By Ma. Elisa P. Osorio (The Philippine Star) Updated August 13, 2010 12:00
MANILA, Philippines - Real estate developers will continue to receive income tax holidays (ITH) and other incentives under the 2011 Investment Priorities Plan (IPP) despite the move of the government to lessen tax breaks on industries that have a steady stream of investors.
A big chunk of incentives given by the Board of Investments (BOI) was for the developers of mass housing projects like Megaworld. Trade Secretary Gregory L. Domingo has said he will remove incentives to firms that will invest even if there is no ITH.
In a separate interview, Board of Investments (BOI) managing head Cristino L. Panlilio said he will retain the incentives for mass housing project developers. “The real estate industry needs incentives because of the backlog in housing units,” he said. “The ITH will continue even for Metro Manila projects.”
BOI was supposed to remove the incentives for mass housing for the 2010 IPP. However, at the behest of some government agencies, BOI decided to retain the perks. The twin typhoons that hit Metro Manila and other surrounding provinces likewise fueled the need for more housing developments.
Panlilio said that although he is in favor of the rationalization of fiscal incentives, he would like to assure investors and businessmen in the country that they will continue to enjoy the perks until it lapses. Under the law firms may enjoy ITH for eight years.
He noted that the incentives provided by the Philippines are one of the highest when compared to other countries. Panlilio said it is time to look for other ways to attract investors aside from offering them tax breaks.
Earlier, Domingo said that investment incentives on industries that attract many businesses will be removed in order to make way for a more robust revenue collection by the government. He said the incentives on industries that receive sizeable investments must be removed already. He said that if investors will come in anyway, then there is no need to provide tax breaks.
“The incentives should be rationalized. Incentives should not be given to just any industries you want to give incentives to industries where you think we cannot get those industries without those incentives but if those industries as coming in anyway or setting up shop then why do you have to give incentives,” Domingo asked.
Domingo did not name which industries will retain the incentives program. He said they will have to study the current incentive package.