The P81-billion Makati subway project would enjoy tax-free perks during the first four years of its rail operations, the interagency Fiscal Incentives Review Board (FIRB) said on Monday.
The FIRB, cochaired by Finance Secretary Carlos Dominguez III, approved the Makati subway’s tax holiday and other incentives last month. The FIRB said the “majority” of its five-member board approved the application of proponent Philippine Infradev Holdings Inc.
The FIRB is also composed of cochair Trade Secretary Ramon Lopez, Executive Secretary Salvador Medialdea, Budget Officer-in-Charge Tina Rose Marie Canda and Socioeconomic Planning Secretary Karl Kendrick Chua.
On top of the four-year income tax holiday, the Makati subway project will also benefit from five years of enhanced deductions and duty-exemption on importation for project construction, operation, management and maintenance, the FIRB said.
“This package of incentives is confined only to the activity applied for, which is the rail operation. The incentives approved will not apply to the other business activities that would be generated from the subway operations, such as the lease of retail areas and advertising, which should be subject to the regular corporate income tax rate and other applicable taxes,” Dominguez was quoted by the FIRB as saying.
The FIRB said it approved the tax perks as it took into consideration “the projected increase in economic productivity of P24.4 billion per year once the subway system becomes operational in January 2026.”
“This will be monitored, along with the other projected benefits, in accordance with the principle of granting incentives based on merit or performance embodied in the Corporate Recovery and Tax Incentives for Enterprises Law,” the FIRB said.
Lopez was quoted as saying that the project’s “productivity boost and other benefits offset the economic costs that will be incurred by the government, such as foregone revenues.”
Dominguez also enjoined the Makati local government and the Department of Transportation to connect the Makati subway with the larger Metro Manila subway system, which will run between Quezon City and the Ninoy Aquino International Airport in Pasay City.