The Fiscal Incentives Review Board (FIRB) has approved the grant of 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.
A majority of the five-member FIRB chaired by Finance Secretary Carlos Dominguez III approved last month the grant of 4 years of income tax holiday, followed by 5 years of enhanced deductions and duty exemption on importation for the construction, operation, management, and maintenance of the rail project.
Dominguez made it clear that this package of incentives is confined only to the activity applied for, which is the rail operation. The incentives approved will not apply to the 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.
In deciding to approve the project, the FIRB took into consideration the projected increase in economic productivity of P24.4 billion per year once the subway system becomes operational in 2026. This will be monitored, along with the other projected benefits, in accordance with the principle of granting incentives based on merit or performance embodied in the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law.
Trade Secretary and FIRB co-chair Ramon Lopez said this productivity boost and other benefits offset the economic costs that will be incurred by the government, such as foregone revenues.
Throughout the deliberations for the project, Dominguez also said that the Makati City government and the Department of Transportation (DOTr) should work out the details of how to connect the proposed subway to the Metro Manila Subway project of the national government.