DOF, BOI now work closely on grant of tax incentives

In line with government’s fiscal consolidation efforts, the Board of Investments (BOI) is now coordinating with the Department of Finance (DOF) in evaluating and approving projects seeking tax incentives .

BOI officials said the two agencies are now working together to ensure that only qualified investments would be entitled to fiscal perks, and that the grant of such incentives does not result in unnecessary foregone revenues.

Under the scheme, the BOI submits to the DOF certain details of the investment applications, without necessarily revealing who the project proponents are. The DOF then evaluates if the proposed investment deserves fiscal perks such as income tax holidays and duty-free capital equipment imports, and makes a recommendation to the BOI, which still has the final decision on approvals.

Due to the DOF endorsement, the BOI said it will no longer implement its simplified registration process, started in Sept. 2005, which allowed a shorter processing time of one to five days for some project applications. Hence, BOI approvals will revert back to the usual processing period of between 20 to 30 working days.

The BOI implemented the simplified registration process in response to the clamor of foreign investors to bring investment processing in the Philippines at par with other countries, at the same time making it more investor-friendly.

The incentive-giving agency, however, has set up a toll-free call center that will make investments information available 24 hours a day, seven days a week.

"Now, investors from around the globe need not go to Manila to get the data sheet they need," Trade and Industry Secretary Peter Favila said in a statement.

The BOI call center is the first of its kind in the Southeast Asian region. The facility will attend to investors’ concerns through its 24-hour a day, seven days a week customer service assistance.

Initially available to investors in the US, Canada and the United Kingdom, the call center project is expected to speed up information dissemination from the usual walk-in inquiries to the more efficient phone-in queries.

Earlier, the BOI launched the Online Checklist for project registration which provides investors via the Internet the business requirements they would need in starting their business in the Philippines. This system would shorten the approval process for granting incentives to local and foreign investors.

The BOI is likewise drawing up a new set of policy guidelines for the grant of income tax holiday (ITH) incentives to firms and projects seeking registration with the investment agency.

Over a 10-year period from 1995 to Oct. 2005, ITH incentives availed by BOI-registered firms have amounted to P28.267 billion.

Based on the draft guidelines, the BOI would limit the extension of ITH specifically to all projects by micro and small enterprises with total assets of P15 million and below. On the other hand, full ITH incentives would be given to all export-oriented projects.

However, the BOI plans to limit the grant of ITH incentives to expansion projects unless the project is specifically identified as entitled to full incentives.

Among the investment areas identified with full incentives under the current Investment Priorities Plan (IPP) are agribusiness in support of the Agriculture and Fishery Modernization Act; healthcare and wellness products and services, considered an infant industry; and the export-oriented information and communications technology, electronics and motor vehicle products.

Likewise, investments in energy projects, specifically those involving power generation using new and renewable energy (NRE) source such as biomass, waste to energy conversion, solar, wind, geothermal, hydro and tidal, are entitled to full incentives because such projects reduce dependence on imported fuel and provide an alternative source of energy.

Infrastructure investments are also entitled to full incentives if they are in mass housing with selling prices of at most P500,000 per unit.

Investments in shipbuilding and shipping, as well as in machinery and equipment, raw materials and intermediate inputs in support of the activities listed in the IPP are also entitled to full incentives.

Areas where the ITH would be determined on a case-to-case basis are infrastructure involving logistics, build-operate-transfer projects, land-based transport system, mass housing, tourism, jewelry and fashion garments.