With outsourcing firms expressing growing concern about losing tax incentives under the government’s ambitious tax reform, the Philippine Economic Zone Authority (PEZA) is reassuring investors that the new tax law will only apply to new investment. Outsourcing companies and other firms located in the country’s economic zones enjoy tax incentives, which are considered one of the major draws to invest in the Philippines.
The Philippines finance department, however, plans to take away the tax breaks given to investors as the government seeks ways to finance its ambitious massive infrastructure program. In a recent Bloomberg interview, PEZA Director General Charito Plaza has expressed confidence that the tax changes will only apply to new investments: the government will not renege on existing contracts. Still, some investors are putting their business plans on hold, according to the president of the European Chamber of Commerce in the Philippine, Guenter Taus. The chamber’s 800 members are mostly in outsourcing and manufacturing.