Government increases threshold for approval of IPAs projects to P15 billion

Investment capital threshold for IPAs increased to P15 billion

In a move to promote the ease of doing business, the government has raised the investment capital threshold designated for investment promotion agencies (IPAs) to P15 billion.

The Cabinet-level Fiscal Incentives Review Board (FIRB) issued a resolution to increase the investment capital threshold for projects delegated to IPAs to P15 billion and below. This is in line with the provisions of Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law.

Under the previous setup, IPAs approved the incentives of projects below P1 billion, while the FIRB selected the tax perks for business activities above P1 billion.

The FIRB said, “The board recognizes the need to increase the investment capital threshold to promote the ease of doing business in response to the concerns raised by some IPAs. This is also to align with policy proposals in Congress, which seek to give more authority to the IPAs in granting incentives.”

The increase in the threshold may be enforced by the FIRB without the need to amend the Tax Code.

The FIRB also pointed out that the revised threshold aligns with the Public-Private Partnership Code of the Philippines, which states that PPP projects with a cost of P15 billion or higher shall be approved by the inter-agency National Economic and Development Authority Board upon favorable recommendation of the Investment Coordination Committee.

Moreover, all applications for tax incentives with investment capital of more than P15 billion will remain under the jurisdiction of the FIRB.

Data showed that total investment capital from approved priority activities with incentives under the CREATE Law has reached P1.1 trillion as of end-2023. The bulk of the investment capital worth P843.9 billion was approved by the FIRB, while the remaining 23 percent came from IPAs covering 881 projects.

CREATE aimed to cut the corporate income tax rates and adopted a simpler and more effective fiscal incentives system to make them comparable to the ASEAN region.

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