The Department of Trade and Industry (DTI) has called on the bicameral Congress to urgently sign the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, a landmark reformative bill that will make the country’s tax rates more competitive in South Eaast Asia and eventually make the country an attractive investment destination. CREATE has been certified an urgent measure by the national government, and after 3 years of deliberations, is now ready for signing by Congress and into law by President Rodrigo Duterte.
CREATE bill aims for the immediate reduction of corporate income tax (CIT) rate from 30 to 20% for small and medium enterprises earning a net taxable income not exceeding PHP 5 million (USD 104 thousand) and total assets not exceeding PHP 100 million (USD 2.08 million), and from 30 to 25% for all other corporations, effective July 1, 2020 until June 30, 2023. It will also provide incentives for exporters and “critical” domestic enterprises of up to 17 years of incentives with 4-7 years of Income Tax Holiday (ITH) and 10 years of special corporate income tax (SCIT). For domestic enterprises, up to 12 years of incentives with 4-7 years of ITH and 5 years of SCIT for enterprises with capital of not less than PHP 500 million, and 5 years of enhanced deductions otherwise. The CREATE will also feature stimulus for the government’s vaccination program, specifically VAT exemption and the duty-free exemption for Covid-19 vaccines would be granted until 2025.
Apart from the CREATE bill, DTI has also called on Congress to pass other important pending bills that seek to liberalize foreign ownership in many sectors. For example, the Public Service Act Amendment, which seeks to lift limitations on foreign equity ownership in some sectors currently classified as a public utility. These include telecommunications and transport, and will now include distribution of electricity; transmission of electricity, and water pipeline distribution system or sewerage pipeline.
Additional measures being prioritized include the amendment to the Consumer Act of the Philippines and the Price Act to classify personal protective equipment as a prime commodity subject to price regulation; as well as the revised Warehouse Receipts Law that would allow farmers to use crops as collateral for bank loans. These are pending with the Lower House committees.
(Sources: BusinessWorld; Philippine Star)