The Fiscal Incentives Review Board (FIRB) Secretariat has revealed that only four investment promotion agencies (IPAs) have complied fully with the requirement under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law for them to submit complete formal reports to the Cabinet-level inter-agency body.
According to Finance Assistant Secretary and FIRB Secretariat Head Juvy Danofrata, these four law-compliant IPAs are the Bases Conversion and Development Authority (BCDA), John Hay Management Corp. (JHMC), Poro Point Management Corp. (PPMC), and PHIVIDEC Industrial Authority (PIA).
The rest of the IPAs that failed to comply fully with the CREATE Law’s reportorial requirement are the Philippine Economic Zone Authority (PEZA), Tourism Infrastructure and Enterprise Zone Authority (TIEZA), Authority of the Freeport Area of Bataan (AFAB), Aurora Economic Zone and Freeport Authority (APECO), Board of Investments (BOI), Cagayan Economic Zone Authority (CEZA), Clark Development Corporation (CDC), Regional Board of Investments-Bangsamoro Autonomous Region in Muslim Mindanao (RBOI-BARMM), Subic Bay Metropolitan Authority (SBMA), and Zamboanga City Special Economic Zone Authority (ZCSEZA).
“The Secretariat has already sent a follow-up letter signed by the Chairman of the FIRB and Finance Secretary, Carlos Dominguez III, to each of these IPAs that had incomplete and missing submissions,” said Danofrata. “All IPAs should understand that these reports we require are important for the FIRB to fulfill its oversight functions on the administration and grant of tax incentives.”
As part of their reportorial requirements, all IPAs are urged to submit to the Secretariat lists of their registered business enterprises (RBEs) availing of tax incentives, IPA-approved projects/activities with investment capital of P1 billion and below, and registered Information Technology and Business Process Management (IT-BPM) enterprises availing of the work-from-home (WFH) arrangement, among others.
Danofrata said the reports are shared with the Bureaus of Internal Revenue (BIR) and of Customs (BOC) for monitoring, audit, and other purposes consistent with the objectives of the CREATE Act.
Signed by President Duterte on March 26, 2021, the CREATE has cut corporate income taxes (CIT)—to 20 percent for micro, small and medium-sized enterprises (MSMEs) and to 25 for all other firms–and rationalized the grant of tax incentives to ensure that such perks are given in a transparent, targeted, performance-based, and time-bound manner.
Meanwhile, apart from the abovementioned requirements, the Secretariat disclosed that both the PEZA and TIEZA have yet to transmit their respective reports on pre-CREATE actual investment capital, which were due in August 2021.
PEZA—being the IPA with the largest number of RBEs—has other pending submissions after presenting its investment promotion efforts to the FIRB, such as its cost-and-benefit analysis on its investments and granted tax incentives, as well as its report on the successful/ongoing technology transfer to improve the country’s competitiveness, which it also failed to submit last year.
In response to the April monitoring report of the Secretariat, Finance Secretary and FIRB Chairman Carlos Dominguez III expressed his dismay over the non-compliance of the IPAs and declared that more stringent measures would be taken should the IPAs continue to disregard the requirements of the Secretariat as provided by the CREATE Law enacted by President Duterte.