Title XIII, Chapter III – The Fiscal Incentives Review Board

Sec. 297. Expanded functions of the fiscal incentives review board. – The functions and powers of the Fiscal Incentives Review Board created under Presidential Decree No. 776, as amended, shall be expanded as follows:

(A) To exercise policy making and oversight functions on the administration and grant of tax incentives by the investment promotion agencies and other government agencies administering tax incentives. In particular the Fiscal Incentives Review Board shall:

• (1) Determine the target performance metrics as conditions to avail of tax incentives;
• (2) Review and audit the compliance of other government agencies administering tax incentives, with respect to the administration and grant of tax incentives and impose sanctions such as, but not limited to, withdrawal, suspension, or cancellation of their power to grant tax incentives:
• (3) Determine the minimum contiguous land area that vertical economic zones should comply with;
• (4) Conduct regular monitoring and evaluation of investments and non-investment tax incentives, such as using cost-benefit analysis (CBA) to determine their impact on the economy and whether agreed performance targets are met; and
• (5) Check and verify, as necessary, the compliance of registered business enterprises with the terms and conditions of their availment, in particular the agreed target performance metrics, rules and regulations of this Act, and other relevant laws or issuances;

(B) To approve or disapprove, the grant of tax incentives to the extent of the registered project or activity upon the recommendation of the Investment Promotion Agency: Provided, That the application for tax incentives shall be duly accompanied by a cost-benefit analysis: Provided further, That the Fiscal Incentives Review Board shall prescribe the data requirements for the application of incentives to allow for the calculation of costs and benefits upon application: Provided, further, That the grant of tax incentives to registered projects or activities with investment capital of One billion pesos (P1,000,000,000.00) and below shall be delegated by the Fiscal Incentives Review Board to the concerned Investment Promotion Agency to the extent of the registered project or activity: Provided furthermore, That the Fiscal Incentives Review Board may increase the threshold amount of One billion pesos (P1,000,000,000. 00): Provided finally, That the application for tax incentives shall be deemed approved if not acted upon within twenty (20) days from the date of submission of the application and complete relevant supporting documents to the fiscal incentives review board or the investment promotion agency, as the case may be. (Vetoed by the President)

(C) To approve applications for tax subsidies to government- owned or controlled corporations, government instrumentalities, commissaries, and state universities and colleges.

For this purpose, the other government agencies shall ensure complete submission of applications, documents, records, books, or other data relevant or material;

(D) To formulate place-specific strategic investment plans during periods of recovery from calamities and post-conflict situations and where the Fiscal Incentives Review Board determines that there is a need to attract many classes, firms, that would accelerate the growth of a regions flagship industries, in accordance with the medium-term development plan the Fiscal Incentives Review Board may formulate and approve place-specific strategic investment plans and recommend incentives to the President, following the same procedure in Section 297;

(E) To cancel, suspend, or withdraw the enjoyment of fiscal incentives of concerned registered business enterprises on its own initiative or upon the recommendation of the Investment Promotion Agency for material violations of any of the conditions imposed in the grant of fiscal incentives, including, but not limited to, the non-compliance of the agreed performance commitments and endorse registered business enterprises whose incentives are cancelled, suspended, or withdrawn to the concerned revenue agencies for the assessment and collection of taxes and duties due commencing from the first year of availment;

(F) To cancel, suspended, or withdrawn to the concerned revenue agencies for the assessment and collection of taxes and duties due, including fines or penalties, if warranted, for violations of any of the conditions imposed in the grant of tax subsidy, or provisions of this act, or applicable rules;

(G) To require Investments Promotion Agencies and other government agencies administering tax incentives to submit, regularly or when requested, summaries of approved investment and incentives granted, and firm or entity-level tax incentives and benefits data as input to the Fiscal Incentives Review Board’s review and audit function, and evaluation of performance of recipients of tax incentives. For this purpose, the Fiscal Incentives Review Board shall maintain a masterlist of registered products and services for export or domestic consumption that are entitled to incentives: Provided, That, to facilitate compliance with the foregoing, the Department of Trade and Industry, in coordination with relevant regulatory bodies, shall cause the registration and reporting by registered business enterprises, of the types of services rendered whether domestically or to foreign clients; types of products manufactured domestically, products imported and sold locally, and products exported;

(H) To publish regularly, at per firm, the data pertaining to the amount of tax incentives, tax payments, and other related information including benefits data;

(I) To obtain information summon, examine, inquire and receive from other government agencies administering tax incentives, government-owned or controlled corporations, government commissaries, and state universities and colleges, and local government units, documents, records, books, or other data relevant or material to the resolution of issues arising from the approval, disapproval, cancellation, suspension, withdrawal or forfeiture of tax subsidy, or in imposing penalties for violations of the terms and conditions on the availment of tax subsidy, or any of the provisions of this Act;

