DTI, businesses back passage of CREATE bill

The Department of Trade and Industry (DTI) and more than 30 business groups are pushing for the immediate approval of the proposed Corporate Recovery and Tax Incentives for Enterprises Act (ACT) which will immediately reduce the corporate income tax (CIT) rate as the measure would provide relief to firms from the impact of the coronavirus disease 2019 or COVID-19 pandemic.

“The DTI, including the BOI (Board of Investments), fully supports the CREATE bill because it is better than the status quo and it is better than CITIRA (Corporate Income Tax and Incentives Rationalization Act). It is better for new investors and it is better for incumbent investors,” Trade Secretary Ramon Lopez said in a Viber message to reporters.

CREATE, the revised version of CITIRA, seeks to quickly cut the country’s CIT -rate considered among the highest in Southeast Asia - to 25 percent by July from 30 percent at present.

Under the CITIRA, the aim was to bring down the CIT rate gradually over a 10-year period to 20 percent from 30 percent.

Apart from the speedy reduction of CIT, Lopez said CREATE would provide a certain and competitive incentive regime for attracting new investors.

For firms enjoying the five percent tax on gross income earned, the bill provides a longer transition period which will allow them to enjoy the same benefit up to 2029.

Under CREATE, the net operating loss carryover (NOLCO) for losses incurred this year will be extended to five years from three years.

In addition, Lopez said CREATE would enable the country to attract highly strategic projects which create employment and use innovative technology as the President would be empowered to offer tailor-fitted incentives beyond the regular menu provided under the bill.

“This is what’s needed now. We have been talking about why the Philippines is not getting a big share of foreign investments. This is definitely one of the key answers. Aside from the infrastructure factor which is being addressed by Build Build Build, economic reforms to correct foreign equity limitations and other issues, the non-passing of corporate tax reform CREATE creates uncertainties in the business environment and we have to address this,” he said.

Finance Secretary Carlos Dominguez also urged local and foreign business groups to seek the immediate passage of CREATE in Congress before it adjourns next week.

“There is no better time to reform our corporate income tax system and modernize our fiscal incentives system than now. This could be the most important economic reform in decades,” he said.

“I strongly believe that your collective voice will finally get us over the hill in this policy effort. The unequivocal support of the business sector is crucial in urging our lawmakers to rally behind this long-overdue reform. There could not be a stronger signal that this country is back in the game than the passage of CREATE.”

In a joint statement,, business groups Alyansa Agrikultura, Anvil Business Club, Bankers Association of the Philippines, Cebu Business Club, Cebu Leads Foundation, Chinese Filipino Business Club Inc., Entrepreneurs’ Organization Philippines, Federation of Filipino-Chinese Chambers of Commerce and Industry Inc., Federation of Indian Chambers of Commerce (Philippines)

Inc., Financial Executives Institute of the Philippines, Foundation for Economic Freedom, Institute for Solidarity in Asia Inc., Institute of Corporate Directors, Investment House Association of the Philippines, Management Association of the Philippines, National Real Estate Association, Organization of Socialized Housing Developers of the Philippines, People Management Association of the Philippines, Philippine Center for Entrepreneurship, Philippine Chamber of Commerce and Industry, Philippine Council of Associations and Association Executives, Philippine Hotel Owners Association Inc., Philippine Institute of Certified Public Accountants, Philippine Retailers Association, Philippine Women’s Economic Network, Procurement and Supply Institute of Asia, Rural Bankers Association of the Philippines, Shareholders’ Association of the Philippines, Subdivision and Housing Developers Association, Tax Management Association of the Philippines, University of the Philippines School of Economics Alumni Association, and Women’s Business Council Philippines said they strongly support the immediate passage of CREATE.