AFAB, Registered Enterprises Tackle TRABAHO Bill Proposal
The Authority of the Freeport Area of Bataan (AFAB) hosted a consultation meeting on the second tax reform package under the Tax Reform for Attracting Better and Higher Quality Opportunities (TRABAHO) with House of Representatives’ Speaker Gloria Macapagal-Arroyo, Ways and Means Committee Chairperson Representative Dakila Carlo Cua, 2nd District of Bataan Representative Jose Enrique Garcia III and Department of Finance (DOF) Undersecretary Karl Kendrick Chua last 16 August 2018, at the AFAB Administration Building, FAB, Mariveles, Bataan.
Also in attendance were representatives from 10 of the biggest FAB Registered Enterprises, Bataan Governor Albert Garcia, Mariveles Mayor Ace Jello Concepcion, AFAB Chairman and Administrator Emmanuel D. Pineda, and AFAB Deputy Administrator for Operations Alewijn Aidan K. Ong.
The round table consultation aimed to tackle and clarify the provisions of the TRABAHO Bill as well as hear out the concerns of the investors and community leaders regarding the proposed changes in tax measures that will affect the corporate income tax (CIT), fiscal and non-fiscal incentives, and tax facilitation.
The second tax reform package aims to lower CITs by two percent (2%) per year starting 2021, eventually bringing down the current thirty percent (30%) to twenty percent (20%) by 2029. However, it seeks to rationalize incentives to make corporate income taxation more accountable and more equitable for both large and small corporations.
“I can assure you that this government is pro-investment and [creation of] jobs. We would not make a policy that would harm, but we want the incentives being forwarded to follow certain principles” Usec. Chua said as he discussed that under the proposed incentive reform, investments that will avail the tax incentives are bounded by the following general principles and conditions: performance-based, time-bound, targeted, and transparent. He added that the purpose of the bill was to strike a good balance in designing a policy that is insusceptible to leakages and creates more employment opportunities. Meaning, only businesses that will contribute to national development through continuous expansion and generation of pro-poor investments and jobs are entitled to the sustained provision of fiscal incentives.
The locators, particularly Mr. Duncan Miao, President of the Fashion Focus Group of Companies, raised concerns about the lack of security under the bill; highlighting the importance of incentives as a way to attract more investments and help create more jobs. He added that the eighteen percent (18%) reduced CIT replacing the five percent (5%) on Gross Income Earned (GIE) could discourage potential investors and might be the deciding factor for them to choose a different investment location other than the Philippines.
When asked whether or not investors would have to pay value-added tax (VAT) under TRABAHO, Rep. Cua clarified that investors who are exporting at least ninety percent (90%) of their products will be exempted from paying VAT for tax facilitation.
Gov. Garcia, on the other hand, commended AFAB’s success in bringing in investments, improving the economy by paying the taxes well, and generating more than 40,000 jobs not only for citizens from Bataan but also from other regions even as far as Visayas and Mindanao. “We don’t want to kill the goose that lays golden eggs”, he added. Moreover, Mariveles Mayor Concepcion mentioned how the surge in the number jobs and employees in FAB aided in the significant growth of the local economy as manifested in the continuous increase and development of local enterprises.
Rep. Cua guaranteed the attendees that their concerns are well noted and there are still plenty of opportunities to improve the bill as it will go through plenary discussions wherein further amendments could be introduced.
AFAB Chairman and Administrator Pineda expressed his gratitude for the initiative of the House of Representatives, especially House Speaker Arroyo, to discuss and clarify the provisions of the bill and for the opportunity to hear out the locator’s concerns with respect to the aspects of their business that will be affected.
The House Ways and Means Committee passed the TRABAHO bill last 07 August 2018 and is now up for plenary debates at the House of Representatives. It is a substitute bill for the Tax Reform for Acceleration and Inclusion (TRAIN) Package Two.