Some P33 billion investments are on hold as they await the final decision on their eligibility for incentives particularly value-added tax (VAT) exemption, according to the Philippine Economic Zone Authority (PEZA).
PEZA management said these include a P16-billion expansion of Amkor Technology Philippines which provides semiconductor assembly and test services; the P11-billion integrated steel project of Chinese firm Panhua Groups as well as the P6-billion investment of British technology firm Dyson. A Swiss firm is also planning a major investment in the country, according to PEZA.
PEZA said these are just among the big- ticket projects the country might lose if a revenue regulation (RR) slapping VAT on their domestic purchases will not be suspended.
The investors have high expectations under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) but are thinking twice if the VAT issue cannot be resolved, a PEZA source said.
PEZA plans to recommend these pending projects to the Fiscal Incentives Review Board (FIRB) for superior incentives and even subsidies under CREATE.
According to the source, PEZA in its board meeting last week issued a resolution supporting the call of management and ecozone investors to suspend the implementation of the RR as a business relief during the pandemic and to attract more investments.
According to PEZA, various ecozone industry groups have reached out to the Department of Finance for the suspension of the Bureau of Internal Revenue (BIR) regulation.
PEZA director-general Charito Plaza earlier said the imposition of the VAT is untimely and inconsistent to the policy of government extending business assistance and reliefs to investors so they can continue operations.
Plaza said the BIR supported and agreed to make expenses related to the fight against the new coronavirus disease 2019 deductible to PEZA locators’ gross income earned.
Plaza added imposing VAT will increase the cost of local supply and raw materials and will encourage the exporters to import instead the raw materials and supplies which are duty-free, to the detriment of local suppliers
For these and other big-ticket investments, PEZA said the agency is recommending to the FIRB their qualifications in every tier of CREATE.
PEZA is also meeting with locators with big expansion plans to discuss their expectations from government.
Originally, export companies are exempt from VAT as PEZA zones are regarded as separate customs territories. – Irma Isip
