By Tracy Cabrera
DESPITE the long delay of six months and with the adverse impact of the coronavirus global pandemic in the business sector, qualified companies manufacturing personal protective equipment (PPE) will soon be able to avail themselves of tax holidays approved by the government for businesses repurposed for the struggle against the ongoing health crisis.
This came as the Bangko Sentral ng Pilipinas (BSP) expressed optimism over the country’s speedy recovery from the economic slump, saying that the worst is over and our pandemic-ravaged local economy will be reinforced by the latest data about the movement of money in and out of the Philippines during the third quarter of the year.
According to BSP governor Benjamin Diokno, the adverse impact of the Covid-19 pandemic on the country’s external accounts may have already reached its peak during the second quarter of the year, paving the way for the recent balance of payments, dollar remittance and foreign direct investment numbers that are seen as potential leading indicators of a coming rebound in growth.
Yet in setting aside the positive outlook, President Rodrigo Duterte approved recently the proposed 2020 Investment Priorities Plan (IPP) submitted by the Board of Investments (BOI).
The IPP, which is renewed every three years, is a list of preferred business activities that qualify for BOI tax incentives, including an income tax holiday of four to six years.
The Duterte administration had offered some incentives to Covid-19-related activities before the 2020 IPP, such as tax and duty exemptions for the importation of medical equipment and supplies.
However, with the IPP pending in Malacañang for months, the government has long had in its hands a means to encourage the private sector to channel more resources in the fight against Covid-19.
Back in May, BOI managing head Ceferino Rodolfo disclosed that the agency actually submitted the IPP earlier in the year, but withdrew it as the pandemic hit the country, revising it to include activities such as manufacturing of alcohol and face masks and projects in support of the Balik Probinsya program.
Based on Memorandum Order No. 50 signed by executive secretary Salvador Medialdea, essential services and enterprises that are eligible for tax breaks include the manufacture of PPEs, medicines, sanitizers and other disposable cleaning materials, and the provision of laboratory and other related equipment. Also included are crematoriums, health waste treatment, laboratories, test facilities, hospitals and quarantines.
Also covered are the manufacture of industrial goods and the processing of agriculture and fishery products, including halal and kosher foods, into semi finished, intermediate goods, or finished, consumer products.
The commercial production of agricultural, fishery and forestry products, as well as nurseries, hatcheries, postharvest facilities and other support services are counted as investment priorities as well.
The IPP will also give tax breaks to business activities that support countryside employment “outside of congested urban areas” while prioritizing strategic services such as electronics engineering, contact centers, data analytics and the like, and those that involve original content such as animation, software development, game development, health-care information management systems and engineering design.
Also among the preferred activities are aircraft maintenance, repair and overhaul, charging and refueling stations for alternative energy vehicles, industrial waste treatment, telecommunications, state of the art engineering, health-care and disaster risk management services, mass housing, infrastructure and logistics, innovation drivers, inclusive business models, environment and climate change-related projects, and energy-related activities.
Meanwhile, in southern Philippines the Bangsamoro Autonomous Region in Muslim Mindanao has also come up with its list of priority investment areas—including export activities, agriculture, agribusiness, aquaculture, fishery, basic industries, infrastructure and services, industrial service facilities, engineering industries, logistics and investment enterprises related to the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN (Association of Southeast Asian Nations) Growth Area.
The priority list includes as well the halal industry, tourism, health and education services, energy, and investment operations carried out by Islamic banks. (AI/MTVN)