MANILA, Philippines – The Board of Investments (BOI) has released the guidelines for the implementation the Investment Priorities Plan (IPP) 2014 to 2016, which serves as the blueprint for activities entitled to incentives from the government.
BOI Memorandum Circular No. 2015-1 containing the general policies and specific guidelines to implement the IPP, was published yesterday.
The circular noted the 2014 IPP approved by President Aquino in October last year, would be a rolling three-year plan to ensure continuity, consistency and predictability for both domestic and foreign investors.
While the 2014 IPP would be valid for three years, it would be reviewed annually.
The 2014 IPP lists the following as preferred activities:
• manufacturing (motor vehicles; shipbuilding; aerospace parts and components; chemicals; virgin paper pulp; copper wires and copper wire rods; basic iron and steel products; and tool and die)
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• agribusiness and fishery
• services (integrated circuit design; creative industries or knowledge-based services; ship repair; charging stations for electric vehicles; maintenance repair and overhaul of aircraft; and industrial waste treatment)
• economic and low-cost housing (horizontal and vertical)
• public infrastructure and logistics (airports and seaports for cargo and passenger and air land and water transport) and
• Public-Private Partnership Projects.
The 2014 IPP also covers export activities as well as those in special laws such as industrial tree plantation; exploration, mining, quarrying and processing of minerals; publication or printing of books; refining, storage, marketing and distribution of petroleum products; rehabilitation, self-development and self-reliance of persons with disability; renewable energy; and tourism.
The circular stated the grant of incentives would be based on the project’s substantial benefits to the economy.
A firm’s entitlement to income tax holidays (ITH) would wants be based on the following: project’s net value-added; job generation; multiplier effect; and measured capacity.
The net income qualified for ITH for all except renewable energy projects, would be limited to 110 percent of the projected gross revenues represented in the firm’s application for registration with the BOI.
In cases where the project’s actual revenues exceed projections, the BOI may adjust and increase the ITH entitlement following a request filed by the firm before the projected revenues are breached.
The ITH would only be applicable to revenues generated from services rendered to other enterprises.
“For projects involving services inherent to a project’s operation, entitlement to ITH shall be subject to the condition that 70 percent of the revenues are generated from non-related entities and service fees are within normal or regular rates,” the circular read.
The circular also noted the BOI would want to encourage registered enterprises to adopt the Inclusive Business (IB) model by providing goods and services as well as income and decent work opportunities for the low-income segment within the firm’s supply or value chain.