THE FISCAL Incentives Review Board (FIRB) approved on Monday P29.4 billion worth of fiscal incentives for a housing development and two cement plants located outside Metro Manila, its first approvals after the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law gave it more power over tax perks.
The Department of Finance said on Tuesday that the FIRB approved P24.9 billion worth of tax incentives for a cement plant in Calatagan, Batangas; P3.1-billion worth of perks for a cement plant in Porac, Pampanga; and P1.4-billion for a mass housing project in Iloilo.
Specifically, the board also a two-year income tax holiday (ITH) and duty exemptions on imported materials and five years’ worth of enhanced deductions to the operator of the cement plant in Pampanga.
The project will significantly augment the factory’s current capacity, adding 898,560 metric tons (MT) to its current maximum output of 687,473 MT of cement each year, Finance Assistant Secretary Juvy C. Danofrata said, citing Board of Investments estimates.
Meanwhile, the Batangas cement factory, which is planning to install clinkering facilities, was given a six-year ITH, five years of enhanced deductions and exemptions from paying duty on imports.
Socioeconomic Planning Secretary Karl Kendrick T. Chua said the perks granted to the two facilities should help them adopt new technology to boost production and reduce costs.
The expansion will raise the plant’s capacity to 2.5 million MT a year and is expected to result in P866 million in annual savings to the economy on import costs since this will augment the local supply of the material and meet demand from the construction industry, Ms. Danofrata said.
“The projected net benefits of the investment are driven by the locally-sourced capital equipment and raw materials as well as the income taxes that the government will potentially collect from the estimated jobs created by the project,” she added.
Trade Undersecretary Ceferino S. Rodolfo said the Batangas project needs more investment than the Pampanga plant because it will also produce clinker, raising the cost.
“[Granting tax perks to the two cement manufacturers should] lessen the country’s import dependence, increase our local capacity, and encourage competitiveness in the industry,” Trade Secretary Ramon M. Lopez said.
The Iloilo housing project was granted a four-year ITH and exemption from duties on the import of capital equipment and raw materials.
Ms. Danofrata said the project will build more than 3,000 low-cost housing units equivalent to about 1% of the housing backlog in the Western Visayas.
The perks should encourage the private sector to help the government build low-cost homes and address the housing shortage, according to Mr. Lopez.
Republic Act No. 11534 or the CREATE Act lowered the corporate income tax to 25% this year and reformed the tax incentive system.
It expanded the oversight power of the FIRB to monitor whether the fiscal incentives are given to deserving companies. It adheres to the Strategic Investment Priorities Plan in determining the type and duration of incentives given to key industries, which were ranked based on their capacity to attract investment, create jobs and boost the country’s competitiveness.
For the hotel industry, which was among the hardest-hit sectors during the pandemic, Finance Secretary and FIRB Chairman Carlos G. Dominguez III said CREATE will also help the sector by reducing corporate income tax, giving companies more flexibility to keep their workers employed and make investments.
“The administration is doing all that it can to support the revival of even more robust hospitality and tourism industries in the post-pandemic era,” Mr. Dominguez said at a forum arranged by the Philippine Hotel Owners Association, Inc. Tuesday.
“What I can assure you of is this government’s readiness to support local businesses through expanded credit, lower interest rates, and by ensuring fiscal prudence in managing our financial resources,” he added.
The DoF has estimated that the government granted P481.7 billion worth of fiscal incentives to favored companies in 2019, down 7% from a year earlier. — Beatrice M. Laforga
