Conduct of Interim Performance Monitoring of RBEs and IPAs

August 4, 2022 FIRB RESOLUTION NO. 023-22 WHEREAS , Section 297 (A) of the National Internal Revenue Code (NIRC) of 1997, as amended by the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, provides that the Fiscal Incentives Review Board (FIRB) shall exercise policy-making and oversight functions on the administration and grant of tax incentives by the Investment Promotion Agencies (IPAs); WHEREAS , Rule 8, Section 7 of the CREATE Act Implementing Rules and Regulations (IRR) mandates IPAs to submit to the FIRB a report on the compliance of RBEs with the terms and conditions imposed for registration and availment of tax incentives within 90 days after the statutory deadline for filing the annual income tax return for registered entities with investment capital of more than one billion pesos (P1,000,000,000.00) and within 180 days after the statutory deadline for filing the annual income tax return for registered entities with investment capital of one billion pesos (P1,000,000,000.00) and below; WHEREAS , Rule 13, Section 3 of the CREATE Act IRR provides that the FIRB, upon prior notification to the registered business and in coordination with the concerned IPA having jurisdiction over the said registered enterprise, shall have the power to verify the documents by conducting an inspection, check, or inventory count for the verification and reconciliation of the records, at any time during office hours at the registered place of business; WHEREAS , Section 297 (E) of the NIRC of 1997, as amended, empowers the FIRB to cancel, suspend, or withdraw the enjoyment of fiscal incentives of concerned registered business enterprises (RBEs) on its own initiative or upon the recommendation of the IPAs for material violations of any of the conditions imposed in the grant of fiscal incentives, including, but not limited to, the noncompliance of the agreed performance commitments and endorse RBEs whose incentives are cancelled, suspended, or withdrawn to the concerned revenue agencies for the assessment and collection of taxes and duties due commencing from the first year of availment; WHEREAS , there is a need to ensure the degree of accuracy of the reports submitted to the FIRB Secretariat to ensure the effective implementation of the CREATE Act and its IRR; NOW, THEREFORE, BE IT RESOLVED, AS IT IS HEREBY RESOLVED , that the FIRB Secretariat is granted the authority to conduct onsite inspections of RBEs, together with the concerned IPA, by conducting inspections and checking of RBE-level documents, and audit of performance commitments, among others, to verify RBEs compliance with the CREATE Act, its IRR, and the terms and conditions of registration; RESOLVED, FURTHER , that the FIRB Secretariat shall, likewise, check and validate the processes and data collected by the IPAs which may be conducted onsite or within the concerned IPA office to review their compliance with the CREATE Act and its IRR; RESOLVED, FURTHER , that any on-site inspection to be conducted by FIRB Secretariat shall be limited to the scope of work and tentative timelines attached herein as ANNEX A and ANNEX B , respectively; RESOLVED, FINALLY , that the Head of the FIRB Secretariat may approve adjustments, modify the scope of work, and/or implement other measures necessary to effectively and efficiently monitor and evaluate the performance of the IPAs and RBEs. DcHSEa This Resolution may be signed in any number of counterparts, each of which, when duly executed and sent by facsimile or electronic transmission to the Secretariat, shall be valid and effectual as if executed as an original, but all the counterparts (including those sent by way of facsimile or electronic transmission) shall together constitute one and the same document. Adopted by the Board in its meeting on 4 August 2022, where a quorum was present. (SGD.) AMENAH F. PANGANDAMAN Secretary of Budget and Management (SGD.) ARSENIO M. BALISACAN Secretary of National Economic and Development Authority VICTOR D. RODRIGUEZ Executive Secretary (SGD.) ALFREDO E. PASCUAL Co-Chairperson and Secretary of Trade and Industry (SGD.) BENJAMIN E. DIOKNO Chairperson and Secretary of Finance ANNEX A Scope of Monitoring and Evaluation Please refer below to the list of processes and documents that the FIRB Secretariat will check with the IPAs during the onsite evaluation. 1. IPA process flow on Certificate of Entitlement to Tax Incentives issuance and documentary support. 2. IPA process flow on performance audits and monitoring, including documentary support. 3. IPA process flow on Certificate of Authority to Import and List of Importables issuance and documentary support. 4. IPA approval process for projects with investment capital of P1 billion and below, with sample terms and conditions. 5. Review of IPAs' existing reportorial requirements (documents requested by the IPA from the RBEs, outside of the existing requirements of the FIRB and the FIRB Secretariat). 6. Other IPA processes related to the implementation of the CREATE Act, to be used as inputs to the development of the ex-post framework. 7. Review of the IPA's processes on the retrieval, validation, and preparation of reports, in accordance with the FIRB's reportorial requirements. On top of the enumeration mentioned above, we will also maximize the opportunity to provide updates on our impact evaluation methodologies (ex-ante and ex-post) and share significant upgrades related to the Fiscal Incentives Registration and Monitoring System. ANNEX B Breakdown of Timelines per IPA No. IPA Tentative timelines* 1 Authority of the Freeport Area of Bataan September 14-16, 2022 2 Aurora Pacific Economic Zone and Freeport Authority September 28-30, 2022 3 Bases Conversion and Development Authority September 26-30, 2022 4 Board of Investments November 15-18, 2022 5 Clark Development Corporation September 26-30, 2022 6 Cagayan Economic Zone Authority September 21-23, 2022 7 John Hay Management Corporation October 10-12, 2022 8 Philippine Economic Zone Authority November 22-25, 2022 9 Phividec Industrial Estate Authority September 27-30, 2022 10 Poro Point Management Corporation October 19-21, 2022 11 Regional Board of Investments-Bangsamoro Autonomous Region of Muslim Mindanao September 12-15, 2022 12 Subic Bay Metropolitan Authority October 5-7, 2022 13 Tourism Infrastructure and Enterprise Zone Authority October 6, 2022 14 Zamboanga City Special Economic Zone October 11-14, 2022 * Timelines may change based on operational exigencies and the availability of the corresponding IPA focals.