P40-B more income seen from increased GIE perk
Credit to Author: The Manila Times| Date: Mon, 01 Jul 2019 16:19:38 +0000
The government will gain P30 to P40 billion in additional revenues a year if the gross income earned (GIE) tax incentive presently enjoyed by locators in economic zones will be increased to 8 percent from the current 5 percent.
“There is that recognition to develop a formula there [increasing GIE]. It can generate more revenue,” Trade Secretary Ramon Lopez said on Monday.
“If they will agree to the grandfathering and higher GIE instead of longer transition, at least you will have an immediate revenue. Those guys paying we have computed about P30 to P40 billion at [8 percent GIE],” added Lopez.
The government is currently pushing for the passage of the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill, which seeks to rationalize fiscal incentives. Under the proposed bill, the corporate income tax will be lowered from the current 30 percent to 20 percent.
The bill however also proposed to remove the 5 percent perpetual tax on GIE which is currently enjoyed by locators inside economic zones. Regional Operating Headquarters (ROHQs) and offshore banking units are also bound to lose their 10 percent special tax privilege.
Depending on how long a company enjoys the GIE, the Trabaho bill allows for a transition period of two to five years.
Lopez said locators are complaining about the removal of the GIE. “They have an immediate complaint because of the removal that’s why we could have a longer transition or adjust the GIE,” he said. Anna Leah E. Gonzales
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