FIRB adopts framework for requests for investment benefits
MANILA – The Fiscal Incentives Review Board (FIRB) adopted the framework for granting incentives to qualified industries under the government’s Strategic Priority Investment Plan (SIPP) which aims to attract high-value investments added and labor-intensive that will create more jobs and strengthen the Philippines’ competitiveness in the global market.
As provided for in the new Law on Business Recovery and Tax Incentives for Businesses (CREATE) which streamlined the country’s corporate tax incentives for investors, this framework gives shape to the SIPP.
The menu and duration of incentives that would be offered to companies or investors will depend on the level classification of the company requesting the investment benefits.
For example, level 3, which covers sectors considered “critical for structural transformation and the industrial revolution of the economy”, will benefit from the longest period of incentives.
This SIPP framework was written by the Department of Trade and Industry (DTI) -Board of Investments (BOI).
The three-level structure of incentives offered to priority investors is already contained in the CREATE law.
Following the adoption of the framework, the finance secretary and president of the FIRB, Carlos Dominguez III, urged the DTI to identify at least two leading companies in each of the industrial sectors and to determine what incentives should be offered to these potential investors for them. encourage to settle in The Philippines.
“Let’s already identify these companies. Let’s take a couple at level one, a couple at level two, and a couple at level three, and research them. Then offer to them and ask them, “What will it take for you to come here?” Dominguez said at the second FIRB meeting last week.
Dominguez said investment promotion agencies (APIs) can undertake these tasks.
DTI Secretary Ramon Lopez endorsed the proposal, which will now turn APIs into “marketing arms” rather than simply functioning as investment request processing agencies.
Also at its second meeting, the FIRB gave the green light to Dominguez’s recommendation to let the board approve tax incentives for all investments over PHP 1 billion per company until the end of the period. end of 2022.
After this period, approval of incentives for investments over PHP 1 billion but not more than PHP 3 billion per company will be delegated to the FIRB technical committee, which is chaired by Deputy Secretary Antonette Tionko of Fiscal Operations. (ROG) of the Ministry of Finance (DOF). ).
The FIRB also approved during the meeting a proposal from the Secretary of the Department of Budget and Management (DBM), Wendel Avisado, to set up an appeal process for investment projects disapproved by the technical committee. . Such actions may be appealed to the FIRB commission itself.
A recommendation by Tionko to provide the Board with a list of approved and disapproved investment projects was also given the green light.
DTI Undersecretary Rafaelita Aldaba discussed at the meeting the characteristics of SIPP under the CREATE law.
Under the SIPP, level 1 covers investments with high potential for job creation, value creation and essential support to sectors essential for industrial development, as well as emerging industries with potential comparative advantage, said Aldaba.
This category includes, among others, modern agriculture and food processing; agricultural production using modern technologies; design-oriented industries such as furniture, games and toys, jewelry and clothing; energy efficiency and environmentally friendly activities; health products and medical products; industrial parks; and ports, airports and seaports.
Aldaba said Tier 2 includes manufacturing of supplies, parts and components not produced domestically, to encourage import substitution and fill gaps in the domestic supply / value chain.
These activities, among others, are the production of iron, steel and non-ferrous metals, copper rods, plastics and synthetics in primary form, basic chemicals and pharmaceuticals.
The production of fiber optic cables, refined petroleum, semiconductor devices and other electrical components, as well as machinery and equipment are also classified in level 2.
Level 3 involves research and development (R&D) activities that yield significant results with high added value and higher productivity; breakthroughs in health and science; generation of new knowledge; commercialization of patents, industrial designs, copyrights and utility models; and highly technical manufacturing.
Examples of activities at this level include vaccine development and production; manufacturing of 3D printers, drones, robots, electric vehicles, plug-in hybrid electric vehicles and optical imaging devices; the creation of smart factories and smart cities, and predictive agriculture, Aldaba added.
Also covered by level 3, she said, the introduction of new products that incorporate new technologies; adoption of innovative processes using Industry 4.0 technologies such as artificial intelligence, machine learning and the Internet of Things.
During the meeting, the FIRB also approved the main features of the Online Tax Incentive Registration and Tracking System (FIRMS) for investors requesting incentives, with some modifications to ensure that the process would be fully compliant with the provisions. Ease of Doing Business. law (EODB).
FIRMS would be set up to allow potential investors to easily apply and follow the progress of their applications.
The FIRB also approved the proposals presented by the Deputy Secretary of the DOF and the Chief of the Secretariat of the FIRB, Juvy Danofrata, to authorize the technical committee to recommend to the council policies for the development and expansion of the supply chain. national in order to reduce dependence on imports, promote diversification and enhance the quality of products consumed locally and exported; and location-specific SIPPs during times of recovery from disasters and post-conflict situations.
Tionko, as the head of the technical committee, was authorized by the FIRB to obtain information from other government agencies regarding the granting of grants and tax incentives to companies. (RP)