The Fiscal Incentives Review Board approved the grant of tax incentives to the P81-billion subway project in Makati City that is expected to begin commercial operations by January 2026, the Department of Finance said in a statement Monday.
A majority of the five-member FIRB chaired by Finance Secretary Carlos Dominguez III approved last month the grant of a four-year of income tax holiday, followed by five years of enhanced deductions and duty exemption on importation for the construction, operation, management, and maintenance of the rail project.
Dominguez made it clear that the package of incentives would be confined only to the activity applied for, which is the rail operation.
“The incentives approved will not apply to the other business activities that would be generated from the subway operations, such as the lease of retail areas and advertising, which should be subject to the regular corporate income tax rate and other applicable taxes,” the DOF said.
The FIRB said it considered the projected increase in economic productivity of P24.4 billion per year once the subway system becomes operational byn 2026.
This will be monitored, along with the other projected benefits, in accordance with the principle of granting incentives based on merit or performance embodied in the Corporate Recovery and Tax Incentives for Enterprises law.
Trade Secretary and FIRB co-chair Ramon Lopez said the productivity boost and other benefits would offset the economic costs that would be incurred by the government, such as foregone revenues.
Throughout the deliberations for the project, Dominguez said the Makati City government and the Department of Transportation should work out the details on how to connect the proposed subway to the Metro Manila Subway project of the national government.
The subway project is a 10-kilometer railway system traversing Makati’s central business district and key points such as Ayala Ave., the Makati City Hall, the Poblacion Heritage Site, the University of Makati, Ospital ng Makati, and the other new districts in the city.
Philippine Infradev Holdings Inc., the proponent of the project, said in March it started purchasing properties for the development of the main station of the underground rail system following the signing of a joint venture partnership between unit Makati City Subway Inc. and real estate and gaming entrepreneur Kevin Kristopher Wong.
Philippine Infradev said wholly-owned subsidiary MCSI formed an unincorporated joint venture with Richer Today Inc., which is owned by Wong, for the financing, design, construction, development, marketing and sale of some 5.5 hectares of lots in and around Station 5 of the Makati City Subway Project.
Located near Makati City Hall, Station 5 is the main construction site where tunnel boring machines will be assembled and lowered, the company said.
