MANILA, Philippines — The rail operations of the Makati City Subway project will be granted a four-year income tax holiday followed by five years of enhanced deductions and duty exemption on importation for the construction, operation, management, and maintenance of the project, the Department of Finance (DOF) said Monday.
In a statement, the DOF said the Fiscal Incentives Review Board (FIRB) has approved the grant of tax incentives for the P81-billion Makati City subway project, which is expected to begin commercial operations in January 2026.
The DOF said the board approved the tax incentive grant last month.
“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.
“This will be monitored, along with the other projected benefits, in accordance with the principle of granting incentives based on merit or performance embodied in the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law,” it added.
Finance chief Carlos Dominguez, however, clarified that this package of incentives is confined only to the activity applied for, which is the rail operation.
“The incentives approved will not apply to the other business activities that would be generated from the subway operations, such as the lease of retail areas and advertising, which should be subject to the regular corporate income tax rate and other applicable taxes,” the DOF said.
The subway project is seen to help ease traffic congestion by providing an alternative transport service to up to 700,000 commuters, and reducing the volume of vehicles plying the city streets.
Throughout the deliberations for the project, Dominguez also said that 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, the DOF said.