News Legacy
AdvocatesTV
July 28, 2020
DOF hopes CREATE bill will finally get lawmakers’ nod
Photo Credit: PCOO
Finance Secretary Carlos G. Dominguez III expressed the hope that President Duterte's 5th State of the Nation Address (SONA) would finally convince lawmakers to approve the proposed Corporate Recovery And Tax Incentives for Enterprises (CREATE) Act.
The chief of the Department of Finance made the pronouncement after Duterte renewed his appeal to lawmakers to greenlight the overdue measure that will provide an outright 5% cut in the corporate income tax rate (CIT).
Dominguez noted that the bill has been "recalibrated" to better attract investors looking for new supply chain hubs, create more jobs and provide the biggest ever stimulus package for businesses in the face of the global economic downturn.
“We are hoping that our lawmakers will finally give their nod to this long due tax reform that has become an integral component of our government’s bounce back plan for the domestic economy battered by the unprecedented global health crisis,” he said in a statement.
The CREATE bill, which represents Package 2 of the Duterte administration’s comprehensive tax reform program (CTRP), was approved by the House of Representatives last September, but remains pending in the Senate. The bill is the redesigned package of the Corporate Income Tax and Incentives Rationalization Act (CITIRA)
The measure aims to immediately reduce the 30% CIT rate—the region’s highest—to 25% and further cut it by 1 percentage point each year until 2027, so that the rate will only be 20% by that time.
Dominguez said the measure aims to fuel economic dynamism, especially among the country’s growth engines—the micro, small and medium enterprises (MSMEs)—that employ a majority of Filipino workers.
Based on DOF estimates, the outright CIT cut would free up almost P42 billion in business capital in the first year of implementation, and P625 billion over the succeeding five years.
“This reform will also send a strong signal to the world that the Philippines is positioning itself as a premier investment destination for companies that are looking to diversify their supply chains,” Dominguez said.
CREATE will provide targeted, time-bound incentives tailor-fitted to the needs of investors that the country wants to attract, and an enhanced net operating loss carry over (NOLCO), extended from three to five years for losses incurred in 2020 by all businesses that are not large taxpayers.
The bill also extends the sunset period for current incentive recipients from 2 to 7 years provided under the original CITIRA to 4 to 9 years to help them adjust in this time of crisis.
It will also allow the Fiscal Incentives Review Board (FIRB) to recommend to the President the grant of longer incentives and additional non-fiscal incentives for deserving investments.
The chief of the Department of Finance made the pronouncement after Duterte renewed his appeal to lawmakers to greenlight the overdue measure that will provide an outright 5% cut in the corporate income tax rate (CIT).
Dominguez noted that the bill has been "recalibrated" to better attract investors looking for new supply chain hubs, create more jobs and provide the biggest ever stimulus package for businesses in the face of the global economic downturn.
“We are hoping that our lawmakers will finally give their nod to this long due tax reform that has become an integral component of our government’s bounce back plan for the domestic economy battered by the unprecedented global health crisis,” he said in a statement.
The CREATE bill, which represents Package 2 of the Duterte administration’s comprehensive tax reform program (CTRP), was approved by the House of Representatives last September, but remains pending in the Senate. The bill is the redesigned package of the Corporate Income Tax and Incentives Rationalization Act (CITIRA)
The measure aims to immediately reduce the 30% CIT rate—the region’s highest—to 25% and further cut it by 1 percentage point each year until 2027, so that the rate will only be 20% by that time.
Dominguez said the measure aims to fuel economic dynamism, especially among the country’s growth engines—the micro, small and medium enterprises (MSMEs)—that employ a majority of Filipino workers.
Based on DOF estimates, the outright CIT cut would free up almost P42 billion in business capital in the first year of implementation, and P625 billion over the succeeding five years.
“This reform will also send a strong signal to the world that the Philippines is positioning itself as a premier investment destination for companies that are looking to diversify their supply chains,” Dominguez said.
CREATE will provide targeted, time-bound incentives tailor-fitted to the needs of investors that the country wants to attract, and an enhanced net operating loss carry over (NOLCO), extended from three to five years for losses incurred in 2020 by all businesses that are not large taxpayers.
The bill also extends the sunset period for current incentive recipients from 2 to 7 years provided under the original CITIRA to 4 to 9 years to help them adjust in this time of crisis.
It will also allow the Fiscal Incentives Review Board (FIRB) to recommend to the President the grant of longer incentives and additional non-fiscal incentives for deserving investments.