BoI backs CARS-like incentives within CREATE

THE Board of Investments (BoI) is seeking the inclusion of incentives similar to those of CARS (Comprehensive Automotive Resurgence Strategy) to be embedded within the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, potentially making domestic manufacturing more attractive.

“By incorporating that kind of incentive into the CREATE law, the BoI on its own can directly provide this type of incentive to our investors,” according to Elvin Raymond Garcia, supervising investment specialist of the heavy industry division at BoI, at the Auto Parts and Vehicles Expo 2024 media conference on Thursday.

“The CARS program under Executive Order (EO) 182… provides fixed investments and production volume support through a tax payment certificate scheme,” he added.

He said that because the program was established through an EO, applications for the incentives will have to go through a process which includes approval by the Fiscal Incentives Review Board.

According to Mr. Garcia, the CARS program opened up three slots for participants, of which only two were taken, by Mitsubishi Motors Philippines Corp. and Toyota Motor Philippines Corp.

The participants were given fiscal support through a non-transferable tax payment certificate, which can be used to defray the tax and duty obligations of the participants to the government. These cover excise tax, income tax, import duties, and value-added tax.

In exchange, participants undertake to assemble cars in the Philippines that are suited for largevolume sales.

Some 40% of the fiscal support is allocated for fixed investment support, and 60% constitutes production volume incentives.

“So in that sense, the participants (Toyota and Mitsubishi) opined that the CARS program incentives are more generous than the income tax holiday (ITH) currently offered under the CREATE law,” Mr. Garcia said.

“ITH is not enough to level up the industry, but maybe CARS-like incentives might be a solution,” he added, quoting Rommel R. Gutierrez of the Chamber of Automotive Manufacturers of the Philippines, Inc.

Mr. Garcia said the BoI supports House Bill (HB) 4206, which aims to strengthen the motor vehicle manufacturing industry.

HB 4602 proposes the inclusion of auto projects in the Strategic Investment Priority Plan (SIPP) for the next 12 years, he said.

“For our part, we have included motor vehicles in general, not just electric vehicles, in our listing under the SIPP since 2022,” he added.

BoI-registered investments in the automotive industry remain small, which the BoI plans to increase through more investment outreach.

“Particularly in the automotive industry, our largest investors are still Toyota and Mitsubishi … This is because we do not handle them if they invest or locate through the Philippine Economic Zone Authority or other investment promotion agencies,” he said.

“But we are working on attracting more. Actually, we are doing more investment outreach because the Department of Trade and Industry has this target of making the country the second-largest foreign direct investment destination,” he added. —