MANILA, Philippines — The Department of Trade and Industry (DTI) is proposing to set a threshold on the amount of investments for projects that would have to go through the Fiscal Incentives Review Board (FIRB) to secure tax perks under the proposed measure to rationalize fiscal incentives.
The agency is also pushing to have those falling below the cap be evaluated by investment promotion agencies (IPA) instead, to enable government to act on all projects for registration.
Trade Secretary Ramon Lopez told reporters the agency is proposing to put in a place a threshold for the investment value of projects that would go through the FIRB for approval.
While the threshold has yet to be finalized, he said the agency is looking at $1 billion to $3 billion.
“With the volume of projects, I was telling (Finance) Undersecretary Karl (Chua), the FIRB may not be able to handle it. Let us leave to the IPAs those below this threshold. Below this threshold value, IPA to approve and then, FIRB for oversight. It (FIRB) can reevaluate or veto,” Lopez said.
For those projects that meet or are above the threshold, he said the IPA could give recommendations, but the approval would have to come from the FIRB.
Since there would be a Strategic Investment Priority Plan to be used as a guide on what activities are qualified for incentives, the DTI chief said the IPAs would be able to determine if the projects up for registration are eligible.
Under House Bill 4157, or the Corporate Income Tax and Incentives Rationalization Act (CITIRA), approved on third and final reading at the House of Representatives, the aim is to lower the corporate income tax rate which is considered highest in the region at 30 percent gradually to 20 percent by 2029, and rationalize fiscal incentives.
CITIRA provides that the FIRB composed of the finance secretary as chair and the heads of DTI, National Economic and Development Authority, and Department of Budget and Management, as well as the Executive Secretary as members, would have the power to grant and cancel incentives.
Apart from setting a threshold value, Lopez said the DTI continues to push for a longer transition period for rationalization of fiscal incentives.
He said he would be happy with a minimum of five years up to maximum of eight years as transition period for firms currently enjoying fiscal incentives.