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Current status of the Philippines’ tax incentives system: “It’s complicated.”

 

Here in the Philippines, overly generous tax incentives are granted to businesses to the point that costs outweigh benefits.

 

Every peso granted by the government as a tax incentive is potential revenue that could have been used for health, education, and infrastructure.

 

Revisiting our incentives system is long overdue.

 

Through the proposed TRABAHO Bill, the government will modernize tax incentives by granting them for good reasons to create more jobs, improve rural investment, and adopt new technologies and innovation.

 

This will ensure that every peso granted as a tax incentive generates a higher return for all Filipinos, not just a select few.

 

Why settle for less when you can have more?

 

Currently, the Philippines’ tax incentives system lacks transparency and accountability.

 

With the proposal of the TRABAHO Bill to rationalize the grant of incentives, we can correct this inequity, the DOF claims.

 

The TRABAHO bill will create a level playing field for businesses and attract new players to compete. As a result, more jobs will be created for Filipinos and can boost our economic growth.

 

The proposed TRABAHO, or tax reform for attracting better and high-quality opportunities bill, of the comprehensive tax reform program aims to create a fair and accountable tax incentive system as it establishes the general principles in granting incentives.

 

General Principles in granting incentives under the proposed bill:

  1. Performance-Based – Firms receiving incentives should meet performance targets
    that benefit society: Investment, job creation, rural development, and research and
    development.
  2. Targeted – Tax incentives should be given to businesses with significant positive
    externalities, and must identify sectors that are aligned with the national development
    priorities.
  3. Time-Bound – The granting of tax incentives should include sunset provisions. The
    absence of a time limit on incentives is detrimental to accountability and performance.
  4. Transparent – Regular monitoring and evaluation of all beneficiaries and recipients
    should be institutionalized and reported to the government to ensure that what
    society gains outweigh the cost of incentives.


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