Government gives tax breaks to P81-B Makati City subway project

MANILA, Philippines — The government has approved tax incentives for the railway operations of P81-billion Makati City subway project, which is targeted to start commercial operations in 2026.

The Fiscal Incentives Review Board (FIRB) gave the project a four-year income tax holiday, as well as a five-year enhanced deductions and duty exemption on importation of materials needed for the construction, operation, management and maintenance of the rail project, the Department of Finance said Monday.

The tax breaks will only apply these specific activities for the project, meaning regular corporate income tax rate and other levies would be collected from other business activities that would be generated from the subway operations, such as the lease of retail areas and advertising.

“In deciding to approve the project, the FIRB took into consideration the projected increase in economic productivity of P24.4 billion per year once the subway system becomes operational in 2026,” the DOF said.

The FIRB was formed by the the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, a key administration measure that seeks to cut corporate taxes and level the playing field by dismantling some tax perks deemed excessive.

The 10-kilometer Makati Subway Project is a public-private partnership between Makati City and listed Philippine Infradev Holdings Inc.

The proposed subway would connect key points in Makati such as the current Central Business District along Ayala Avenue, the Makati City Hall, the Poblacion Heritage Site, the University of Makati, Ospital ng Makati and the other new business districts within the city. 

Throughout the deliberations for the project, Finance Secretary Carlos Dominguez III said the Makati City government and the Department of Transportation should work out the details of how to connect the proposed subway to the Metro Manila Subway project of the national government. — Ian Nicolas Cigaral