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House committee approves perks for Sarangani ecozone

Wednesday, August 26, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]

THE HOUSE of Representatives committee on ways and means has approved a bill that gives tax incentives to a proposed economic zone in Sarangani province.

The still-unnumbered substitute bill to House Bill (HB) No. 5877, authored by Sarangani Rep. Erwin L. Chiongbian, aims to transform the area — covering the municipalities of Maasim, Kiamba, and Maitum — into a self-sustaining, industrial, commercial, financial, investment and tourism, and recreation center.

The bill earlier passed the scrutiny of the committees on economic affairs and of trade and industry on June 3.

"The measure will realize the objective of providing jobs to... those in the countryside, increase their productivity and individual incomes and improve the level and quality of their living conditions," Mr. Chiongbian told the committee hearing yesterday.

The committee, headed by Antique Rep. Exequiel B. Javier, agreed with the rationale of the bill and approved giving tax incentives to the proposed economic zone by exempting it from all taxes, duties, fees, imports, charges, costs, and service fees.

But Lourdes B. Recente, Finance director for research, opposed the tax component of the bill. "Tax incentives given to them should be aligned with those given to ecozones under PEZA [Philippine Economic Zone Authority]," she said in the same hearing.

PEZA gives the following incentives to all locators in economic zones under its jurisdiction:

* income tax holiday (ITH) for four years for non-pioneer projects and six years for pioneer projects;

* upon expiry of ITH, 5% special tax on gross income — in lieu of the regular 30% corporate income tax — and exemption from all national and local taxes;

* tax- and duty-free importation of raw materials and capital equipment;

* exemption from wharfage dues and export tax;

* zero-rated value-added tax on local purchases; and

* exemption from expanded withholding tax.

Ms. Recente also stressed that the Finance department had earlier asked for a moratorium on approvals of tax incentives to proposed ecozones. "We want, as much as possible, to preserve revenues...but if the proponents would like to push through with their proposal, they should be able to identify sources of financing." — Jhoanna Frances S. Valdez


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