Te Philippines, Asia’s Rising Tiger, is attracting not only local businessmen but also foreign investors to do business in the country. To encourage business investments in the Philippines, the government created various Investment Promotion Agencies (IPAs) to provide assistance and fiscal incentives in exchange for their ventures in preferred areas in the country.
Some of the IPAs established are the Board of Investment (BOI), Philippine Economic Zone Authority (Peza) and the Tourism Infrastructure and Enterprise Zone
Authority (Tieza).
Investors covered by these investment regimes can enjoy various incentives such as, but not limited to, simplification of customs procedures and employment of foreign nationals to provide technical expertise and supervisory support, income-tax holiday, exemption on value-added tax, import duties and tariff fees, and even exemption from local taxes and fees imposed by the local government unit.
The BOI, attached to the Department of Trade and Industry (DTI), is the agency that grants incentives based on economic activities that are needed by the country in order to prosper or develop, which is called investment priority areas. Some of the priority areas of the Philippines to date are the business-process outsourcing, electronics and renewable- energy industry.
Peza, also attached to the DTI, is the agency that promotes and facilitates business operations of export-oriented enterprise. Peza established various special economic zones in key areas in the Philippines. These areas are developed with all the required resources and utilities for smooth and competitive import-export operations. From the traditional “gated” economic zones, Peza has also expanded the incentives subject to incentives to the information-technology-based enterprises.
On the other hand, Tieza, attached to the Department of Tourism, is the agency created to boost the tourism industry in the country. The said agency is being funded by the 50 percent of the collections of travel tax imposed on individuals who
purchase air ticket. The funds are being used to fund various infrastructure and projects. Investors can develop tourism enterprise zones for as long as the areas to be developed has historical and cultural significance, environmental beauty and with existing or potential leisure facilities. Investors can also operate inside an existing enterprise zone and apply as tourism enterprise within the zone. Existing tourism-related enterprises can also qualify for incentives if these are outside the zones.
Recently, to strengthen the management of these incentives programs administered by the IPAs, Congress enacted the Republic Act 10708, or the Tax Incentive Management and Transparency Act (Timta), on December 9, 2015.
With the Timta, the government will be able to monitor, review and analyze the impact of these various tax incentives as information are now mandated to be submitted to the IPAs and other government agencies by all registered enterprises. These information will be available for use in budgeting, determination of the cost-benefit situation of the various investment programs and other uses.
With these various measures in place, the Philippines now will be on its way toward making the country as one of the investment centers in Asia while better managing the administration thereof.
Jeffrey Galang Salazar is a Certified Public Accountant and Master in Business Administration degree holder. He is currently connected with Tong Hsing Electronics Phils. Inc., Mold Parts Manufacturing Asia Inc. and Pamantasan ng Cabuyao.
This column accepts contributions of articles of interest from accountants who are of interest to the accountancy profession, in particular, and to the business community, in general. These can be e-mailed to boa.secretariat.@gmail.com.