The Department of Trade and Industry (DTI) has reserved the longest years of incentives to export-oriented smart and high technology projects that are set up outside Metro Manila.
“The farther you locate your investments, the longer your incentives,” said Rafaelita Aldaba, DTI assistant secretary, at a forum hosted by the Canadian Chamber of Commerce of the Philippines last week.
Depending on the location, the so-called Tier 3 industries get as long as 17 years of tax breaks for exporters and 12 years for domestic compared with 14 and 9, respectively, for those engaged in Tier 1 industries.
“Tier 3 activities should consist primarily of activities that are adopting advanced digital production technologies, or producing equipment parts and services that embed these new technologies in the Fourth Industrial Revolution , along with activities that are engaged in R&D (research and development) as well as the commercialization of R&D, leading to accelerate innovation and increased value- added in these major sectors of the economy,” Aldaba said.
For those locating in the National Capital Region (NCR), export companies get up to 16 years in tax breaks – six years income tax holiday (ITH) and 10 years of enhanced dedication (ED) and the special corporate income tax (SCIT).
Domestic enterprises get only 11 years – six years ITH and five years of ED. They then will be subject to the regular CIT.
Exporters that locate outside NCR get 17 years tax breaks – 7 years of ITH and 10 years of ED/SCIT while enterprises catering to the domestic market get 12 years – 7 years ITH and five years ED.
Among the specific industries cited by Aldaba include smart agriculture, biotech, smart manufacturing, robotics and automation, automated machinery, robotics ams, 3D printers industrial robots, robots sensors, processes, accuators, aerospace, medical devices, among others.
Aldaba also highlighted the qualification of technology and digital intensive industries like computers, electronics, electrical machinery, machinery and transport; knowledge-intensive services like computer related, R&D (AI Center) and other businesses as well as IT business processes like creative industries (audiovisual, digital, interactive media, visual arts, cultural sites , creative services and design) and; health technology like health and medical services, video tech, edtech, sports and digital health.
