MANILA, Philippines – The Arroyo administration is seriously considering the granting of incentives, particularly tax breaks, to companies that decide not to retrench their workers even in the face of the deepening global and financial crunch, the chairman of the Board of Investments (BOI) disclosed.
Undersecretary Elmer Hernandez of the Department of Trade and Industry, who is also the BOI chief, explained the incentives are to be granted in a determined attempt to keep the country’s employment levels at a minimum despite the ongoing crisis.
Earlier, the Department of Labor and Employment warned that at least 10,000 Filipino workers have been retrenched since the country started feeling the adverse impact of the crisis in late 2008.
Hernandez said that for the first time, the government will be granting perks or incentives to companies that maintain the current number of employees while, at the same time, removing such perks to telecommunications companies.
“We have to focus on job saving now,” Hernandez pointed out. “Manufacturing firms that normally would not qualify under the Investments Priorities Plan (IPP) because they have no new investments could apply for perks.”
He said the proposed IPP for 2009 has yet to be finalized because the BOI will still be holding public hearings, particularly for inclusion of companies that will be granted the incentives.
But Hernandez said the proposed 2009 IPP would be similar to that of 2008′s, except for the projects for job-saving and job creation.
There are four criteria that will qualify under the job saving or job creation projects, Hernandez said.
The first, he said, is to retain investments and maintain the current number of employees. Second, retain investments and increase the current number of employees. Third, increase investments and maintain current number of employees. And fourth, increase investments and increase the current number of employees.
According to Hernandez, this is an option to existing companies on how they can avoid laying off workers as he stressed: “These are difficult times and extraordinary measures are needed.”
Under the law, Hernandez said that firms that will not have additional investments do not qualify for income tax holidays.
However, because these are hard and difficult times, he said the government will give additional deductions for labor expense as incentives to companies.
In turn, this will reduce their taxable revenues, thus reducing their tax payments to the government, Hernandez said.
However, Hernandez cautioned that not all companies that will not retrench their workers wlll qualify for the incentives.
For instance, Hernandez said a particular company must first prove that without the incentives provided by the government, it will be forced to retrench a certain number of its employees but because of the tax break, it will be keeping the entire work force.
At the same time, Hernandez underscored the government’s full support to the micro, small and medium enterprises because new projects will be provided tax perks in the proposed 2009 IPP.
However, he said telecommunications companies have lost such incentives for their investments in broadband services despite representations even from some government agencies.
Hernandez explained companies do not need incentives for their broadbands because these are “very profitable.”
But if these same companies are willing to build infrastructures, they can then apply for tax breaks under the infrastructure heading of the proposed 2009 IPP, Hernandez said.
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