NextGen Day

MANILA, Philippines — President Rodrigo R. Duterte has signed the 2022 Strategic Investment Priority Plan (SIPP), which identifies areas in which the government seeks to attract investment through tax breaks.

The 2022 SIPP is contained in Memorandum Order No. 61, which was signed by Duterte on Tuesday but only published to reporters on Thursday. It would be a companion document to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.

The initiatives mentioned in the 2020 Investment Priorities Plan (IPP) were kept and included in Tier I of the newly constituted SIPP, according to the memorandum.

On November 18, 2020, Duterte signed the 2020 IPP. It went into effect on December 6, 2020.

The IPP is the government’s framework for high-value economic activities that are eligible for tax breaks. It includes, among other things, the production or manufacture of medications, medical equipment, and gadgets, as well as personal protective equipment (PPE), surgical equipment, and supplies.

Tier II activities are “envisioned to promote a competitive and resilient economy and fill in gaps in the Philippines’ industrial value chains, and are deemed critical in promoting green ecosystems, ensuring a reliable health system, achieving robust self-reliance in defense systems, and realizing modern, competitive, and resilient industrial and agricultural sectors,” according to the report.

Tier III will consist of tasks that are both challenging and rewarding “The application of research and development, as well as attracting technological investments, are expected to drive the economy’s transformation. It also encompasses operations such as the manufacture of new technology-enabled equipment, parts, and services, as well as the commercialization of research and development results.”

On February 7, 2022, the House of Representatives Committee on Ways and Means approved the newly constituted SIPP.

The BOI accepted the submission of the newly drafted SIPP to the President for approval on March 25 through Board Resolution No. 08-21.

The newly developed SIPP is in line with the updated Philippine Development Plan 2017-2022, as well as the long-term objective and vision of the Department of Trade and Industry’s Inclusive Innovation Industrial Strategy (i3S) and the National Academy of Science and Technology’s Pagtanaw 2050.

The CREATE Law, which went into effect on April 11, 2021, cut corporate income tax from 30% to 25% for major corporations and 20% for small and medium businesses with net taxable income of less than PHP5 million.

It offers tax breaks to both domestic and foreign investors conducting business in the country, in an effort to encourage entrepreneurs to set up domestic operations in order to promote economic activity and contribute to the economy’s sustained recovery.

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