Reconstituted incentives review body to hold first meet
The government’s chief economic manager has sought to convene the more powerful Fiscal Incentives Review Board (FIRB) to jump-start the implementation of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law.
In a statement on Wednesday, Finance Secretary Carlos Dominguez III said he wanted to “call a meeting right away” for the reconstituted FIRB,. Dominguez and Trade Secretary Ramon Lopez are cochairs of the FIRB. Under the CREATE Law, the FIRB’s function was expanded to review not only the incentives being enjoyed by state-run corporations as it had done in the past, but also those granted by investment promotion agencies (IPA).
Finance Assistant Secretary July Danofrata was quoted by the Department of Finance (DOF) as saying that the FIRB could meet as soon as CREATE takes effect on Monday, April 12.President Duterte signed CREATE into law on March 26. It was published on March 27 and will take effect 15 days later, except that April 11 fell on a Sunday.
Bureau of Internal Revenue (BIR) Deputy Commissioner Arnel Guballa on Wednesday said the four revenue regulations (RRs) which would serve as CREATE’s implementing guidelines would be issued in time with the law’s effectivity.
The draft RRs which the BIR crafted covered rules on incentives, income tax, value-added tax and withholding tax.
Implementing rules
The DOF and state-run think tank National Tax Research Center were also helping in the crafting of CREATE’s implementing rules and regulations.
Under CREATE, the FIRB will “determine the target performance metrics as conditions for enterprises to avail of tax incentives; and conduct regular monitoring and evaluation of investment and noninvestment tax incentives, such as cost-benefit analysis to determine their impact on the economy and whether agreed performance targets are met,” the DOF noted.
“It is also responsible for reviewing the compliance of other government agencies administering tax incentives, with respect to the administration and grant of such tax perks, and impose sanctions, such as, but not limited to, the withdrawal, suspension or cancellation of their power to grant tax incentives,” the DOF added.
The FIRB will decide on the fiscal perks appropriate for incoming qualified investments worth over P1 billion, while projects below this threshold will be covered by IPAs.
Dominguez said CREATE was “the largest fiscal stimulus program for the private sector in the country’s history, providing an estimated P1-trillion worth of tax relief to enterprises over the next 10 years.”
CREATE Law retroactively reduced the income tax rate slapped on firms to 25 percent effective July 2020, from 30 percent previously. It also slashed to 20 percent the levy on micro, small and medium enterprises.
“The law is expected to provide tax savings to businesses worth P251 billion in 2021 and 2022,” according to Dominguez.
