THE Cabinet-level Fiscal Incentives Review Board (FIRB) has flagged the “low utilization rate” of its online registration and incentives application portal for investors or enterprises, as well as limited awareness on the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law among stakeholders.
As of February 14, only 45 accounts were created in its Fiscal Incentives Registration and Monitoring System (FIRMS), according to Finance Assistant Secretary and FIRB Secretariat Head Juvy Danofrata.
Danofrata pointed out that the use of the system is crucial for the FIRB Secretariat to monitor the tax application incentives of investment promotion agencies (IPAs) with investment amounts of below P1 billion.
To address the low utilization rate of FIRMS, Danofrata vowed that the FIRB will continue to encourage its use among the prospective and existing business enterprises in investment promotion agencies (IPAs).
Since the launch of FIRMS, instructional videos have also been uploaded on the FIRB website to guide both the IPAs and registered business enterprises in accessing and operating the features of the online system for incentives applications.
Under Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, the FIRB is tasked to review and approve fiscal incentives for projects with a total investment capital of more than P1 billion while those amounting to P1 billion and below are delegated to IPAs.
Little awareness of CREATE
Apart from the low utilization rate of FIRMS, Danofrata also reported that among the challenges faced by IPAs is limited awareness of CREATE provisions, particularly on the grant of fiscal incentives and the details of the Strategic Investment Priority Plan (SIPP).
Nonetheless, Danofrata said they have been holding town hall meetings and consultations with various IPAs and publishing e-newsletters about the CREATE Law’s provisions to fill this gap.
Finance Secretary Carlos G. Dominguez III, who heads the FIRB, ordered Danofrata to also hold a seminar with the heads of various IPAs to provide them the information they need on CREATE law. Dominguez chairs the reconstituted FIRB with Trade Secretary Ramon Lopez as co-chairman.
After the CREATE law took effect on April 12 last year, the FIRB approved in 2021 the grant of tax incentives to five big-ticket projects with a combined investment capital of P119.5 billion, of which four are located outside Metro Manila.
These five were among the nine applications submitted by the Board of Investments for Approval. Of the remaining four, one project was disapproved while three more are set to be decided by the Board as of end of 2021.
In March this year, the Department of Finance reported that the FIRB approved the tax incentives for Trans-Asia Shipping Lines Inc., a company owned by Davao-based businessman Dennis Uy’s Chelsea Logistics Corp.
“Our efforts to enhance the country’s fiscal incentives system lead to attracting large amounts of investments from foreign investors, which in turn, will generate more employment opportunities and promote economic stability,” Danofrata said.
The rail operations of the proposed Makati City Subway was the only project located in Metro Manila that was approved for tax incentives.
The rest are located in Iloilo, Davao, Batangas, and Pampanga, which involve cement manufacturing activities and the construction of mass housing units.
Meanwhile, Danofrata also reported to Dominguez that they also approved last year P4.28 billion in tax subsidies for seven government agencies and state-run corporations.
Among those that received the tax subsidies were the University of the Philippines-Baguio, Philippine Deposit Insurance Corp., Armed Forces of the Philippines Commissary and Exchange Service, Small Business Corp., Government Service Insurance Corp; Department of Interior and Local Government, and the Intercontinental Broadcasting Corp. (IBC-13).