The government lost over P300 billion in potential revenues annually because of the income tax holidays and other incentives with no time limits enjoyed by large companies, a Department of Finance official said Thursday.
Finance Undersecretary Karl Kendrick Chua, citing 2015 data, said income tax holidays and special rates accounted for P86.25 billion of the revenue losses, while custom duty exemptions contributed P18.4 billion.
Chua said exemptions from paying the value-added tax on imports led to P159.82 billion in foregone revenue, while local VAT contributed P36.96 billion, although part of the tax would eventually be refunded because these were imposed on exporters.
Chua these incentives totaling P301.22 billion did not yet include exemptions from the payment of local business taxes and the estimates on tax leakages. He said in terms of income tax incentives, the government effectively gave away P61.33 billion to companies in 2011 and P88.17 billion in 2014.
Customs duty exemptions dropped from P82.97 billion in 2011 to P38.04 billion in 2014 owing to the various free trade agreements signed by the Philippines with other countries.