THE Fiscal Incentives Review Board (FIRB) regretted the granting of tax incentives to Hanjin Heavy Industries and Construction Philippines, Inc. (HHIC-Philippines) in Subic worth hundreds of millions of pesos but was not able to put up a good performance.
In a report submitted by the FIRB Secretariat, during its period of operations, Hanjin Philippines was given a seven-year income tax holiday in 2015. The company enjoyed tax incentives worth P370 million that turned out to be a revenue loss for the government.
Aside from this, Hanjin was also given special corporate income tax rate of five percent of its gross income once the income tax holiday expired.
According to Department of Finance Assistant Secretary and FIRB Secretariat head Juvy Danofarata, Hanjin was also given tax and duty-free importations of raw materials and capital equipment.
Aside from the tax incentives, Hanjin Philippines also received power subsidies for its operations at the Subic Bay Freeport Zone amounting to P5.17 billion from 2009 up to 2018 even if it failed to keep employing its 20,000 employees, and invest in a planned new US$2-billion Mindanao Shipyard that should have generated 30,000 jobs but the project failed to materialize.
Danofarata emphasized that this is the reason why they would implement stricter evaluation and impact analysis before awarding tax incentives to any big business.
According to Danofarata, it is their job to ensure that the company that will receive tax privileges will be able to deliver a good performance and other promises such as employment and revenue from their business.
And because of the failure of Hanjin Philippines to deliver on this promise, many Filipinos lost their jobs and productivity in the area sank.
This brought losses amounting to huge amounts of money for the government due to the tax incentives it gave to Hanjin Philippines, which should have been given to a more robust and deserving company in the country.