Virus measures get tax incentives
The Department of Trade and Industry (DTI) has included activities in response to the coronavirus disease 2019 or COVID-19 pandemic and supporting the Balik Probinsya program in the proposed Investment Priorities Plan (IPP) 2020 submitted to Malacañang.
When approved, the IPP will serve as a transition framework for the grant of incentives while the second package of the tax reform program has yet to be approved.
Trade Undersecretary and Board of Investments (BOI) managing head Ceferino Rodolfo said the agency submitted the proposed IPP for this year to Malacañang two weeks ago.
He said the proposed IPP 2020 is a carryover of the current plan but has two additional activities.
“We put two other activities that can qualify for incentives, under the current incentives in EO (Executive Order) 226. We put those in relation to response to COVID pandemic or activity that will mitigate impact of COVID pandemic, and activities in support of the Balik Probinsya program,” he said.
He said COVID-19 response activities which may qualify for incentives under the proposed IPP include manufacture of critical products like ventilators and face masks for the local market.
Activities supporting the Balik Probinsya program which seeks to decongest Metro Manila and promote development in the provinces, are also entitled to tax perks under the proposed IPP.
Under the 2017 to 2019 IPP currently being used, the following have been identified as preferred activities: all manufacturing activities including agro-processing; agriculture, fishery and forestry; strategic services; healthcare services including drug rehabilitation centers; mass housing; infrastructure and logistics including local government unit – public private partnership projects; innovation drivers; inclusive business models; environment or climate change-related projects; and energy.
Also part of the list are export activities; activities covered by special laws; and priority investment areas in the Autonomous Region in Muslim Mindanao.
Activities in sectors listed under the IPP can enjoy incentives including income tax holidays and exemption from tax and duty on imports of capital equipment.
Rodolfo said he is hopeful the proposed IPP for this year would be approved and signed by President Duterte soon.
As the proposed IPP is a transition framework, he said once the proposed Package 2 of the tax reform program is approved, firms that registered under the IPP but have not enjoyed the tax perks would have an option to either remain under the previous incentives regime or avail of benefits under the new law.
The proposed Package 2 or Corporate Income Tax and Incentives Rationalization Act (CITIRA) which has been revised and is now called Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), aims to immediately cut the corporate income tax (CIT) rate to 25 percent from 30 percent starting July.
CITIRA was aiming to gradually reduce the CIT to 20 percent from 30 percent over a 10- year period, while rationalizing incentives given to firms.
Under the proposed Package 2, firms engaged in projects or activities listed in the Strategic Investment Priorities Plan to be crafted by the BOI would be eligible for incentives.