Finance Secretary and Fiscal Incentives Review Board (FIRB) Chairperson Benjamin Diokno emphasized that fiscal prudence must be exercised in granting tax incentives, as provided under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
“What we aim through the CREATE Act is to attach accountability and responsibility for every tax exemption given, since the incentives we give out entail important costs to the government,” said Secretary Diokno in response to calls by industry groups to review CREATE provisions on the revised fiscal incentives tax regime and reportorial requirements for the grant of incentives.
Secretary Diokno also underscored the need to balance out the needs of both the government and investors.
“The government is obligated to exercise prudence in determining which financial resources to forgo in favor of higher economic returns that will benefit the taxpaying community,” Secretary Diokno said.
Secretary Diokno added that it is the FIRB’s modernized fiscal incentives system that enables the CREATE Act to effectively generate more investments and quality jobs that ultimately boost economic growth.
Finance Assistant Secretary and FIRB Secretariat Head Juvy Danofrata supported this view, stating that, “a transparent approval system of tax incentives can be expected through the implementation of the CREATE Act. This is also the mandate we are championing in the FIRB: to carefully ensure that the enterprises’ projects granted with tax perks present substantial economic gains for the country.”
The 2022 Strategic Investment Priority Plan (SIPP), developed by the Board of Investments (BOI) in coordination with the FIRB and other stakeholders, serves as the primary basis for determining priority industries, projects, and activities that can be granted fiscal incentives under the CREATE Act.
Categorized into three tiers, priority projects and activities listed under Tier III are directed towards emerging technologies that are consistent with the fourth industrial revolution, such as: artificial intelligence, nanotechnology, biotechnology, advanced digital production technologies, and innovation support facilities including space-related infrastructures. Moreover, these activities represent those that are qualified for longer income tax holidays.