BoI can still grant RBEs pioneer status — DoJ

BoI can still grant RBEs pioneer status — DoJ

THE Corporate Recovery and Tax Incentives for Enterprises (CREATE) law did not take away the power of the Board of Investments (BoI) to confer pioneer status on registered business entities (RBEs), the Department of Justice (DoJ) said in a legal opinion.

It also found no conflict between conferment of pioneer status and the authority of local government units (LGUs) to grant exemptions from local business tax (LBT).

In the legal opinion addressed to Trade Secretary Alfredo E. Pascual, Justice Undersecretary Raul T. Vasquez said nothing in the CREATE law revoked the BoI’s authority to classify RBEs as pioneer or non-pioneer enterprises.

Pioneer enterprises make goods or raw materials not previously produced in the Philippines.

Mr. Pascual had asked the DoJ to weigh in on whether the CREATE law had eroded the legal basis for the LBT exemption of businesses registered with the BoI, and whether the BoI could still certify RBEs as pioneer enterprises.

“It appears the intention of the framers of the CREATE Act is to rationalize and delineate into one menu the tax incentive system,” Mr. Vasquez said.

“The fundamental rationale behind the current principle of local fiscal autonomy lies in the principle of empowering local government units and ensuring their sustainability and self-reliance through the direct conferment of comprehensive and extensive tax powers.”

He noted that the opinion was purely for guidance and is not legally binding.

He said that LGUs have the authority grant exemptions to LBTs, while the BoI only classifies RBEs.

In 2022, the BoI had issued a memorandum circular granting RBEs an exemption from LBT under the Strategic Investment Priority Plan for  six years (pioneer) or four years (non-pioneer). The BoI had sought the Justice department’s advice on whether the memo had legal basis.

The DoJ said it could not form an opinion on the matter, citing incomplete facts in the BoI’s memo.

“It would require us to make assumptions about the circular, not apparent in the query,” Mr. Vasquez said.

“The Secretary of Justice does not render opinions on questions the resolution of which hinges on factual matters that are not readily discernible from the query.” — John Victor D. Ordoñez