Zone builders seek upfront incentives

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    Economic zone developers are seeking upfront incentives such as tax breaks to make the selling prices of land to locators competitive.

    Richard Albert Osmond, president of Science Park of the Philippines Inc. said developers pay all sorts of taxes as soon as they purchase land and during construction phase and only get to enjoy value-added tax exemption (VAT) and income tax holiday once the land is proclaimed an ecozone.

    “(The tax breaks) should be given ahead so we can pass on the savings to locators, our buyers. The incentives the developers are asking for are not for them to gain but to make the selling price competitive vis-a-vis other countries,” Osmond said in a chance interview last week

    Compared to manufacturers which do business on per order basis, developers have to build first to get the locators.

    “We have a different business model. Say we buy a 200-hectare lot. If we are not able to sell all of that, we will be left holding (an empty) bag. We want better incentives to be competitive as a country because any savings we get we pass on to locators by having competitive prices. Right now we are not cheap. We hope we can get that cost advantage,” Osmond said.

    Developers seek a longer transition of 10 years to shift to corporate income tax from the current 5 percent tax rate on gross income earned. The government wants the transition to be at five years

    “We will fight it out,” said Osmond, adding that members of the Philippine Industrial Estates Association are set to meet officials of the Philippine Economic Zone Authority on Tuesday.

    Osmond also laments the long process of getting permits for land conversion, a key requirement or presidential proclamation of an ecozone, which could take three to four years.

    “We pay full tax when we buy the land, when we construct. We hope the tax break is applied ahead to bring down our cost,” Osmond added.