Finex urges Congress to pass Create Bill

AN organization of financial executives has urged lawmakers to immediately pass the Corporate Recovery and Tax Incentives for Enterprises ( Create) Bill before Congress adjourns on June 3.

In a recent statement, the Financial Executives Institute of the Philippines (Finex) said the proposed bill would be a “liferestoring boost to market confidence, providing the most direct, cost-efficient and instant relief to businesses” suffering because of the coronavirus pandemic.

Create is a revised version of the Corporate Income Tax and Incentives Rationalization Act, which seeks to reduce gradually the corporate income tax (CIT) by 1 percentage point every year, from the current 30 percent to 20 percent by 2029.

Under the bill, the CIT rate will be reduced from 30 percent to 25 percent by July 2020, which will instantly bring the country close to the Association of Southeast Asian Nations’ average of 23 percent.

Finex Chairman Eduardo Yap claimed the bill would “brighten” the business outlook because the corporate income tax would be further reduced to 20 percent from 2023 to 2027, by 1 percentage point reduction per year.

“The instant 5-percent tax savings by July is a direct infusion of financial assistance to businesses, giving them more resources to retain employees and to keep up with financial difficulties,” he said in a statement.

The group also supports the extension of net operating loss carryover for an additional two years, from the current three to five years, for losses incurred in 2020 for all taxpayers.

The proposal to give flexible authority to the Fiscal Incentives Review Board and President Rodrigo Duterte in granting both fiscal and non- fiscal incentives should be considered, according to the group.

“This will make the tax incentives system an agile mechanism that can adapt easily to changes in the global business environment, and can very decisively seize high-value investment opportunities when they are presented,” it said, adding safeguards need to be in place.

They also backed the granting of a maximum transitory period of nine years for current holders of incentives and appropriate gross income earned tax rate.