The government expects to save as much as P40 billion in revenues annually, once the fiscal incentives are adjusted under the proposed tax reform program.
Trade Secretary Ramon Lopez said the Trade and Finance Departments were planning to file the harmonized set of incentives by yearend.
“I think there will be savings of about P30 [billion] to P40 billion from the adjustment of fiscal incentives if the government will put a cap on certain perks,” he said.
Both departments have yet to discuss the status of income tax holiday.
The Trade Department said that in all the years that the ITH was offered as a part of the incentive package to investors, it had not truly benefited the companies as it normally took about three to four years before a company posted a profit.
After the six-year period or a maximum of 8 years of ITH, companies are then required to pay the regular corporate income tax rate of 32 percent. There were proposals for the gradual phase-out of income tax holiday within a span of three years.