The Philippine Chamber of Commerce and Industry (PCCI) has strongly pushed to fast track the enactment of the Corporate Recovery and Tax Incentives Reform or CREATE bill before yearend.
“After years of lobbying, we are hopeful that the measure will be enacted into law before the year ends,” said PCCI President Amb. Benedicto V. Yujuico during the President’s Annual Report 2020 at the PCCI Annual General Meeting. It took three years before the Senate and the House of Representatives came up with the unified CREATE bill.
The hoped for December enactment of the long delayed corporate income tax regime would certainly be an acceleration from Finance Secretary Carlos G. Dominguez III earlier pronouncement for a December transmittal of the unified CREATE version to President Duterte. Dominguez III said the immediate transmittal of the CREATE law to Malacanang will allow taxpayers to properly adjust their books and returns for the filing season as the reduction of the corporate tax rate will be retroactively applied to July 1, 2020.
Dominguez described the CREATE Bill as one of the country’s largest economic stimulus measures to help businesses recover from the economic turmoil caused by the COVID-19 pandemic.
He said the CREATE law will benefit pandemic-hit businesses, especially micro, small and medium enterprises (MSMEs), which make up 99 percent of all companies in the country.
In the Senate version, domestic corporations with total assets, excluding land, of not more than P100 million and net taxable income of P5 million and below will enjoy an immediate 10 percentage point reduction in the corporate tax from 30 percent to 20 percent.
All other corporations will benefit from an immediate reduction of the corporate tax from 30 percent to 25 percent.
Moreover, under the Senate version of CREATE, taxpayers whose gross sales or receipts do not exceed the value-added tax (VAT)-exempt threshold of P3 million and are subject to the 3 percent percentage tax shall only pay 1 percent instead from July 1, 2020 to June 30, 2023.
Proprietary and non stock educational institutions and hospitals are also among the major beneficiaries of the Senate version as it reduces the preferential tax rates enjoyed by these entities from 10 percent to 1 percent from July 1, 2020 to June 30, 2023.
On the long-overdue fiscal incentives reform, investment promotion agencies (IPAs) maintain their key functions and powers under their respective charters, but they will now be supervised by the Fiscal Incentives Review Board (FIRB).
Approvals of incentives for investments with capital exceeding P1 billion pesos will be made on the FIRB level.
Dominguez said that placing the governance of tax incentives under the body chaired by the Department of Finance and co-chaired by the Department of Trade mirrors international best practice and is a major win for the Filipino people.
The FIRB ensures accountability and transparency in the grant of tax incentives.
CREATE also enhances the flexibility of our incentives system so that we can proactively attract investments that will bring exceptional benefits to the Filipino people.
Under CREATE, a Strategic Investment Priority Plan (SIPP) shall also be formulated every three years to identify priority projects or activities that will receive incentives.
Meantime, Yujuico noted of PCCI’s leadership in the business community during the during the pandemic.
Aside from Yujuico’s thrust for innovation during his stint as PCCI president, he also led the country’s largest business organization to help government in responding to the
pandemic.
“We took on the new challenge of responding to the COVID-19 by mobilizing our local chambers,” he said.
PCCI partnered with the Asian Development Bank to provide for the most affected communities and came up with comprehensive, relevant, reliable information through various Memorandum Circulars and Chamber News, as well as advocacies to keep businesses updated on current developments.
“We conducted surveys and held dialogues with our local chambers and industry associations to assess the impact of COVID-19 on our members’ operations and generate recommendations to help accelerate the recovery process,” he said.
PCCI also launched three key programs: Roadmap to Recovery as a series of e-forums with policymakers on economic recovery programs and opportunities under the “new normal”; PinasMuna campaign for tourism, and Buy Pinoy for consumer products; and,
The innovation@ph webinars to support the transition of micro and small enterprises (MSEs) to the digital marketplace.
PCCI also successfully held its 46th Philippine Business Conference, albeit virtually.
“We became truly the voice of business, leading advocacies to help businesses survive the slowdown, seeking support for both MSMEs and large enterprises, particularly those badly-hit, practically crippled by COVID-19,” said Yujuico stressing that PCCI was practically the first organization to propose relief measures such as tax breaks, waiver of penalties and interest charges on loans, deferment of rents payments, loan restructuring even possibly grants, and increase public transport.
“Today, even with a lot of economic activities already allowed, businesses continue to face an uncertain future. Yet, despite the uncertainty, there is good to be learned from our experience,” he said.