DOF says gov’t losing revenues due to ‘redundant, unnecessary’ incentives

Acting Socioeconomic Planning Secretary Karl Chua

MANILA – The Department of Finance (DOF) has defended the need to rationalize fiscal incentives to investors, saying that the government is losing revenues due to supposed redundancies.

In an interview with reporters in Quezon City, Finance undersecretary Karl Kendrick Chua said that on average, the government only has a 60-percent return from the incentives given to businesses.

“On average, we find that for every P1 in incentive we give, only 60 centavos come back so on average, there are many redundant or unnecessary incentives,” he said on the sidelines of a hearing.

The DOF in January submitted to Congress the proposed second package of the Tax Reform for Acceleration and Inclusion (TRAIN 2), which seeks to lower the corporate income tax (CIT) rates and rationalize fiscal incentives.

Under the proposed TRAIN 2, the DOF wants to amend or repeal at least 123 special laws on investment incentives, and consolidate them into one omnibus incentive code.

According to Chua, the DOF will not completely remove incentives; some will be retained to ensure that investors in select industries will remain in the country.

“There are some sectors that can be more deserving of incentives because they are export-seeking, they are efficiency-eeking, or they are footloose – meaning they can go away without the incentives,” he said.

“But the far majority we see are they come here for the talent, the minerals, the skills, the market and they will make a profit even without the incentives,” he explained.

The incentives, however, are still being reviewed to determine which ones may be retained and which ones may be scrapped. (GMA News)

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