By BERNIE CAHILES-MAGKILAT
Some 32 business groups in the country have banded together to reiterate their strong support for the immediate passage of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).
“CREATE is a bold, historic economic reform, one of the largest and most game changing in decades. As a stimulus package, CREATE will be a life-restoring boost to market confidence, providing the most direct, cost-efficient and instant relief to businesses suffering from business reverses due to COVID-19,” the business groups said a joint statement.
The businessmen particularly cited the immediate reduction of corporate income tax (CIT) rate from 30 to 25 percent by July 2020, which would instantly bring the country close to the ASEAN average of 23 percent, and the further reduction of the CIT to 20 percent by 1 percentage point reduction per year from 2023 to 2027, which would brighten business outlook even further.
The instant 5 percent tax savings by July is a direct infusion of financial assistance to businesses, giving them more resources to retain employees and to keep up with financial difficulties. As an investment-attracting move, the CIT cut drastically alters, for the better, the financial prospectus of the Philippines.
They also lauded the extension of NOLCO (net operating loss carryover) for additional 2 years, from the current 3 years to 5 years, for losses incurred in 2020 for all taxpayers. This also drastically reduces the downside a company expects from COVID-19, and tilts the decision-making process very strongly towards maintaining operations through the recovery years after 2020 – making the amendment a very robust job protection measure, considering that, in 2020, substantial losses will cut across all businesses, whether large or non-large, and all sectors, especially those hard-hit by COVID-19.
They also rallied behind the proposal to give flexible authority to the Fiscal Incentives Review Board (FIRB) and the President in granting both fiscal and non-fiscal incentives. This will make the tax incentives system an agile mechanism that can adapt easily to changes in the global business environment, and can very decisively seize high-value investment opportunities when they are presented. However, we urge that proper safeguards must be put in place to prevent abuse of discretion or be a political tool to grant favors to undeserving recipients.
Lastly, businessmen support the granting of a maximum transitory period of 9 years for current holders of incentives and appropriate gross income earned (GIE) tax rate.
“We humbly request the Senate and the House of Representatives to move quickly and decisively to push CREATE forward and ensure its passage urgently, ideally before Congress adjourns on June 3. Any further delay comes at the risk of losing more jobs and hemorrhaging more investments. Pass CREATE now!,” the business groups said.
The business groups include Alyansa Agricultura, 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 & Industry Inc., Federation of Indian Chambers of Commerce (PHIL) 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, UP School of Economics Alumni Association, and Women’s Business Council Philippines.