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Investment promotion agencies can now approve fiscal incentives for projects up to P15 billion from only P1 billion previously
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The Fiscal Incentives Review Board approved a resolution increasing the investment capital threshold for projects handled by IPAs
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Beyond P15 billion, applications will be approved by FIRB, according to Resolution No. 003-24
Investment promotion agencies (IPAs) can now approve fiscal perks for projects up to P15 billion from P1 billion previously.
The move aligns with policy proposals in Congress that give IPAs greater authority to grant incentives, according to the Department of Finance (DOF). It is also in keeping with President Ferdinand Marcos, Jr.’s directive for government to roll out a “red carpet” for investors, the agency added.
Fiscal Incentives Review Board (FIRB) Resolution No. 003-24 adopted on February 2 increased the investment capital threshold for projects delegated to IPAs, pursuant to the National Internal Revenue Code (NIRC), as amended, to P15 billion.
Under the previous setup, IPAs were responsible for approving incentives for projects with investment capital below P1 billion, and the FIRB for projects exceeding that amount, as mandated by Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law.
“I commend the FIRB for its swift action in improving the Philippines’ global competitiveness. IPAs play a vital role in attracting more productivity-enhancing investments to the country, and we will continue to support them by acting fast on measures that will further promote ease of doing business and cultivate an investment-friendly climate,” Finance Secretary and FIRB chairperson Ralph Recto said in a recent statement.
The move is also seen to boost the IPAs’ responsibility and accountability in managing the country’s incentive system and ensure steadfast compliance among registered business enterprises regardless of the amount of investment capital, DOF said.
In addition, the revised threshold is aligned with the Public-Private Partnership (PPP) Code of the Philippines, which states that PPP projects amounting to P15 billion or higher should be approved by the National Economic and Development Authority Board.
As such, applications for tax incentives involving investment capital exceeding P15 billion will continue to fall under the purview of the FIRB.
All pending applications for tax incentives involving investment capital of P15 billion and lower and already endorsed by IPAs to the FIRB at the time of the approval of Resolution No. 003-24 will be returned to the respective IPA for necessary action.
The IPAs will now incorporate approved projects with investment capital of P15 billion and below in their monthly reports to the FIRB Secretariat.
The FIRB, in collaboration with IPAs, retains the authority to oversee compliance of all registered business entities with their performance commitments, irrespective of the investment capital amount.
Created under the CREATE Law, the Cabinet-level FIRB is mandated to oversee the grant and administration of incentives of IPAs to ensure that projects or activities achieve performance metrics and that the grant of fiscal support to RBEs leads to higher economic returns.
As of December 31, 2023, the estimated total investment capital from the 1,011 CREATE-incentivized projects has reached a record P1.1 trillion, generating a committed employment count of 112,464 jobs varying across priority industries under the Strategic Investment Priority Plan.
