Only projects that reach a certain investment threshold would need to secure the approval of a multi-agency headed by the Department of Finance (DOF) before they could start enjoying tax incentives, the Department of Trade and Industry (DTI) proposed.
DTI’s Board of Investments is still studying the appropriate threshold, but Trade and Industry Secretary Ramon Lopez said that this, offhand, could be pegged at $1 billion to $3 billion worth of investments.
What company and which project get tax incentives would depend on the decision of the proposed Fiscal Incentives Review Board (FIRB), which will be chaired by the secretary of finance as proposed under the second tax reform package.
Called the Corporate Income Tax and Incentives Reform Act (Citira), the bill is being discussed in the Senate after it was approved by the House of Representatives last month.
The Citira bill will lower the country’s corporate income tax, which is currently one of the highest in Southeast Asia. The bill, however, has drawn a lot of opposition since it would also rationalize tax incentives, which has cast a shadow of uncertainty on businesses that preferred the status quo.
Lopez told reporters last week that he had suggested to Finance Undersecretary Karl Chua that an investment threshold be set.
“Given the big number of projects, I was telling [Chua] that maybe the FIRB would not be able to handle all of them. Maybe we should leave the projects below the threshold to the IPAs (investment promotion agencies),” Lopez said.