The Department of Finance (DOF) wants the newly reconstituted Fiscal Incentives Review Board (FIRB) to meet at the earliest possible time to discuss the body’s expanded functions under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.
In a statement, Finance Secretary Carlos G. Dominguez III said on Wednesday (April 7), that the FIRB should immediately meet once CREATE, or Republic Act (RA) No. 11534, takes effect this month.
The FIRB is mandated to serve as the oversight body for the government’s 13 existing investment promotion agencies. It will also conduct regular monitoring and evaluation to assess businesses’ performance receiving incentives.
CREATE was signed into law by President Duterte last March 26, and published in a national newspaper on March 27, which makes it effective on April 11, or 15 days after publication in the Official Gazette or a newspaper of general circulation.
RA 11534 will actually take effect on April 12, because the 11th falls on a Sunday.
Dominguez chairs the reconstituted FIRB under the CREATE Law with Department of Trade and Industry (DTI) Secretary Ramon Lopez as co-chairman.
“I want to call a meeting right away,” Dominguez told Assistant Secretary Juvy Danofrata during a recent DOF executive committee meeting.
Danofrata, who heads the Strategic, Economics and Results Group (SERG) of the DOF, said the meeting of the FIRB can be held as early as the week of April 12, given the aforementioned effectivity of the law.
The law’s implementing rules and regulations (IRR) is now being finalized by the DOF and the National Tax Research Center (NTRC).
CREATE is the largest fiscal stimulus program for the private sector in the country’s history, providingan estimated P1 trillion worth of tax relief to enterprises over the next 10 years.
In 2021 and 2022, the law is expected to provide tax savings to businesses totaling around P251 billion, which will help keep them afloat and retain jobs as they recover from the crippling effects of the pandemic-induced global economic upheaval.
The law provides an immediate 10 percentage-point reduction to the previous 30 percent corporate income tax (CIT) rate of domestic micro, small and medium enterprises (MSMEs) and a 5-percentage point cut for all other corporations, effective July 2020.
CREATE also redesigned the fiscal incentives system to make the grant of generous incentives to companies performance-based, time-bound, targeted and transparent.