The Philippine government has announced tax sops to attract cryptocurrency firms to operate from its country. However, the tax sops could be available only in Cagayan’s Special Economic Zone. In any case, it is a clear signal that the country is keen to promote the emerging virtual currency sector. The advantage the country has its cheap labor that will attract firms. Significantly, the move comes at a time when most of the countries are tightening their regulations on the sector.
Philippine government’s most recent statement disclosed that companies could operate under liberal regulations though within the economic zones. The enterprises could also be entitled to avail number of tax incentives offered by the establishment. Its objective is to encourage the domestic job market. Cagayan Economic Zone Authority’s (CEZA) head, Raul Lambino, indicated that about ten platforms are in the pipeline for cryptocurrency exchanges. It is only a question of time before it starts issuing a license to them, btcmanager reported. It was in February last that the CEZA has started drafting rules for digital currency companies, as well as, blockchain.
Inside the economic zones, companies could be engaged in any aspect of virtual currency business. This included commercial mining, hosting of initial coin offerings (ICOs) and offering of blockchain technology-related financial services. However, a company that has a cryptocurrency exchange would be forced to trade cryptocurrency through an offshore location. This is to ensure that these firms fall in line with the fresh regulation.
Before the latest regulations were announced, startups and tech firms that were keen to have their presence in economic zones have to apply for a license. They were also asked to indicate plans for a minimum of $1 million investments within a period of two years. Aside from that, they would have to pay licensing fees of $100,000 per annum. The economic zone is run by a government-controlled corporation and was established based on an act of 1995.
Philippines Security and Exchange Commission disclosed on January 29 last that it was creating fresh laws and regulations for trading in cryptocurrency. The regulator indicated that there was a need for clarity on digital currency trading apart from protecting investor interests. SEC’s commissioner, Emilio Aquino, indicated that a final draft of these laws would become available before the current year ends. He said, “We need to act because initial coin offerings (ICOs) are sprouting especially in 2017. We want to come up with our own set of regulations.”
Currently, the Philippines Central Bank is engaged in reviewing applications submitted by businesses that are keen to establish cryptocurrency exchanges. If they opt to register themselves in the SEZ, then they could gain from tax breaks offered by the establishment.
Significantly, the country was among the earliest ones to regulate bitcoin. Therefore, Philippines believe that its latest steps to offer ten digital companies the legal status would be a stepping stone for crypto’s ecosystem. Last year, Japan laid some important regulations for virtual currency exchanges. However, there are other Asian countries that have adopted a different approach to the issue.