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Private sector backs urgent passage of CREATE

MORE than 50 private sector groups are urging lawmakers to instantaneously pass a bill that would cut corporate income tax and streamline fiscal incentives.

Legislators are set to convene the bicameral conference committee to reconcile contradictory provisions in the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act passed by the Senate in November and the House version a year earlier.

The 51 private sector groups represent the banking, real estate, insurance, and outsourcing sectors, along with foreign chambers representing Spain, France, and Nordic countries. The Management Association of the Philippines, Makati Business Club, university groups, and other business councils are also represented.

“We join the multisectoral call for the passage of this important legislative measure with urgency. After three years of deliberation, every day of delay comes at the risk of losing more jobs and hemorrhaging more investments,” the groups said.

CREATE streamlines the tax incentives system to make it more time-bound and performance-based.

It would also reduce corporate income tax to 25% from 30% starting July 2020, and then by one percentage point each year from 2023 to 2027. The rate falls to 20% for local smaller companies with net taxable income of P5 million or lower and total assets less than P100 million.

“These would instantly bring the country’s CIT (corporate income tax) rate closer to the ASEAN average of 21.65% and give us more resources to retain our employees and to keep up with financial difficulties,” the groups said, adding that the reduced tax would help attract investments.

Under CREATE, Investment Promotions Agencies (IPAs) like the Philippine Economic Zone Authority will review investment projects valued at P1 billion or lower, while the Fiscal Incentives Review Board (FIRB) approves larger projects.

Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) SEIPI wants to raise this threshold for quicker approval under IPAs.

Trade Secretary Ramon M. Lopez, in a recent meeting with the new chairman of the House committee on trade and industry asked to include CREATE among priority measures this year.

He also asked Navotas Representative John Reynald M. Tiangco to prioritize the passage of a revised Consumer Act of the Philippines, as well as an expanded Price Act.