THE Department of Finance (DOF) has described the Fiscal Incentives Review Board (FIRB) as a necessary good governance measure to advance the public interest in the granting of tax incentives to private corporations.
The FIRB is an existing interagency committee, chaired by the DOF, which currently grants tax subsidies to government-owned or -controlled corporations (GOCCs).
Under the proposed Corporate Income Tax and Incentives Rationalization Act (Citira), the FIRB’s coverage will be expanded to include approval of tax incentives for private businesses.
FIRB will also serve as the oversight body for the country’s 13 existing investment promotion agencies (IPAs) to ensure that registered business enterprises receiving tax breaks subsequently deliver the jobs and investment that they had promised when they sought such fiscal incentives from their respective IPAs.
This proposal is not unique and is in fact practiced in the region, said Finance Undersecretary Karl Kendrick Chua.
For instance, he said that Malaysia, known to have a world-class investment incentive system, has a similar institution called the National Committee on Investment (NCI) that approves all incentives granted by its 33 IPAs.
“The FIRB is designed to promote the Filipino people’s interests by ensuring two things: first, that incentives granted will lead to the creation of more jobs for Filipinos; and second, that opportunities to apply for incentives are made available to micro, small and medium enterprises (MSMEs), many of which are currently unaware that they can apply for such tax incentives,” Chua said.
He added that under the current system, there are 13 IPAs in the Philippines that are largely autonomous, each with its own mandate, menu of tax incentives, and authority to grant them largely without the approval or knowledge of the DOF.
“The system of having different packages of incentives and processes, as well as autonomous approval points, have created confusion among potential investors and reduced accountability in the grant of tax incentives,” said Chua. “To promote fairness in the tax system, Citira not only seeks to harmonize the package of tax incentives, but to also put more order, clarity, and accountability in the process of granting incentives through the FIRB.” (PR)