THE increase in foreign direct investment (FDI) during the first half of the year showed that businesses were not spooked by the planned rationalization of tax and incentives program, according to the Philippine Department of Finance.
“Despite the persistent fear-mongering activities of certain groups, the international investment community continues to signal its confidence in the policies of the Duterte administration and in the strength of the Philippine economy and its workforce, as illustrated by the surge in FDI pledges in the year’s first semester,” Finance Undersecretary Karl Kendrick Chua said on Wednesday.
“We are glad that investors are aware of, and appreciate, the huge strides made by the Duterte administration in implementing its Zero-to-Ten-Point Socioeconomic Agenda, which include the massive ‘Build, Build, Build’ infrastructure program, improvements in ease of doing business, and the anti-corruption and peace and order measures of the president,” he added.
Last week, the Philippine Statistics Authority reported that foreign investment pledges in the second quarter of the year amounted to P49.58 billion, up 60.2 percent from the P30.95 billion registered in the same period a year ago.
This added to the P46 billion worth of pledges during the first quarter, bringing total pledges during the first half of the year to more than double the amount last year.
The report is based on data from six of the seven investment promotion agencies (IPAs) monitored by the PSA, which include the Board of Investments (BOI), Philippine Economic Zone Authority (PEZA), Clark Development Corporation (CDC), Subic Bay Metropolitan Authority (SBMA), Authority of the Freeport Area of Bataan (AFAB), BOI-Autonomous Region in Muslim Mindanao (BOI-ARMM) and Cagayan Economic Zone Authority (CEZA).
President Duterte reiterated in his 4th State of the Nation Address (SONA) last July his request for the House of Representatives to pass the second package of the Comprehensive Tax Reform Program (CTRP)—the CITIRA bill—which aims to energize micro, small and medium enterprises (MSMEs) by gradually reducing the corporate income tax rate from 30 percent to 20 percent.
The bill also seeks to reform the country’s fiscal incentive system to make it performance-based, targeted, time-bound, and transparent.
As pointed out by Duterte in his latest SONA, package 2 will benefit MSMEs.
Finance Secretary Carlos Dominguez III supported the [resident, saying that the proposed CIT cut and rationalization of incentives will boost micro, small, and medium enterprise’s growth because under the current corporate taxation system, a select group of 3,150 corporations registered under investment promotion agencies (IPAs) enjoy discounted effective CIT rates of 6 to 13 percent while small and medium-sized businesses, which employ a majority of Filipino workers, pay the regular tax rate of 30 percent, which is the highest in the region.
The CITIRA bill was approved on second reading by the House of Representatives on Monday night.
PHOTO COURTESY: PIXABAY