DOF BACKS TAX INCENTIVES FOR EXPORTERS

MANILA,  January 22, 2004 (STAR) By Des Ferriols - The Department of Finance (DOF) said it would support the proposed new incentive package to exporters, but only if the perks are limited to a select group of exporters and only on a temporary and time-bound basis.

The debate over whether government can afford to give incentives to exporters continued to escalate as the Senate reopened discussions on Senate Bill No. 2711 that would amend the Omnibus Investments Code of 1987.

With warnings from the International Monetary Fund that it could no longer afford to give too many incentives and sacrifice its revenues, the Arroyo administration has been wary about granting perks even to its biggest dollar earners, namely exporters, that already enjoy various tax breaks.

However, intense competition from other countries has prompted Philippine exporters to seek incentives from the government in their struggle to remain competitive.

Under the OIC, exporters were granted incentives in the form of tax and duty-free importation of capital equipment, but these incentives have expired and exporters have sought their renewal.

If passed, the new law would level the playing field between exporters located inside special economic zones and other registered exporters that are not located in these zones.

According to the DOF, it had no objections to renewing the incentives but only if they would be granted to registered exporters only.

"The restoration of the incentives to exporters in general would put them on equal footing with registered firms operating inside special economic zones which have been enjoying this incentive," said Finance Secretary Juanita Amatong in the DOF’s official comment to the proposed legislation.

Amatong said the DOF was also amenable to granting exemptions from taxes and duties on the importation of source documents by enterprises engaged in information technology but also on a limited basis.

"We have suggested to Congress that the privilege should not be given to all IT projects but only to specific IT activities that are worthy of government support and promotion," Amatong said.

Amatong said it was also acceptable for the bill to grant one percent duty and 10-percent value added tax on importations by registered domestic-oriented enterprises since these firms already enjoy an upper hand.


Reported by: Sol Jose Vanzi

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