THE House Committee on Ways and Means has asked the Department of Finance (DOF) and the Department of Trade and Industry (DTI) to follow through with its commitment to release the implementing rules and regulations (IRR) on the fiscal incentives provisions of the Corporate Recovery and Tax Incentives for Enterprises (Create) Act as several investors are just waiting for the ground rules.
House Ways and Means Chairman Joey Sarte Salceda of Albay urged the two agencies to do so “so that the country can begin to truly say it is open for serious business.”
Earlier this month, the DOF and the DTI targeted May 17 for the release of the IRR. The agencies then revised the target date to end of May.
“Their commitment was to release it this month so, I hope, at the very least, they could release the regulations for even just the applications process by Monday, the last day of the month,” Salceda said.
According to the lawmaker, the application process rules will be essential “because until then, we have little clue about the kinds of industries that are coming.”
“The Board of Investments also told investors last week that they hope to release the rules this month. It’s crucial that we do so soon,” Salceda said. He added he’s “having conversations with several investors and they are telling me that they are just waiting for the ground rules and they will apply.”
The lawmaker said he expects a rebound in job creation beginning the second quarter if the DOF and the DTI issues the IRR.
Briefing
ONCE the rules are released, Salceda said his committee will exercise oversight powers and seek a briefing on the operation of the rules.
“We will continue to work with the implementing agencies to see how we can make the application process easier.”
The lawmaker added that the rules on the “superincentives” that the President can issue to exceptional investments will also be crucial, “given global industry trends.”
“Global companies are looking for areas that will be friendly to big investments. The electronics sector in particular is looking for hubs for mass production, given the shortage for semiconductors,” Salceda said.
Under Create, the President “may, in the interest of national economic development and upon the recommendation of the FIRB [Fiscal Incentives Review Board], modify the mix, period or manner of availment of tax incentives, or craft the appropriate financial support package for a highly desirable project or a specific industrial activity based on defined development strategies for creating high-value jobs, building new industries to diversify economic activities, and attracting significant foreign and domestic capital or investment, and the fiscal requirements of the activity or project, subject to maximum incentive levels recommended by the FIRB.”
The proposed IRR said the government’s financial support can include land use, water appropriation, power provision, as well as budgetary support through the yearly national budget.
The president can also grant qualified firms a maximum of 40-years of fiscal incentives, with a maximum of 8-year income tax holiday. Qualified firms must have investment capital of a minimum P50 billion, or its equivalent in US dollars, or a minimum direct local employment generation of at least 10,000 jobs within three years from the issuance of the certificate of registration.
“That area is straightforward, so we can release the rules for this already. The vaccination drive is making significant progress, and we will probably be able to reopen the manufacturing sector fully by end of this year,” Salceda explained. “We also need the jobs now. We need to take the initiative, before our competitors are able to take better advantage.”
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