Nordic traders open to ‘contract’ kind of tax incentives

By Bernie Cahiles-Magkilat

Nordic businessmen are amenable to the “contract” kind of investment-incentive deal the Duterte administration is trying to implement under the proposed TRABAHO Bill.

Nordic Chamber of Commerce of the Philippines (NordCham) President Bo Lundqvist said after Finance Undersecretary Karl Kendrick Chua made a presentation at the NordCham Economic Briefing as he defended the government’s second package of its comprehensive tax reform program.

“The contract or commitment or commitment on labor, training, I don’t think anyone will object to that,” said Lundqvist. He admitted that before Chua’s explanation, Nordic businessmen were a bit worried that incentives will be taken out, “but what we’ve heard is not as bad.

Somehow, we have been clarified and the logic behind is definitely positive.”
He cited Chua’s explanation that the proposed TRABAHO BIll is like a “contract” between the government and the investor.

For instance, the TRABAHO Bill seeks to grant 50 percent tax deduction for every job created and for training expenses the investor will be granted 100 percent tax deduction. This is in lieu of the removal of the 5 percent tax on gross income earned.

Chua explained that this contractual kind of incentive is meant to ensure that investments are performance-based, timebound, targetted and transparent.

Lundqvist, a Swedish businessman heading the IT services provider Retail Associates, also said that majority of its 120 members of Nordcham do not enjoy incentives from the government except for those that are registered with the Philippine Economic Zone Authority (PEZA).

He, however, admitted that most of those that will be affected are IT-BPO and outsourcing projects that are registered with PEZA, which under the current incentive system grants 5 percent tax on gross income earned in lieu of all national and local taxes on a perpetual basis.

Despite the scare caused by the proposed TRABAHO Bill on businessmen in general, Lundqvist said they have not seen any decline in interest in the Philippines among Nordic businessmen.

On the contrary, he said, the chamber is helping Nordic businesses understand the Philippine system and policies to attract more investments here. But like any change in administration, businessmen have to adjust for a while “but today we are still very positive.”

Nordic business interests in the country are in the areas of IT BPO, outsourcing, manufacturing, telco, defense, energy and retail. NordCham is composed of 120 companies doing business here or having business in five Nordic countries -- Sweden, Finland, Iceland, Norway and Denmark.