Peza: P40-B Japanese project on hold due to 'Trabaho' bill

A Japanese manufacturing firm is putting its P40-billion expansion plan on hold amidst uncertainty over tax perks, keeping the company in the country.

Charito Plaza, director general of the Philippine Economic Zone Authority (Peza), reported this on Monday, noting that Murata Philippines is planning to further expand its local operations.

The tax is for the second time, the tax refund is taxed and the taxable income is taxed. Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill, formerly known as Duterte administration.

"The P40 trillion is for Murata's expansion of buildings [its manufacturing] of new products, but they're [putting it on hold] until they know the fate of Train 2, "she said in a text message.

The Trabaho bill will lower corporate income taxes in the country, while rationalizing the incentives offered to investors. The latter is known to hit Peza and other economic zones nationwide.

According to its website, Japan-based Murata Manufacturing Co. Ltd. has its largest production site in Asia in the Philippines, which was established in 2012.

Called the Philippine Manufacturing Co. of Murata, Inc. (PMM), it began its operations in Batangas in 2013 with the production of multilayer ceramic capacitors.

Plaza said the company is currently occupying 24 hectares of land with two buildings to manufacture its products. She said the expansion would have also created 6,000 new jobs.

"They'll expand to two more [buildings] ounces incentives remain the same or an attractive year [set of] incentives [in Train 2] will be passed, "she added.

While Peza did not expend on the company's reservations, the Japanese electronics firm may become eligible for 5-percent gross income earned (GIE) tax in lieu of local and national taxes, a perk that will be removed under the Trabaho bill.

A company registered in a Peza area can enjoy the 5-percent GIE tax after its income tax holiday expires after a few years, a likely cost effective opportunity for the company.

The Trabaho bill was passed to the House of Representatives even though they would be affected by the proposed measure.

The polarizing bill is now in the Senate's hands, which has been re-elected next year despite the back office of the government. / kg a

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