President Duterte has called for the urgent approval of the proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) Act in Congress even if it could lead to an estimated government revenue loss of P97.1 billion next year.
The measure, which seeks an immediate five-percent reduction in corporate income tax, would help businesses battered by the coronavirus pandemic to recover from their feet, according to the President.
“Allow me take this opportunity to appeal to the honorable men and women of Congress to consider as urgent and pass the CREATE bill. This is crucial to our stimulus strategy to lift up flagging local firms affected by the pandemic,” the President said in his recent budget message to Congress.
Duterte said the bill would reduce corporate income tax from the current 30 to “a more competitive flat rate” of 25 percent until 2022.
The tax rate will then be further reduced by one percentage point every year until 2027. The CIT will reach 20 percent by 2027.
The CREATE bill, Duterte added, will also facilitate extended applicability of net operating loss carry-over (NOLCO) for losses incurred during the current year, more flexible tax incentives, and a longer sunset period for companies currently receiving tax incentives.
Duterte said the CREATE bill could reduce the government’s projected revenue collection of P160 billion from the Comprehensive Tax Reform Program (CTRP) to P62.7 billion next year.
“The projected reduction of government revenues from Package 2, or the CREATE bill, meanwhile, is P97.1 billion,” he said.
Apart from the CREATE bill, the government has pushed for the passage of two other economic bills — Financial Institutions Strategic Transfer (FIST) and the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE).
These measures seek to show the government’s stronger support for the private sector as the engine of growth to help the economy recover more efficiently, according to the President.
The President had earlier asked Congress to pass the P4.506-trillion national budget for 2021, saying it is a crucial tool to bankroll programs needed to recover the economy and address the need of sectors affected by the pandemic.
The proposed budget prioritizes the social services sector and funds health-related COVID programs to address the pandemic.