DTI offers options on investment approvals

The Department of Trade and Industry proposed the approval of investments amounting to $3 billion or below by promoting agencies and those above $3 billion by the Fiscal Incentives Review Board under the final draft of the Corporate Income Tax and Incentive Rationalization Act, or CITIRA.

Trade Secretary Ramon Lopez said over the weekend the proposal aimed to lessen the pressure on FIRB and maximize the capacity of investment promoting agencies.

“I was telling the Finance Department to leave all the projects that fall below the threshold of $3 billion to IPAs with FIRB as oversight authority for these lower bracket investments. The FIRB can concentrate on the approval of investments beyond the threshold. There are so many investments that fall under the threshold and this may slow down the assessment rate of FIRB,” he said.

The Trade Department for the meantime is awaiting the recommendation of the Board of Investments on the final value of investments that will fall on IPAs and those for approval by the FIRB.

The department offered two approaches to extending the transition period of investors from the current set of incentives to the proposed reform package.

For high value and employment-intensive industries, the Trade Department proposed a minimum of the transition of seven years to a maximum of 10 years, while projects with less investment values and lower employment will be given a minimum of five years and maximum of seven years.

“Frankly, I’ll be happy with 5 minimum and maximum of 8 years transition period. That’s reasonable enough. By that time, the lowering of tax rates would have continued. But for the regular transition, I’d be okay with 5 to 7 years. Although, I still could not discount what Senator Migz Zubiri proposed for the high export and labor-intensive industries which was a minimum of 7 and a high of 10,” Lopez said.

Labor intensive projects are identified as those employing at least 3,000 people and more.

The Trade Department is in discussions with Finance Department on the transition period.

The transition would also give enough time for the development of the new infrastructures to mature, Lopez said.

He noted that the higher gross income earned to be generated during the transition would substantially contribute to efforts of the national government to increase revenue generation.