The government plans to exempt infrastructure projects with “national significance” from paying local taxes, according to the National Economic and Development Authority (Neda).
In a presentation in Japan, Socioeconomic Planning Secretary and Neda Director General Ernesto M. Pernia said this is one of the amendments that are being proposed in the build-operate-transfer (BOT) law and its implementing rules and regulations (IRR).
“After more than two decades since the enactment of the BOT program and law, which authorizes the financing, construction, operation and maintenance of infra projects by the private sector, the need to improve the framework that governs PPP has surfaced,” Pernia said. “Amendments to the BOT law and its IRR are among the priority legislations intended to raise the efficacy of private-sector participation and to keep policies attuned to the changing business environment,” he added.
Neda sources told the BusinessMirror that the proposed amendments, however, will still be presented and must be approved by the interagency Infrastructure Committee (Infracom).
But if these are approved, it will exempt private companies undertaking PPPs from paying local taxes. Currently, local government units slap taxes on PPP projects.
While the Constitution provides that “projects of national significance” be exempt from taxes, these have not been included in the BOT law and IRR.
These are all part of the government’s efforts, Pernia said, to improve PPP procurement. According to the Neda chief, other proposed amendments are the inclusion of new variants for contractual agreements, such as joint ventures, among others.
“While the Philippine PPP program has received international recognition, there are still gaps in maximizing the potential of PPP as a tool for promoting infra development and national progress,” Pernia said.
The country’s PPP Center was created in 2010 by the Aquino administration as an attached agency of the Neda. It is the main driver of the country’s PPP program and projects.
As of October 2016, there are 14 PPP projects with awarded contracts, and three of these projects have been completed and are operational. Another four projects are currently under construction and seven projects are undergoing preconstruction.