Panel approves incentives, tax exemptions for industry cluster-based programs

THE House Committee on Ways and Mean has approved the tax provision of a proposal to institutionalize industry cluster-based programs and projects through inter-cooperation of local government units and people’s participation.

Approved by the panel chaired by Rep. Isidro Ungab (3rd District, Davao City) is Section 13 on incentives to industry-cluster entrepreneurs of the unnumbered substitute bill to House Bill 4962 or the proposed “People’s Participation in Industry Cluster-based Programs and Projects Act.”

The bill principally authored by Rep. Cinchona Cruz-Gonzales (Party-list, CIBAC) defines industry cluster-based programs and projects as those programs and projects that promote convergence, job generation and investment through production of competitive products and services to achieve inclusive growth.

In a hearing, the Committee on Ways and Means approved Section 13 of the substitute bill which provides for incentives to industry cluster entrepreneurs. These entrepreneurs shall be granted preferential access to low-interest credit in government financing institutions and priority in government-initiated product marketing and promotion programs, the bill provides.

It further provides that a donation or bequest made under the industry cluster-program, project or activity shall be exempt from donor’s tax provided the donations are made: To or for the use of an LGU or any political subdivision for the government; and In favor of accredited NGO provided, however that not more than 30 percent of said donation shall be used by such NGO for administration purposes. Furthermore, the NGO is incorporated as a non-stock entity, paying no dividends, governed by trustees who receive no compensation, and devoting all of its income whether gifts, donations, subsidies or other forms of philanthropy for the accomplishment and promotion of the purposes enumerated in its Articles of Incorporation.

The bill provides such donation or bequest shall be considered as allowable deduction from the gross income in the computation of the income tax of the donor, in accordance with the provisions of the National Internal Revenue Code of 1997, as amended.

Lastly, Section13 provides that industry clusters shall be given incentives if they can innovate and share these with other clusters. Incentives shall be limited to training programs for the cluster entrepreneurs, special credit program and shared service facilities such as machinery or equipment.

The Committee on People’s Participation chaired by Rep. Benjamin Asilo (First District, Manila) referred the substitute bill to the Committee on Ways and Means for approval specifically of the tax provision or Section 13.

The bill provides it is the declared policy of the State to recognize the role of the people in community development. Toward this end, the State shall encourage cooperation among LGUs and their instrumentalities to institutionalize a program to strengthen the people’s participation in local development and enhance productivity and guarantee income opportunities for all.

Pursuant to this policy, the bill provides the government shall institutionalize the industry cluster approach as a means of pursuing the local economic development of the member LGUs of the inter-local cooperation (ILC). The bill refers to ILC as an alliance of LGUs that are geographically adjacent to each other within a province or two adjacent provinces whose purpose is to integrate local production forces like manpower, materials, money, machine, methods, create a concerted effort to push their development, and jointly provide programs, projects and services to constituencies.

The bill provides for: Meaningful participation of accredited civil society and business organizations in industry cluster-based programs; Accreditation of civil society and business organizations and private sector organizations by the Department of Trade and Industry of the industry cluster-based programs; Development Process of the ILC; Creation of an Industry Cluster Management Board for every cluster that shall  monitor, plan, coordinate and supervise implementation of the industry cluster-based programs; Incentives to industry cluster entrepreneurs; Institutional linkages of concerned government agencies with civil society and business organizations; and Monitoring and evaluation of industry cluster-based programs by the DTI.

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