(J) To submit annual reports to the Office of the President, as part of the budget process, covering its policy and activities in the administration of this act, including recommendations on tax incentive policies and approval of tax incentives;

(K) To decide on issues, on its own initiative or upon the recommendation of the Investment Promotion Agency, after due hearing, concerning the approval, disapproval, cancellation, suspension, withdrawal, or forfeiture of tax incentives or tax subsidy in accordance with this Act. The Fiscal Incentives Review Board shall decide on the matter within ninety (90) days from the date when the Fiscal Incentives Review Board declares the issues submitted for resolution. A business enterprise adversely affected by the decision of the Fiscal Incentives Review Board may within thirty (30) days from receipt of the adverse decision, appeal the same to the Court of Tax Appeals;

(L) To promulgate such rules and regulations as may be necessary to implement the intent and provisions of this Section;

(M) To recommend to the President the grant of appropriate non-fiscal incentives in accordance with the Strategic Investment Priority Plan for highly desirable projects or very specific industrial activities and based on: (a) benefit-cost analysis approved by the Fiscal Incentives Review Board; and (b) containing a schedule of budgets of expenditures and sources of financing with magnitudes provisionally approved via resolution for inclusion in the upcoming National Expenditure Plans by the Development Budget Coordination Committee;

(N) To adopt policies for the development and expansion of the domestic supply chain in order to reduce dependence on imports; promote diversification and sophistication of products produced and services offered, whether exported or consumed locally; and cater to local market demand; and

(O) To exercise all other powers necessary or incidental to attain the purposes of this Act and other laws vesting additional functions on the Fiscal Incentives Review Board”.

The functions of the fiscal incentives review board under Sections 297 (A) (1) and (5), (E), (G), (H), (J), and (K) shall be exercised in relation to the grant of tax incentives to registered projects or activities with the total investment capital of more than One Billion Pesos (P1,000,000,000.00) as provided herein. (Vetoed by the President)

Notwithstanding the provisions in the preceding paragraphs, tax and duty incentives granted through legislative franchises shall be excepted from the foregoing expanded powers of the Fiscal Incentives Review Board to review, withdraw, suspend, or cancel tax incentives and subsidies.

Sec. 298. Composition of the Fiscal Incentives Review Board. The Fiscal Incentives Review Board. The Fiscal Incentives Review Board shall be reconstituted as follows:

Chairperson    –           Secretary of Finance

Co- Chairperson –       Secretary of Trade and Industry

Members         –           Executive Secretary of the Office of the President

• Secretary of Budget and Management
• Director General of the National Economic and Development Authority

The Board shall have a technical committee which shall serve as its main support unit and perform functions as may be assigned, and shall be composed of the following:

Chairperson –              Undersecretary of Finance

Members –                  Undersecretary or Assistant Secretary of the Office of the Executive Secretary

• Undersecretary of Trade and Industry and Board of Investments
• Managing Head or Assistant Secretary of Trade and Industry
• Undersecretary or Assistant Secretary of Budget and Management
• Deputy or Assistant Director General of the National Economic and Development Authority
• Commissioner or Deputy Commissioner of Internal Revenue
• Commissioner or Deputy Commissioner of Customs
• Commissioner of the Philippine Competition Commission
• Director General or Chairperson or Administrator of the Investment Promotion Agencies: Provided, That the participation of the Investment Promotion Agency representative in deliberations and decision-making processes of the technical committee shall be limited to the matters concerning their Investment Promotion Agency

Secretariat –                The Secretariat shall be headed by an Assistant Secretary of Finance and shall be staffed by the National Tax Research Center

Sec. 299. Structure and Staffing Pattern – To support the expanded functions of the Fiscal Incentives Review Board, the National Tax Research Center, as Secretariat thereof, shall create three (3) additional groups, namely, Fiscal Incentives Management Group, Monitoring and Evaluation Group, and Legal Group. Each group shall be composed of at least two (2) divisions which will be headed by a deputy executive director the existing administrative and financial branch of the National Tax Research Center shall be converted into a group to be headed by a deputy executive director and will be composed of four (4) divisions, namely, finance, human resource management and development, general services, and management and information system.

Provided, That the Fiscal Incentives Review Board secretariat is authorized to determine its organizational structure and staffing pattern, and create such services, divisions, and units, as it may require or deem necessary in the future subject to the approval by the Department of Budget and Management: Provided, finally, That nothing herein modifies the existing organizational structure and staffing pattern of the Investment Promotion Agencies or affects their power to maintain or determine their respective organizational structure and staffing pattern.