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Iloilo OK’s perk for new, expanding businesses

Wednesday, June 1, 2009 | MANILA, PHILIPPINES[ BusinessWorld Online ]

BY FRANCIS ALLAN L. ANGELO, Correspondent


ILOILO CITY — The Iloilo City council has approved an incentive for qualified businesses that would exempt them from coverage of the tax on gross receipts.

The amended Iloilo City Investment Incentive Code of 2006 will give 100% exemption from the tax on gross receipts (which, according to www.iloilocity.gov.ph/taxes.php, varies according to type of business) of new and expanding businesses in the first year of operation. In the second year of operation, these businesses are entitled to 75% tax exemption, 50% in the third year and 25% exemption in the fourth year.

The amended investment code said an investor can avail of the incentives if he will invest at least P5 million. Investors with P5-million capital but less than P20 million will enjoy one-year tax exemption. Businesses with a capital of P20 million but less than P40 million will enjoy the incentive for two years. A capital of P40 million but less than P60 million will entitle an investor to three years of this incentive. Businesses with a capital of at least P60 million can avail the incentive for four years.

Councilor Jose S. Espinosa III, who authored the amendments, said the changes were made following an executive order by Iloilo City Mayor Jerry P. Treñas calling for a review of the code. "The amendments were meant to make the investment code more responsive and attractive to new and expanding businesses amidst the financial crunch. We also want to make Iloilo City an investment site by offering more perks to businesses," Mr. Espinosa said.

Maria Lea Victoria E. Lara, Iloilo Business Club executive director, said they welcome the expanded tax incentive, saying this should help stimulate the local economy.

Ms. Lara said Bacolod City also offered the same incentives to businesses, "the reason why they are attracting more investors such as BPO [business process outsourcing] players."

Mr. Espinosa said other cities such as Cebu, Davao and Bacolod are giving 100% tax holiday for three to five years.

Councilor Antonio V. Pesina, Jr., committee on ways and means chairman, said he opposed the amendments due to their impact on revenues. Mr. Pesina said he was pushing for 75% tax exemption in the first year of operation instead of 100% exemption.

"The exemptions might affect revenue generation because taxes on gross receipts amount to hundreds of millions of pesos. We also need money for social services and other economic programs," Mr. Pesina said.

But city treasurer Katherine T. Tingson said "businesses will still pay the usual regulatory fees for permits and licenses."

Meanwhile, Vice-Mayor Jed E. Patrick Mabilog has proposed an ordinance that will condone the liabilities of delinquent real property taxpayers. The measure will cover all real property taxes delinquencies recorded in the City Treasurer’s Office. It will grant 100% condonation on interest, penalties and surcharges on real property that has fallen behind in tax payments.

The condonation, however, will not apply to delinquent owners of real properties disposed in public auctions, real properties subject to pending court cases, and real properties with existing compromise deals.

Mr. Mabilog said the proposed ordinance aims to ease the financial burden of property owners in the city amid current economic difficulties, and aims to help those who have yet to recover from the effects of typhoon "Frank" a year ago.

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