By Lailany P. Gomez, Reporter

Government’s efforts to attract investors to the Philippines are sometimes hindered by conflicting directives to raise more revenues through taxes, a Trade department official told The Manila Times. “I don’t think [the laws] are working,” said Rhodora Leaño, director of the Bureau of Micro, Small and Medium Enterprises Development at Department of Trade and Industry.

She told The Times in a recent roundtable interview that the country’s existing laws on investment and incentives were not synchronized—making it confusing and unmanageable for both the government and the investors whom officials are courting.

“I’m looking for a direction, focus,” Leaño added. “Masyadong kalat-kalat [It’s too fragmented]. The
Bureau of Investment and the Department of Trade and Industry want to give incentives, but the Department of Finance wants to generate revenues. Magkaroon sana ng focus [Hopefully there will be a focus].”

The director added that the solutions were already being discussed.

Harmony via legislation

Earlier in May, the House of Representatives approved on final reading the investments and incentives code of the Philippines that would consolidate the country’s investments and incentives statutes.
House Bill 5241 aims to harmonize the country’s numerous incentive-giving laws.

The said statutes include Executive Order 226 or the Omnibus Investments Code, special laws for economic zones and other incentives statutes.

Key provisions of the bill mandate the Board of Investments (BOI) as the national investment promotion agency that will formulate a national framework for investments promotions that will govern all investments promotion agencies. The board will exercise oversight functions over all investment promotion activities of all investments promotion agencies—if the measure becomes law.

The BOI’s Board of Governors will be composed of the secretaries of the Trade and Finance departments, the director general of the National Economic and Development Authority (NEDA), the undersecretaries from the Trade department and representatives from the private sector.

The investments code also lists all possible foreign and local investment sectors that would qualify for tax incentives under specified in the act.

The House bill also provides, as a grandfather rule provision, that incentives granted to existing registered enterprises from the contracts or agreements they signed with the Board of Investments, Philippine
Economic Zone Authority (PEZA), other investments promotion agencies, and other government instrumentalities will remain legally binding.

In April 2008, the Finance department said that the government started evaluating the fiscal incentives granted to all corporate taxpayers in order to improve revenues generated through taxes.

The state-run National Tax Research Center had recommended the establishment of a coordinating
network to include representatives from the Bureau of Internal Revenue (BIR), Bureau of Customs, Board of Investments and the Philippine Economic Zone Authority.