The Philippine Economic Zone Authority (Peza) received around P95.03 billion worth of investment pledges last year, attracting investments in the manufacturing and business process outsourcing (BPO) sectors despite its pandemic woes.
Peza said on Thursday the figure was the total investment commitment for 326 projects approved, more than 66.56 percent of which were in manufacturing, while the rest were in the BPO sector.
Although this marked a 19-percent decline from the P117.5 billion commitments in 2019, the figure was still beyond the agency’s expectations. In July last year, Peza Director General Charito Plaza said the agency only expected to get half of what it got in 2019.
“Despite the pandemic that began in 2020 and affected global economy and trade, Peza remains to perform at its best with the help of its registered business enterprises,” she said in a statement.
“We hope that [in this] coming 2021, we will be able to attract more foreign direct investments in the country, keep the Peza brand of service renowned worldwide, and help the Philippine economy bounce back and even become a self-reliant, self-sustaining and resource-generating investment haven in Asia,” she added.
Apart from uncertainties due to the pandemic, developments in Congress also put a question mark on the future of businesses’ tax breaks, which the Peza uses to lure new investors.
In November last year, the Senate passed the Corporate Recovery and Tax Incentives for Enterprises (Create) bill, the latest iteration of a tax reform package that sought to cut corporate taxes and rationalize tax breaks. Peza has been opposing such moves as far back as three years ago.
The Create bill was considered the most balanced of all versions of the tax package, such that foreign businesses who used to side with Peza in asking for a status quo ultimately supported the Senate version.
Under the Senate’s Create bill, the country’s corporate income tax of 30 percent—the highest in Southeast Asia—would be cut to 25 percent and eventually to 20 percent by 2027.
Moreover, for small businesses with an annual income below P5 million, that tax rate is immediately reduced to only 20 percent. The Create bill will also rationalize tax breaks, but investors have 10 years to transition to the new rules.
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