TRAIN 2 offers super incentirres

of availment. So, who saYs there is keeping in tnincl the overall value
no forever? theybring to national developnr ent.

tr
A
Manufacturing enterPrises re-
investing their surplus or undis-
As in all ref ,x uts, there wcltrici be
thosecaught in transition. HB 176

v Benedicta Du-Baladad tributed earnings in SIPP activi-

ties can deduct from their gross
provides fortransitittu rttles to those
affected by the phasing out of the

tr Tfi*' income 50 percent of the amount "forever incentives."

L
oH ONTRARY to the expectatitths of many, TRAIN 2 or the
reinvested within a period of five
years from reinvestment. If the
enterprise reinvests everY five
For those under ITH, they can
continue with ITH but only for the
remaining peri<-rd not exceeding

It Trabaho bill under House Bill 176 that was approved last years and such. reinvestment is five years. Those under the 5 Per-

e(o o\
r-{
N
o
N
'Wednesday
by the House Committee on'Ways and Means
actually offers not lult basic incentiveso but super incentives.
big enough to offset yearlY tax-
able income for the next five Years
from the time of reinvestment, the
ce4t gross income earned shall be
allowed to continue based on thc
following schedule: two years, if (; I H

o {.1
tt
t But the catch is, the business or This cate gory of enterPrises or
enterprise can effectivelY enjoY
ITH in perpetuity for as long as
was availed for more than 10 Years,
three years if five to 10 Years, and

0
hD
activities are not only given ex- it reinvests. five years if below five years.
-
d
activity must be in the targeted pri-
Given all these, TRAIN 2 is not
ority list. Fair enough, isn't it? For tendedperiod of incentives, but are The same could be said for in-
A *6t why should the government exempt granted what I call "super incen- frastructure costs spent for coun- bad after at all.

olH
'60 in taxes tives" that are attractive enough to trywide development. These are But the irnplerncntation could be
o) one from payingits share
allowed as deduction from gross a big concern. TRAIN 2 incorporated

o -- without getting a bigger benefit in change business decisions.

-l
F Among these are the following:
return? Phrased differently, why
t should we allow free riders?
The Department of Finance has
- been saying all along that they want
(1) agribusiness projects or activi-
ties located outside Metro Manila
and other urbap areas identified in
income to the extent of 100 Percent the whole incentives law in the Tax
of the infrastructure costs i ncurred.
To top it all, HB 176 hal empow-
Code, thereby placing it within the
exclusive playground of the BIR. I
have doubts if there would be an
ered the President to grant a longer

m- ..ilr
an incentive system that is targeted,
performance-based, transparent
and time-bound. By a strike of luck
or perhaps hard lobbying, they got
what they wanted in HB 176, the
Trabaho bill. Or is it now called
the Citira bill (Corporate Income
Tax and Incentives Rationaliza-
tion ActX
Under HB 176, the income tax-
based incentive is capped at five
the Strategic fpvestment Priority
Plan; (2) those undertaking proj-
ects or activities in less developed
areas identified in SIPP or recover-
ing from armed conflict or major
disaster; (3) those relocating their
business outside Metro Manila
and selected urbdn areas adjacent
to Metro Manila to other areas of
the country.
All of these shall be entitled to
incentive period or even grant in-
centives to those not covered in the
SIPP or granted in the Tax Code if
the interest of national economic
development so requires. The power
given to the Presidentis wide, both
as to coverage and Period of avail-
ment. The onlylimitation is that, it
shall be given to desirable projects
where the benefits to be derived
from such projects is clear and con-
honest-to-goodness imPlementa -
tion of the incentives sYstem in
those hands whose main task is tcr
collect taxes.
Something to worry about, ancl
should do something abor.rt. T'here
shouldbe proper safegttarcls to pro -
tect this good l;rw, goocl incentive
system, from belconritrg a dead law.
fhe author isthe Founding Partner, chairman

years, consisting of three years additional two-year incentives, or vincing, and far outweigh the cost of and CE7 of Du-Boladad and Associates Low 0ffices
member-firm of WTS GlobaL
income-tax holiday (ITH) and a total of seven years. Of the ad- incentives given. (BDB Low), o

additional two years under a 50 ditional two years, one year can be While TRAIN 2 had cut down The orticle isfor generol information only and

percent reduced income tax (RIT). under ITH. on certain incentives especially the is not intended, nor should be construed as o substi-

The rule is clear-there will be Not only that. There are incen- "forever incentives," it also gave tute for tox, legol or financial advice on ony specific
t,

no extension beyond five years. tives that are tied to certain Pre- more generous incentives to tar- mntter. Applkobitity of this lrtictet0 ony actualor
geted recipients. tt did not totally portkulotr tax or legal issue should be supporterl
Time-bound. ferred activities or projects and
$
]

abolish incentives, which was the therefore by o professional study or advice. lfyou
But certain enterprises, activities for as long as you continue to en-
-A+o fear of many. It only redirected or have any comments or questions concerning the
'uAG€ or projectsthat are believed to fo.ster gage in that activity-or project, you
refocused its lenses to capture the orticle, you moy e-mail the outhor at dick.du-bala-
i

can enjoy these "super incentives,"

'
national development are exempted
from the five-year limitation rule. without limitation as to the period proper subjects of its generositY, dad@bdblaw.com.ph or coll 403-2001 local 30A,