LATEST CREATE VERSION STILL WANTING, SAYS PWC

The latest version of the Corporate Recovery and Tax Incentives for Enterprises Act (Create) bill needs further improvement, as it will still make doing business in the Philippines more expensive for companies that have been operating for more than a decade in economic zones.

This is according to Pricewaterhousecoopers (PWC) Philippines chair and senior partner Alexander Cabrera, who said the Create bill still needed “to acquire its best form.” “The Create bill is very good but in so far as keeping incentivized foreign investors who are already here, the Create bill still needs to acquire its best form,” he said.

The tax package is part of the Department of Finance’s (DOF) tax reform push to lower the corporate income tax (CIT) while rationalizing the tax breaks offered to certain companies, such as those in economic zones.

It was previously called Citira, or Corporate Income Tax and Incentives Reform Act. Now called Create, this proposal from the DOF has gone through substantial changes.

Changes include an immediate cut in CIT from 30 percent to 25 percent in July, as opposed to a 10-year reduction under the Citira.

But many companies in economic zones are already benefiting from low tax rate—5 percent gross income earned tax which they pay in lieu of local and national taxes.

In the meantime, 32 business groups, led by the Management Association of the Philippines and Financial Executives Institute of the Philippines, backed the passage of the Create bill, which they said was an “instant relief” for businesses struggling from the health crisis.

“Create is a bold, historic economic reform, one of the largest and most game changing in decades ... [It] will be a life-restoring boost to market confidence, providing the most direct, cost-efficient and instant relief to businesses suffering from business reverses due to COVID-19,” they said.