CREATE IMPLEMENTING RULES OUT NEXT WEEK

President Duterte will soon have the power to grant hefty fiscal perks to elephant-sized investments as mandated under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, with the law’s implementing guidelines expected to be out next week.

The draft implementing rules and regulations (IRR) of CREATE Law’s provisions on tax incentives and the reconstituted Fiscal Incentives Review Board (FIRB), a copy of which was posted on the DOF’s website, are scheduled for signing on May 17.

Finance Secretary Carlos Dominguez III and Trade Secretary Ramon Lopez, as co-chairs of the FIRB, had been tasked to come out with this IRR before July 11, or 90 days after CREATE took effect on April 11.

Under CREATE, the President “may, in the interest of national economic development and upon the recommendation of the FIRB, modify the mix, period, or manner of availment of tax incentives, or craft the appropriate financial support package for a highly desirable project or a specific industrial activity based on defined development strategies for creating high-value jobs, building new industries to diversify economic activities, and attracting significant foreign and domestic capital or investment, and the fiscal requirements of the activity or project, subject to maximum incentive levels recommended by the FIRB.”

The draft IRR stated that government support could include land use, water appropriation, power provision and budgetary support through the national budget.

In particular, the President can grant qualified firms fiscal incentives for a maximum of 40 years, with a maximum of eightyear income tax holiday.

The IRR also allows a special corporate income tax rate of 5 percent.

Before the President would decide whether to grant hefty perks, the FIRB should first “determine whether the benefits that the government may derive from such investment are clear and convincing and far outweigh the cost of incentives that will be granted.”

Upon the FIRB’s recommendation, the President can exercise his power provided the project has “a comprehensive sustainable development plan with clear inclusive business approaches, and high level of sophistication and innovation; and minimum investment capital of P50 billion or its equivalent in dollars, or a minimum direct employment generation of at least 10,000 within three years from the issuance of the certificate of registration.”