DOF justifies expansion of FIRB mandate

MANILA, Philippines — The Department of Finance (DOF) defended anew yesterday its proposal to expand the mandate of the Fiscal Incentives Review Board (FIRB), saying this would improve governance on the grant of tax perks to private corporations.

In a statement, Finance Undersecretary Karl Kendrick Chua said empowering the FIRB would ensure that incentives granted to the private sector would translate to more jobs and higher investments, as well as benefit small businesses.

Chua issued the statement after the Philippine Economic Zone Authority (PEZA) opposed the proposal to allow the FIRB to approve private incentives.

PEZA said investment promotion agencies (IPA), such as itself, should be allowed to grant tax incentives to registered enterprises instead of giving this power to the FIRB.

“The FIRB is designed to promote the Filipino people’s interests by ensuring two things: first, that incentives granted will lead to the creation of more jobs for Filipinos; and second, that opportunities to apply for incentives are made available to micro, small and medium enterprises (MSMEs), many of which are currently unaware that they can apply for such tax incentives,” Chua said.

The FIRB is an existing interagency committee, chaired by the DOF, which grants tax subsidies to government-owned or -controlled corporations (GOCCs).

Under the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA), the FIRB’s coverage will be expanded to include approval of tax incentives to private businesses.

FIRB will also serve as the oversight body for the country’s 13 investment promotion agencies (IPAs), which are currently autonomous, with their own respective menu of tax incentives.

“The system of having different packages of incentives and processes, as well as autonomous approval points, have created confusion among potential investors and reduced accountability in the grant of tax incentives,” Chua said.

“To promote fairness in the tax system, CITIRA not only seeks to harmonize the package of tax incentives, but to also put more order, clarity, and accountability in the process of granting incentives through the FIRB,” he added.

Chua said other countries in the region also have organizations that oversee the grant of incentives, like the National Committee on Investment in Malaysia.

“As a good governance institution, the FIRB will promote three principles: transparency, accountability and participation. Following international best practices, the FIRB will ensure that the process in granting incentives is transparent and that Congress and the Filipino people may access information as to who receives incentives and how much the economy benefits from this,” he said.