By Chino S. Leyco The Department of Finance (DOF) assured “qualified and performing” foreign investors that they will continue to enjoy incentives from the government under the Duterte administration’s second tax reform package. DOF logo In a statement, the finance department explained that deserving foreign investors have no reason to worried over the pending measure, adding the DOF’s proposal could even provide “better set of perks.” The DOF said the Tax Reform for Attracting Better and Higher quality Opportunities (TRABAHO) bill only wants that incentives be time bound, transparent, targeted and performance-based. “The government’s goal is to modernize the current set of incentives being given to a select group of businesses that only pay a ‘forever’ five-percent tax on gross income earned (GIE), in lieu of all local and national taxes,” the DOF said. According to the DOF, under the current system, the favored companies continue to enjoy tax perks even they failed to generate more jobs or contribute to the economy. For this reason, the DOF believes the present system is unfair to about 90,000 active small and medium enterprises (SMEs) that pay the corporate income tax (CIT) of 30 percent, which is the highest in the region. “The government is pro-investment, pro-jobs and pro-incentives,” DOF said. “We will continue to give incentives to those that perform. But we will start to include sunset provisions on the incentives of those that are not performing.” “So what is there to fear if you are performing, if you are contributing exports, contributing to countryside development, jobs and productivity?” the department asked. To make the CIT system fair and accountable, the Duterte administration is asking the Congress to reduce the rate and rationalize the fiscal incentives system. Corporate tax reform comprises Package 2 of the Duterte administration’s comprehensive tax reform program (CTRP). The House of Representatives already approved on third and final reading in September its version of the corporate tax reform bill known as the TRABAHO bill. The Senate, meanwhile, has yet to approve its counterpart measure. “What we are basically doing is to make our incentives more accountable, fairer, and, at the same time, give the same opportunity to some 90,000 SMEs that are also working hard, also delivering jobs and exports and productivity but paying the regular 30 percent,” the DOF said. The DOF, meanwhile, said that the set of incentives being pushed in the Congress by the Duterte administration is even better than the current one. “For instance, you can avail of the 50 percent more deduction on labor; 100 percent more deduction on training, on research and development; 50 percent more deduction if you buy local. And then the depreciation allowance is even better, and there is a longer net operating loss carryover,” DOF said, referring to the reforms as far “superior” than the current set of incentives that a select few enjoy. It also said the new set of incentives being proposed by the DOF, “when put together, can make our incentives system more competitive and performance-based.” “And for some who have seen the light, they find it better,” DOF said. “Unfortunately, because of misinformation or being stuck in the past or not wanting to contribute better, they forget these positive sides of the reform.” The finance department urged the affected sectors to thoroughly read the measure, rather than base their positions on hearsay and opinions, so that they can work with the government in explaining the true benefits of this CIT bill to the public.