PEZA Bucks Move to Scrap Incentives

Manila Bulletin, April 12, 2018 | Go to article overview

PEZA Bucks Move to Scrap Incentives


By Bernie Cahiles-Magkilat

The Philippine Economic Zone Authority (PEZA) has come out strongly against the Department of Finance (DOF) for trying to emasculate the economic zone agency, remove its incentives and belittled its overall contribution to the economy.

In a strong-worded speech during the 23rd PEZA Anniversary and Investors' Recognition Night, PEZA Director-General Charito B. Plaza presented a detailed report of PEZA's overall contribution to the Philippine economy since it started operation as against the P235.307-billion foregone revenues cited by DOF as basis for the move to cap its incentives and clip its powers under the proposed package 2 of the TRAIN Law.

"If the government gave away a total of P235.307 billion to PEZA companies in 2015 in the form of tax incentives, PEZA companies in return gave P3.317 trillion to the Philippine economy. In effect, for every P1 that the government gives to PEZA companies in terms of incentives, P14 is plowed back by our PEZA companies to the Philippine economy," stressed Plaza.

This figure was based on PEZA's 2015 report to the National Economic and Development Authority (NEDA) in compliance with the TIMTA Law. Broken down, PEZA was able to generate total investments of P1.994 trillion; generated total direct employment 1,031,445 and positively affecting more than 21.267 million Filipinos; total salaries of P270.716 billion; total exports P773.243 billion, local purchases P215.043 billion; withholding tax on compensation: P42.357 billion; expanded withholding tax P11. 347 billion; final withholding tax P7.626 billion; final tax withheld by banks/sources on interest income etc, P888.312 million.

PEZA also pays local taxes. In 2015, PEZA paid P908.716 million in real estate taxes; P890.937 Million in business taxes/permits; and P685.678 million in occupation taxes/others.

"If we add all of these, it will amount to P3.317 trillion again not billion but trillion pesos," Plaza said.

Plaza, however, said that the P3.317 trillion is a cumulative figure for the past 20 years up to 2015 which may not be directly comparable because the DOF figure of foregone revenues only quoted one year, 2015.

PEZA said this is the first time they made such report in compliance with the TIMTA Law, but NEDA was supposed to undertake a cost-benefit analysis on PEZA's incentives versus the benefits that have been created as a result.

Plaza said they are going to submit the same report to Congress to justify their position for a "status quo" on the current incentives schemes under PEZA noting that the past four administrations did not touch the PEZA because it was working well in attracting investors.

In a huddle with reporters, Plaza confided by the proposal of DOF to create a committee headed by DOF to will scrutinize and approve the incentives to be granted to PEZA investors.

"We don't know anymore what's our role if it's already this committee that will determine these incentives. What will happen to us," she said.

Dismayed by how DOF has presented PEZA as "happy go lucky tax waiving agency," Plaza said: "It's unfair because it's one sided. They should not look at the taxes foregone but the total development like income that these industries including PEZA that contributed to the economy and we should also look at the social progress that was created by these industries and ecozones. …

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