VILLAR FILES BILL TO PROMOTE FOREIGN AND DOMESTIC INVESTMENTS IN PHILIPPINES

TO harmonize and simplify the government's administration of programs and policies on the grant of fiscal and non-fiscal incentives to promote foreign and domestic investments in the Philippines, Senator Cynthia Villar filed SBN 35, also known as "The Investments and Incentives Code of the Philippines."

She said the bill provides two types of performance-based incentives to qualified enterprises: the direct tax incentives such as Net Operating Loss Carryover (NOLCO) and indirect taxes like zero percent value added tax on sales, exemption from taxes and/or customs duties on importation of capital equipment, raw materials and source documents and wharfage duties and export tax.

NOLCO is an accelerated depreciation and double deduction for training expenses and double deduction for research and development.

Villar said Income Tax Holiday or Reduced Income Tax is still in place to qualified enterprises.

However, qualified enterprises which avail of the Income Tax Holiday or Reduced Income Tax, or the 5% tax rate on Gross Income Earned, shall be precluded from availing of the performance-based direct taxes incentives.

She said varying incentives are also provided to different registered enterprises such as export, domestic and strategic enterprises and those located in ecozones and freezones.

Special incentives are likewise afforded to registered domestic enterprises located in the identified thirty poorest provinces or less developed areas.

Section 2 of SBN 35 provides that the national economy shall be developed to enhance its competiveness in the global economy through investment promotion and industrial development activities geared towards employment generation and countrywide development.

Accordingly, she said the following are the declared policies of the State: the State shall pursue a market-responsive investment regime; formulate industry and sectoral development programs; undertake investment promotion activities; grant incentives that are simple to administer time-bound and performance-based and recognizes the industrial peace essential to attracting investments.

With the bill, the senator also braces for a more efficient system to be achieved through the creation of an Investment Promotion Action Center (i-PAC) that will serve as a melting pot for information from concerned agencies and as a link to fast track dealings with them.

Villar likewise said the Board of Investments (BOI), upon consultation with the Office of the President, concerned IPAs and appropriate government agencies and the private sector, shall formulate the Investment Priorities Plan (IPP) to be submitted to the President for approval.

In the listing of the activity in the IPP, the senator said the activity shall be covered by the current Medium Term Philippine Development Plan (MTPDP) and Medium Term Philippine Investment Plan (MTPIP) or its equivalent.

She said the activity should also satisfy the following conditions: substantial amount of investments, considerable generation of employment, use of modern or new technology and installation of adequate environment systems.

Villar said the first and fourth conditions should be present in all activities, and the threshold amount of investments and employment generation required for a specific activity shall be subject to a periodic review every three years taking into consideration international standards and other indicators. According to the senator, the President may also allow registration of strategic project listed in the IPP, but this must be located in the country due to stiff competition with other countries.

She said strategic project refers to a project that exhibits high social economic returns and requires large investments that will significantly contribute to the country's economic development.

She said the BOI or IPA may suspend the availment of incentives of registered enterprises when there is probable cause to believe that a registered enterprise violated its registration terms and conditions.

Considering the serious need for congruent laws on investments and incentives, Villar sought for the early enactment of this bill.