Despite touting the new corporate tax reform package, the Board of Investment (BOI) may not be able to meet its target investment pledges of P905 billion for the year due to the pandemic.
BOI Managing Head Ceferino Rodolfo said in a news briefing on Thursday that the investment promotion agency (IPA) is only seeing a total investment approval of P600 billion this year.
As of last week, the attached agency of the Department of Trade and Industry approved P376 billion worth of projects in renewable energy, telecommunications, transportation, agriculture and cement manufacturing, among others.
Rodolfo said they are hoping to catch up and approve about P225- billion investment applications in the last two months of the year to reach the P600-billion mark.
Currently, BOI’s pipeline contains P700 billion worth of investment pledges. Of this amount, P300 billion worth of applications are being vetted after the investors submitted the requirements.
As for the original goal, Rodolfo said that the IPA needs more time.
“They have positive leads but I don’t think that with two months [remaining]…all of them will materialize this year. We will need definitely until, at the very least, first quarter of next year to realize,” Rodolfo explained.
The mobility restrictions amid the pandemic have stalled the investment applications, the BOI chief said, especially during the surge of Covid-19 Delta variant cases.
He said some investors were not able to come to the Philippines to complete their due diligence studies because of the lockdown measures in place.
But Rodolfo is upbeat the investments will flow in as mobility restrictions ease and the economy further reopens.
With this, Rodolfo explained that the constraints amid the pandemic have overshadowed the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which seeks to attract more investments in the country.
Following its enactment, the corporate income tax rate (CIT) rate is reduced to 20 percent from 30 percent for domestic corporations with net taxable income of P5 million and below and total assets of P100 million and below effective July 1, 2020. All other local firms and resident foreign companies are imposed with 25-percent income tax.
Export firms may also be granted income tax holiday (ITH) of 4 to 7 years, followed by special CIT or enhanced deductions for 10 years. Domestic enterprises are also granted ITH for 4 to 7 years, which is followed by enhanced deductions for five years.
Last year, BOI raked in P1.01 trillion worth of investments, which is 10.9 percent lower than P1.14 trillion in 2019 amid the pandemic. These projects have projected employment of over 55,000.