Tax perks await firms using inclusive business models–BOI

October 10, 2016 at 17:30

Tax perks await firms using inclusive business models–BOI

by Catherine Pillas | 

Large companies that will adopt inclusive business (IB) models will get income-tax holidays (ITH) and possible additional income-tax deductions under the 2017-2019 Investments Priorities Plan (IPP), the Board of Investments (BOI) said on Friday.

Trade Undersecretary and BOI Managing Head Ceferino S. Rodolfo said they have already identified agriprocessing and tourism as sectors that will be considered for inclusive-business incentives.

The investment-promotion agency is aiming to extend the coveted ITH of four to six years to these sectors, Rodolfo said during the launch of the “Business+ Philippines Survey.”

IB is already included in the 2014-2016 IPP ,but only as a general strategy, and was not eligible for fiscal perks. The IB model refers to core business models of companies that provide solutions to the problems of poor and low-income communities.

 A salient point of the IB model is that the low-income communities act not just as a source of component to the big firms, but also as a consumer base, making them fully integrated in the value chain of the company.

This was a key topic during the country’s hosting of Asia-Pacific Economic Cooperation Summit last year.

Large companies are enjoined to adopt IB models to integrate smaller companies in their supply chain.

Aside from the ITH, additional income tax deductions could be given to large companies if they do local sourcing from micro, small and medium enterprises (MSMEs).

The BOI is looking at crafting a framework on how firms can avail of this perk, based on the amount of input they get from micro and small businesses.

“We’d definitely want to incentivize greater sourcing from MSMEs. There could be some threshold levels to increase the sourcing on the input from MSMEs from a certain percentage to this percentage,” Rodolfo suggested.

To identify the MSMEs that can be matched with their large counterparts, the DTI official said they will come up with an accreditation system.

The DTI’s projects for MSMes, such as the Shared Services Facilities (SSFs) and Negosyo Centers, can also be tapped to identify the  potential suppliers.

According to Rodolfo, pushing for IB model adoption is key to achieving inclusive growth, which  has proven to be unattainable thus far due to slow agricultural growth, uneven regional economic development, and the disparity in labor productivity between large and small companies. These have been identified by the DTI as the three “structural imbalances” that the agency wants to address through industrial policies.

“From any indicator, the Philippines has been growing, but the problem is not of growth, but with respect to inclusivity of growth, because, even if we’ve experienced a spectacular performance of the economy, the fact is,  25 percent of Filipinos are still living under the poverty line,” Rodolfo added.

In this regard, the DTI and the United Nations Development Program (UNDP) signed a memorandum of understanding with business groups on Friday to conduct a baseline survey on the level of “inclusivity” of companies.

The baseline survey on IB was developed by UNDP Istanbul International Center for Private Sector in Development in an aim to quantitatively analyze the “inclusiveness” of private sector’s business operations and to understand the level of companies’ awareness in IB models.

The partner business groups are the Philippine Business for Social Progress Inc., the Makati Business Club, the Management Association of the Philippines, the Philippine Chamber of Commerce and Industries, and the International Chamber of Commerce Philippines.


  All rights to the stock images are owned by Getty Images and its image partners and are protected by United States copyright laws, international treaty provisions and other applicable laws.
Getty Images and its image partners retain all rights and are available for purchase by visiting gettyimages website.

Arangkada Philippines: A Business Perspective — Move Twice As Fast | Joint Foreign Chambers of the Philippines