The Fiscal Incentives Review Board, chaired by Finance Secretary Carlos Dominguez III, approved on the recommendation of the Board of Investments the grant of tax incentives to a proposed P10-billion cement manufacturing project of San Miguel Corp. in Davao del Sur province.
“Its application for tax incentives was approved by the FIRB last Dec. 15, 2021 during the 10th FIRB board meeting,” Dominguez said in a statement Monday, referring to the Mindanao-based Oro Cemento Industries Corp., a unit of San Miguel.
The project is estimated to produce around 50.4 million cement bags per year to help meet the growing infrastructure requirements in Mindanao.
Voting unanimously, the FIRB board approved the grant of a two-year income tax holiday, followed by five years of enhanced deductions and duty exemption on importations of capital equipment, raw materials, spare parts, or accessories for the project, which is set to start commercial operations in July this year in Sta. Cruz, Davao del Sur.
Trade Secretary and FIRB co-chair Ramon Lopez said that approving the grant of incentives will “help achieve the country’s goal of reducing dependence on cement imports and stabilizing the price and supply of the product, on top of the economic benefits of more jobs and business activity generated by the project.”
The FIRB said that in deciding on the application, it considered the costs and benefits of granting incentives to the project.
Finance Assistant Secretary and FIRB Secretariat head Juvy Danofrata said the projected direct and indirect benefits from the project would outweighs its projected costs, which include the foregone revenues from the tax incentives.
The project is expected to stimulate forward linkages, promote the use of energy-efficient equipment that can lead to a transfer of knowledge and improvement in productivity, especially in the underdeveloped area where the project is located.
The FIRB is an interagency government body created by Republic Act No. 11534 to grant tax incentives to registered business enterprises. It also grants tax subsidies to government-owned and -controlled corporations.
The law harmonizes the tax incentives given by different investment promotion agencies and reduced the corporate income tax rate of micro, small and medium enterprises from 30 percent to 20 percent and the rate on large corporations from 30 to 25 percent.
It also provides generous and flexible tax incentive system that is performance-based, time-bound, targeted and transparent.