Firms’ tax perks cost govt ₧481.7B in ’19
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AX perks to favored firms have cost the government P481.7 billion in foregone revenues in 2019 alone, a year before the passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law. W hile this is 7.13 percent lower than P518.7 billion in tax perks given by the government in 2018 through various investment promotion agencies (IPAs) and through fiscal incentives g ranted to cooperat ives, t he Department of Finance (DOF) still considers this a substantial amount. The DOF-Domestic Finance Group (DFG) reported to Finance Secretary Carlos G. Dominguez III that more than half or 58.8 percent of the total comprised
incentives for value-added tax, accounting for P283.45 billion. This was followed by income tax incentives that made up almost a third or P149.28 billion of the total. Other forms of incentives extended by the government in 2019 were exemptions from customs duties, P47.59 billion (9.88 percent), and the percentage tax incentive availed by cooperatives, P1.38 billion (0.29 percent). Finance Assistant Secretary Ma. Teresa Habitan of the DFG said at a recent DOF executive comm it tee meet ing t hat t he income tax incentives include income tax holiday (ITH), accounting for P68.4 billion (14.2 percent); the special income tax rate for IPA-registered enterprises, accounting for P66.41 billion
(13.8 percent); and the income tax incentives for cooperatives accounting for P14.47 billion (3 percent). The DOF study covered 11,431 enterprises that filed their tax returns, of which 5,749 were IPAregistered firms and 5,682 were cooperatives. Of the 11,431 enterprises, 7,454 or 57.5 percent were granted income tax perks, Habitan said. More than half or 4,371 of those that availed themselves of income tax incentives were cooperatives while the remaining 3,083 were IPA-registered companies. The manufacturing sector took the lion’s share of total tax incentives at P321.3 billion (66.7 percent), followed by services and en-
ergy sectors at P114.8 billion (23.83 percent) and incentives at P26.36 billion (5.47 percent), respectively.
Agriculture, fisheries
TAX perks for the other sectors, such as agriculture and fisheries, amounted to P19.24 billion or 3.99 percent of the total tax expenditures for 2019, Habitan said. Cooperatives received a total of P32.2 billion worth of tax incentives in 2019, she said, with majority of these being service cooperatives in the banking and financing industries. These foregone revenues from tax incentives were based on the perks granted to registered enterprises before the enactment of the CREATE law. Continued on A2
GROWTH PROJECTIONS
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n Tuesday, July 20, 2021 Vol. 16 No. 279
P25.00 nationwide | 2 sections 18 pages |
IN EXPORTS IN ’21, ’22 UP
FISHERMEN in Zapote, Las Piñas City, bring their boats to safety early Monday morning, July 19, 2021, in preparation for weather disturbance Fabian, which has intensified into a severe tropical storm, with maximum sustained winds of 95 kilometers per hour near the center, according to the weather bureau. NONIE REYES
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By Bernadette D. Nicolas
@BNicolasBM
CONOMIC managers on Monday upgraded the growth projections for goods exports this year and for services exports in 2022 while affirming the assumptions on the country’s GDP growth for this year until 2024.
Goods exports are now seen by the Cabinet-level Development Budget Coordination Committee (DBCC) to rise by 10 percent this year from its previous projection of 8 percent, “following an expected recovery in external demand.” Meanwhile, the growth of service exports in 2022 was revised upward to 7 percent from its old projection of 6 percent as it expects travel and BPO receipts to improve with the gradual reopening of the economy. As Covid-19 cases in the coun-
try are declining since the peak in April this year and the economy is in gradual reopening mode with more targeted granular lockdowns, the DBCC kept unchanged its growth targets of 6 to 7 percent this year, 7 to 9 percent in 2022, and 6 to 7 percent in 2023 and 2024. To support this outlook, the DBCC said it will continue to back the gradual and safe reopening of the economy subject to the strictest compliance with minimum public health standards. See “Growth,” A2
Millennials, top foreign tourists in PHL By Ma. Stella F. Arnaldo
@akosistellaBM Special to the BusinessMirror
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ILLENNIALS make up most of the inbound tourists of the Philippines, aligning with the Department of Tourism’s (DOT) promotions program, which recently has been focusing on social-media campaigns. In an online presser on Monday,
DOT OIC-Director for Tourism Development Planning, Research and Research Management Warner Andrada said the average age of foreign tourists in the country last year was 36.69, citing arrival/departure cards of the Bureau of Immigration. In its annual visitor sample survey, the DOT also found out that 69.3 percent of foreign tourists in 2020 were “repeat visitors,” and the rest were first-time visitors. Also
PESO EXCHANGE RATES n US 50.2030
96.4 percent of those surveyed last year made “independent travel arrangements,” and only 3.6 percent used package tours. As per the BI arrival/departure cards, Andrada also reported that 54.11 percent of last year’s visitors came here for holiday/leisure, 2.61 percent for business trips, and 1.08 percent for health/medical purposes. He failed to give comparative 2019 findings.
Jose C. Clemente III, president of Rajah Tours Philippines told the BusinessMirror, he disagreed with some of DOT’s findings. “We still get our fair share of tourists. Millennials have lower budgets so they find it expensive to go through agents. So they probably do direct bookings thinking they will be able to save. I’d like to see how they [DOT] extracted that finding.” Continued on A2
HOUSE PANEL ASKS DOF TO TWEAK BIR RULE THAT IS HURTING EXPORTERS By Jovee Marie N. dela Cruz @joveemarie
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HE House Committee on Ways and Means is now working on the Bureau of Internal Revenue and the Department of Finance (DOF) to address stakeholder concerns on Revenue Regulation (RR) 9-2021, which imposes a 12-percent VAT subject to refund on local inputs for exported goods. House Ways and Means Chairman Joey Sarte Salceda of Albay said a revised RR is expected to be issued on July 21 as exporters decried the issuance of the RR, a rule that they said could “cripple industry.” “I am already working with the BIR and the Revenue Operations Group of the DOF to ad-
dress concerns. The spirit and the letter of CREATE [Corporate Recovery and Tax Incentives for Enterprises Act] is to encourage exporters to use local materials to support local businesses. That’s straightforward. So, at the bare minimum, that rule has to be applied, instead of imposing the 12-percent VAT on all local inputs,” Salceda said. On July 21, Salceda said his committee will lead a briefing between affected stakeholders, concerned agencies, and the Department of Finance and the BIR, who will present their proposed clarifying RR. RR 9-2021 imposed 12-percent VAT on certain transactions that were previously taxed at 0 percent. Continued on A2
n JAPAN 0.4563 n UK 69.1346 n HK 6.4629 n CHINA 7.7490 n SINGAPORE 37.0174 n AUSTRALIA 37.1251 n EU 59.2897 n SAUDI ARABIA 13.3853
Source: BSP (July 19, 2021)