MANILA, Philippines — The Department of Finance has opposed calls to evaluate the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act as it maintained that fiscal prudence must be exercised in the tax perks regime.
Finance chief and Cabinet-level Fiscal Incentives Review Board (FIRB) chairperson Benjamin Diokno is reacting to calls of industry groups to review CREATE provisions on the revised fiscal incentives tax regime and reportorial requirements for the grant of incentives.
“What we aim through the CREATE Act is to attach accountability and responsibility for every tax exemption given, since the incentives we give out entail important costs to the government,” Diokno said.
The DOF chief argued the need to balance out the interests of both the government and investors.
“The government is obligated to exercise prudence in determining which financial resources to forgo in favor of higher economic returns that will benefit the taxpaying community,” Diokno said.
“It is the FIRB’s modernized fiscal incentives system that enables the CREATE Act to effectively generate more investments and quality jobs that ultimately boost economic growth,” he said.
For her part, FIRB secretariat head and DOF assistant secretary Juvy Danofrata said that a transparent approval system of tax incentives can be expected through the implementation of the CREATE Act.
Danofrata argued that FIRB is carefully ensuring that the enterprises’ projects granted with tax perks present substantial economic gains for the country.
The 2022 Strategic Investment Priority Plan, developed by the Board of Investments and the FIRB, serves as the primary basis for determining priority industries, projects, and activities that can be granted fiscal incentives under the CREATE Act.
So far, the FIRB has approved 14 projects worth P405 billion since its creation last year following the enactment of the CREATE.
These projects are involved in cement and steel bars manufacturing activities, construction of mass housing units, shipbuilding, rail operations of a subway, water transport vessel, storage of liquefied natural gas, and communications infrastructure.
Pursuant to the CREATE Act, the FIRB is mandated to oversee the grant and administration of incentives of investment promotion agencies.
Under the law, IPAs approve the incentives of projects below P1 billion, while the FIRB selects the tax perks for business activities above P1 billion.