Business leaders in Cebu questioned the Philippine Economic Zones Authority’s (PEZA) amendment of their incentives policy, saying it is “two steps backward” for enterprises doing business in the province.
Prudencio Gesta, Cebu Chamber of Commerce and Industry (CCCI) president, said removing the five percent tax on rental income might discourage developers from setting up or expanding their operations here.
NO INCENTIVE
PEZA withheld the incentive to businesses in economic zones in Cebu City and Metro Manila last September. Instead, it will grant the five percent rental tax income to those developers locating outside of these areas.
Under this setup, IT facilities in Eastwood City Cyberpark in Quezon City, Northgate Cyber Zone in Muntinlupa City, Robinsons Cyberpark in Mandaluyong City, E-Square Information Technology Park in Taguig City and Cebu IT Park won’t enjoy the special five percent tax discount on rental income.
HURT INVESTORS
Gesta added that Cebu City has not reached its full potential yet for office spaces and taking out the incentive might discourage developers which could affect the general growth in the area.
“While we support PEZA’s intention to develop more office properties in areas outside of Metro Manila and Cebu City, taking out the 5 percent tax incentives already enjoyed by developers in these areas is two steps backward!” he said.
Developers of new special economic zones for manufacturing, agro-industries and tourism that covers an area of less than 25 hectares will no longer avail of the incentives.
POSITION PAPER
Gesta said Cebu City hadn’t reached its full potential yet for office spaces and removing the incentive wouldn’t motivate businesses experiencing a development boom to expand to other areas.
The CCCI president said he would call a meeting with other board members of the chamber to review the PEZA resolution.
The chamber plan to submit a position paper to the agency.
“For CCCI, we will strongly manifest to retain existing tax incentives as these areas still has a huge potential for more development and growth,” said Gesta.
Cebu Business Club president Gordon Alan Joseph agreed.
policy flip-flop
“I think in principle it is good idea but unfortunately indicative of another policy flip flop. Investors need consistency and predictability,” Joseph said about the removal of the incentive.
Joseph said developers should continue to enjoy these incentives even if they completed their projects to encourage them to locate elsewhere.
“The current incentives can be maintained and just increased in other locations,” he said.
Philip Tan, Mandaue Chamber of Commerce and Industry president, said consistent incentives policies to businesses would make the country more attractive to foreign investors.
“Investors don’t only consider taxes but more importantly the ease of doing business. Perhaps policies that are consistent should be applied,” said Tan.
more incentives
Joe Soberano, former president of the Chamber of Real Estate and Builders Association (CREBA), said the PEZA decision won’t be effective in encouraging increased investments outside of established growth areas.
Soberano, who has a mixed-use building inside Cebu IT Park, said he wished the government could design better and more attractive incentives if they want to create significant growth in areas outside of Manila and Cebu.