The Strategic Investment Priority Plan (SIPP) within the Memorandum Order (MO) No. 61 was approved by President Rodrigo Duterte on May 24, 2022 and intends to function as a companion document to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.
The law’s effectivity date was fifteen (15) days after publication in a general circulation newspaper, such as the Official Gazette. Since SIPP’s newspaper publication date was May 27, 2022, makes June 11, 2022, its date of effectivity; thus, it is now in the process of being implemented within the Philippine economy.
The government created the SIPP to identify industries needing further investments and determine if they should be given tax incentives to help with the process.
SIPP is divided into certain tiers and contains various government activities that would aid in improving the Philippine economy, such as a blueprint for those qualified for fiscal incentives, creating a more resilient and competitive economy, and utilising up-to-date research to accelerate economic transformation.
The program is in line with the updated Philippine Development Plan 2017-2022, along with the goals of the Inclusive Innovation Industrial Strategy (i3S) of the Department of Trade and Industry and Pagtanaw 2050 of the Department of Science and Technology's National Academy of Science and Technology.
Additionally, some of its activities complement CREATE law’s reduction of income tax, which removed five percent (5%) up to ten percent (10%) rates, with large establishments going from 30 percent (30%) to 25 percent (25%) and to merely 20 percent (20%) for small and medium enterprises that have net taxable income not higher than PHP5 million.
It is stated that SIPP would be able to incentivise foreign investment by giving fiscal relief to both domestic and foreign investors doing business in the country. This would present the Philippines as a prime area to set up domestic operations, which can immensely accelerate economic activities and aid with the economy’s recovery from Covid-19.
SIPP’s plans for economic improvement are rather intricate; however, the following points are the key takeaways from the program.
- The activities found in Investment Priorities Plan (IPP) are carried over to Tier I of SIPP. The IPP served as the government’s blueprint for prioritising economic activities that qualify for fiscal incentives.
- Tier II includes activities that would establish a competitive and resilient economy that is capable of filling in the Philippines’ industrial value chains, all while creating a green environment, maintaining a dependable health system, and forming resilient industrial and agricultural sectors.
- The activities in Tier III try to accelerate the transformation of the economy by using research and development to attract technology investments. The activities also tackle the production of technical equipment and parts, services that use new technologies, and commercializing the research and development output.
- The program clarified that following Section 302 of the CREATE act, activities that follow Section 296 of the CREATE act can still qualify below Tier II and Tier III, given that the appropriate agencies like the DOST correctly endorse the added activities on Tier III.
- With the program’s implementation, the government agencies were also given specific requirements:
- All government agencies must issue the proper regulations to implement the 2022 SIPP program effectively. Any action or policy that contradicts or proves inconsistent with the SIPP must not be implemented.
- All government agencies need to coordinate with the affected investment promotion agencies (lPAs) to meet the requirements of RA No. 11032 (Ease of Doing Business and Efficient Government Service Delivery Act of 2018). Furthermore, all IPAs to the best of their abilities, are obligated to expedite and manage the registered products or activities using the one-stop action center.