Albay second district Rep. Joey Sarte Salceda on Friday said he wants the Board of Investments (BOI) to release an initial list of industries that are guaranteed to be eligible for incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
Salceda, chairman of the House Ways and Means Committee, said he would soon hold briefings with the BOI to check the progress of the Strategic Investment Priority Plan (SIPP) drafting.
“Actually, I worked on the base list with the BOI, and we want to continue discussing the list with the public, through hearings and briefings by my Committee. I want the BOI to have that list released already as a preliminary list,” Salceda said.
“We will be having hearings with them in the coming weeks to see how best to work on this quickly. Hopefully, we can issue the list within the month,” Salceda added.
Under the current CREATE law, the industry tiers, which determine the incentives a certain enterprise will receive, are discussed in generic terms, but specific priority industries themselves will have to be determined by the BOI.
Depending on their industry tier, eligible enterprises can receive four to seven years of income tax holiday (ITH) and five years of enhanced deductions thereafter for domestic enterprises, and four to seven years of ITH plus 10 years of either enhanced deductions or special corporate income tax rate of five percent of gross income after the ITH.
“It’s one of the most generous tax incentive regimes in the world, but we need to be able to promote it. If they don’t know it, they won’t like it. And to be able to promote CREATE, we need that list of who’s eligible,” Salceda explained.
Under CREATE, the BOI, in coordination with the Fiscal Incentives Review Board, Investment Promotion Agencies, other government agencies administering tax incentives, and the private sector, shall formulate the Strategic Investment Priority Plan to be submitted to the President for approval, which may contain recommendations for types of non-fiscal support needed to create high-skilled jobs to grow a local pool of enterprises, particularly micro, small and medium enterprises (MSMEs), that can supply to domestic and global value chains, to increase the sophistication of products and services that are produced and/or sourced domestically, to expand domestic supply and reduce dependence on imports, and to attract significant foreign capital or investment.
The Strategic Investment Priority PIan shall be valid for a period of three years, subject to review and amendment every three years thereafter unless there would be a supervening event that would necessitate its review.
“Actually, we can release a preliminary list now that would be responsive to COVID-19, and then cite economic recovery as a supervening event later. I just had a conversation with the Budget Secretary yesterday, and he believes we should expedite incentives for virology-related and COVID-19 biotechnology-related sectors. That’s perfectly doable,” Salceda said.
The House tax chairman added that there were already companies, which have expressed interest in producing therapeutics and vaccines in the Philippines.
“Toll manufacturing (one company with a brand or patent having another company produce the product more cheaply) is now becoming a trend in the pharmaceutical industry. We can take advantage because we have a very large pool of capable manpower,” Salceda said.
“All we really need is to see the sectors in black-and-white in the SIPP,’’ he added.