the DTI. Once this plan is implemented, the government will have to issue an executive order.
Source: https://www.mb.com.ph/5-git-perk-for-local-ecozone-investors/#VUTJppYpfy9jfD1j.99
