Government raises IPAs project approval threshold to P15 billion

MANILA, Philippines — The government has increased the investment capital threshold assigned to investment promotion agencies (IPAs) to P15 billion in a bid to promote the ease of doing business.

The Cabinet-level Fiscal Incentives Review Board (FIRB) issued a resolution hiking the investment capital threshold for projects delegated to IPAs to P15 billion and below.

Under the previous setup, IPAs approve the incentives of projects below P1 billion, while the FIRB selects the tax perks for business activities above P1 billion as mandated under Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law.

“The board recognizes the need to increase the investment capital threshold to promote the ease of doing business in response to the concerns raised by some IPAs,” the FIRB said.

“This is also to align with policy proposals in Congress, which seek to give more authority to the IPAs in granting incentives,” it added.

The increase in the threshold may be enforced by the FIRB without the need to amend the Tax Code.

The FIRB maintained that the revised threshold is also aligned with the Public-Private Partnership Code of the Philippines, which states that PPP projects with a cost of P15 billion or higher shall be approved by the inter-agency National Economic and Development Authority Board upon favorable recommendation of the Investment Coordination Committee.

“The increase will also give greater responsibility and accountability to the IPAs as more projects will be under their jurisdiction,” FIRB said.

As such, all applications for tax incentives with investment capital of more than P15 billion will remain with the FIRB.

Further, all pending applications for tax incentives already endorsed by IPAs to FIRB with investment capital of P15 billion will be returned to the concerned IPA for their appropriate action.

The IPAs will now include approved projects with investment capital of P15 billion and below in their monthly report to the FRIB Secretariat.

Nonetheless, the FIRB together with IPAs retain the power to monitor the compliance of all registered business entities of their performance commitments as conditions for the grant of tax incentives, regardless of the amount of investment capital.

Data showed total investment capital from approved priority activities with incentives under the CREATE Law has reached P1.1 trillion as of end-2023.

The bulk or 77 percent of the investment capital worth P843.9  billion was approved by the FIRB.

This is equivalent to 51 big-ticket tax incentive projects in the sectors of information and communication technology, transportation and storage, manufacturing, energy, economic zone operation, mass housing, tourism, human health activities and IT-business process management.

The remaining 23 percent or P207 billion came from IPAs covering 881 projects.

CREATE cut the corporate income tax rates to make them comparable to the ASEAN region.

The law also adopted a simpler and more effective fiscal incentives system, ensuring that incentives are performance-based, time-bound, targeted and transparent.