THE Fiscal Incentives Review Board (FIRB) granted tax incentives for the rail operations of an P81-billion subway project in Makati City that is expected to begin commercial operations in January 2026.
The set of tax incentives approved last month by the majority of the five-member FIRB chaired by Finance Secretary Carlos G. Dominguez III includes four years of income tax holiday, followed by five years of enhanced deductions and duty exemption on importation for the construction, operation, management of the rail project.
However, Dominguez said the approved package of incentives is limited to the activity applied for, particularly rail operations. This means the approved incentives cannot be applied to 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.
Trade Secretary and FIRB co-chair Ramon Lopez said the productivity boost and other benefits offset the economic costs that the government will incur, such as the foregone revenues.
The FIRB considered the projected increase in economic activity of P24.4 billion annually once the subway system becomes operational by 2026. No figures were disclosed in terms of foregone revenues.
Nonetheless, the FIRB said the projected benefits from the project would be monitored, in line with the principle of granting incentives based on merit or performance embodied in the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law.
During the deliberations for the project, Dominguez said the Makati City government and the Department of Transportation should work out the details on how to connect the proposed Makati subway to the national government’s Metro Manila Subway project.
Funded by loans from Japan International Cooperation Agency, the P375- billion Metro Manila subway is expected to cut travel time between Quezon City and Ninoy Aquino International Airport from 1 hour and 30 minutes to just 35 minutes. As of August this year, the Metro Manila subway project is already 26 percent complete. It is expected to be fully operational by 2027 and partially operational by next year.
In August this year, the FIRB also granted tax incentives to P29.4 billion worth of projects outside Metro Manila, which include a mass housing development and two cement manufacturing plants.