The Board of Investments (BOI) said the target date for the release of the Strategic Investment Priority Plan (SIPP) is by the first quarter of 2022.
Sandra Marie Recolizado, director for investment policy and planning at the BOI, in an online public hearing of the House Committee Ways and Means (CWM), said they are planning to release the SIPP before April of the coming year.
The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act introduced a new Title XIII in the National Internal Revenue Code, where Section 300 provides that BOI, in coordination with relevant agencies and the private sector, shall formulate the SIPP.
The SIPP is a list of priority areas that will be entitled to tax incentives, with the aim to attract high-value, labor-intensive investments that will create more jobs and further sharpen the Philippines’ competitiveness in the global market.
Earlier, Recolizado in an online forum told exporters that SIPP incentives will not be automatically granted to enterprises. Instead, their sector or industry will have to undergo an evaluation process to see if it should be included in the SIPP.
During the House committee meeting on December 6, she said CREATE stipulates that the SIPP shall contain “priority projects or activities that are included in the Philippine Development Plan or its equivalent, or other government programs.”
Moreover, a specific activity has to meet 10 conditions or criteria to be included in the SIPP. Among these are a substantial amount of investments; generation of considerable employment especially towards less developed areas; and a considerable amount of net exports.
The activity or project should likewise use modern, advance or new technology; employ processes and innovations leading to the attainment of sustainable development goals; and address missing links and gaps in the supply or value chain or move up the value chain or product ladder.
In addition, the registered activity is also required to promote market competitiveness; enhance the capabilities of Filipino enterprises and professionals to produce and offer increasingly sophisticated products and services; contribute to food security and increased incomes in the agriculture and fisheries sector; and provide services and activities that can promote regional and global operations in the country.
Once the priority activities have been identified, they will then be categorized into three industry tiers upon which their incentives will depend, said Recolizado.
Based on these parameters and criteria, she told the House CWM that they have come up with an “initial and partial list” of 1,271 activities that are qualified for incentives under the SIPP.
These include 400 activities in the manufacturing industry, 142 in agriculture, 31 in transportation and storage, 29 in administrative and support services, and 20 in mining and quarrying.
The list remains fluid as Recolizado said they still have to hold experts’ group discussions for three of the 10 parameters/criteria. They also must still organize a public hearing with government agencies and private stakeholders and set consultations with relevant agencies and the Office of the President on the SIPP, as well as present the plan before the Philippine Investment Promotion Plan Steering Committee.
Meanwhile, Department of Finance Assistant Secretary Juvy Danofrata in her presentation at the Committee hearing outlined four steps businesses should take to apply for tax incentives under the CREATE Act.
First, registered business enterprise (RBE) applicants should check if the proposed activity is included in the SIPP. Next, they should get in touch with the preferred investment promotion agency (IPA) for assistance and additional information on available resources.
Third, they must create an account with the Fiscal Incentives Registration and Monitoring System (FIRMS) to proceed with the filing of the application. The IPAs will review the applications through FIRMS.
Finally the RBE, using the FIRMS account, should accomplish the application forms for registration and attach the required supporting documents. For enterprises with existing registered activities, they are required to log each registered activity in the appropriate section. The system will notify the applicant if the application has been submitted successfully.
While waiting for the SIPP to be issued, the 2020 Investment Priorities Plan has been the interim incentives program to which companies referred to see if their projects or activities qualify to be registered for incentives under the CREATE Act.
The CREATE Act aims to, among others, develop a more responsive and globally competitive tax incentives regime that is performance-based, targeted, time-bound, and transparent.