The Board of Investments (BOI) and Department of Finance (DOF) said the implementing rules and regulations (IRR) of the Tax Incentives Management and Transparency Act (TIMTA) is nearing completion.
In a statement, the Department of Trade and Industry’s BOI said it is working closely and “at full speed” with the DOF to finish the TIMTA IRR this year.
At present, the BOI said the IRR is about 70 percent complete, and both agencies continue to meet regularly to thresh out the few remaining issues.
Passed in December last year, the TIMTA under the Republic Act No. 10708 mandates transparency in the management and accounting of tax incentives administered by investment promotion agencies (IPAs), aiming to monitor incentives given to investors and locators.
This is different from the Rationalization of Fiscal Incentives Bill that is being pushed in the House of Representatives in the next Congress, which aims to implement a single tax incentive scheme for all sectors in place of the current various grants given by IPAs.
The secretaries of DTI and DOF will have to coordinate with the director general of the National Economic and Development Authority (NEDA), commissioners of the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC), as well as heads of various IPAs such as the Philippine Economic Zone Authority (PEZA) to promulgate the IRR.
“Things are moving forward. BOI and DOF have been meeting with the concerned agencies and the other IPAs to reconcile and consolidate inputs on a number of concerns on the proposed IRR provisions,” said Trade Undersecretary and BOI Managing Head Ceferino Rodolfo.
Rodolfo said the BOI came up with a draft IRR of the TIMTA last January 19. This IRR draft was convened with the IPAs through meetings and another six meetings with the inter-agency technical working group composed of the BOI, DOF, BIR, BOC, and the NEDA.
“The inter-agency coordination is an important part of the process for drafting the IRR. We want to ensure that the IRR maps out a robust mechanism that will show accurate and most-up-to-date information. At the same time, there is a need to make certain that in provision of such information, no unnecessary procedural burden is passed on to the investors,” he said.
Rodolfo said the concerned government agencies would jointly request the Congress to extend their time to finalize the IRR.
On Thursday, the BOI and the DOF met to resolve outstanding issues of the IRR, including the specific information that should be submitted by IPAs to companies, IPAs to BIR, BIR to BOC to DOF, and IPAs to NEDA; guidelines for BOI’s evaluation of income tax holiday applications of investors; and the conduct of cost-benefit analyses by NEDA.
Rodolfo said the BOI evaluation of income tax holiday applications of investors is included in the mandate of the BOI as the investments promotion and monitoring arm of the DTI.
BOI, as provided by Executive Order 226, is tasked to do a thorough evaluation on the application of investors for income tax holidays.
Due to the strict implementation of this evaluation on income tax holiday applications, Rodolfo said the government saved P2 billion from rejected income tax holidays requested by registered firms in 2013.