TOKYO: Japanese investors have expressed their concerns on the new tax incentives for new and existing investors and the preferential corporate income tax.
This was raised during a discussion with Japanese and officials of the Departments of Trade and Industry and Finance in an effort to address concerns on the Tax Reform Acceleration and Inclusion (TRAIN) Package 2, which rationalizes tax incentives to investments.
DTI Secretary Ramon M. Lopez explained that the proposed legislation is not meant to remove incentives, but in fact recognizes the important role of incentives and the need to make them more responsive, relevant and effective, i.e. they should conform to the principles of being performance-based, time-bound, focused, and transparent.
“We would like to highlight the aspects of TRAIN Package 2 that would benefit new and existing investors. While Japan is our number one source of investments, there are still a large number of Japanese investors who have not located in the Philippines. The TRAIN Package 2 provides us with the mechanisms both to encourage existing investors to further expand their business, and to attract new investors into the country,” said Lopez.
Board of Investments (BOI) Managing Head and DTI Undersecretary Ceferino Rodolfo explained further that the second tax reform package will in fact provide better incentives.
First, investors will no longer be limited to just the Income Tax Holiday (ITH) and the 5% tax on Gross Income Earned (GIE) — but will now be able to choose other incentives that may be more relevant, including long enough Net Operating Loss Carry-over, accelerated depreciation, and double-deduction of certain expenses critical to upgrading competitiveness such as R&D, training, and others,” said Rodolfo.
“Equally important, the TRAIN Package will remove the nationality bias as well as the export bias of incentives.
