Failure of Congress to adopt a bicameral conference committee report on the proposed Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act is a ‘’huge setback’’ for both the government and the business sector.
Senator Pia S. Cayetano, principal author of the CREATE bill, absolved the Senate from the blame.
She stated that a delay by the House of Representatives to name its chairman and members of its bicameral conference committee to meet with their Senate counterpart to iron out the differing provisions of their versions of the CREATE bill caused the problem.
So on the New Year, business sector would not enjoy the proposed incentives and a reduction of their corporate tax from 30 percent to 25 percent, Cayetano told her colleagues as they prepared to go on a five-week Christmas recess starting Thursday.
This bicameral conference committee might meet for the first time next year.
After the Senate passed the CREATE bill last November, Cayetano said it was only last Tuesday, December 15, that the Senate was informed that the Lower House had chosen members of its conference committee panel.
‘’So on that note, … I am sad to say that there will be no immediate decrease in the Corporate Income Tax, there will be no rationalization and certainty. What the businessmen had asked us is certainty. So that when the new year starts, they know ano papasukan nilang negosyo,’’ she said.
‘’Unfortunately, this will not happen, not because of the Senate though. I thank our colleagues and I thank the Senate President (Vicente C. Sotto III) once again for his leadership and helping us pass this measure on our part,’’ she added.
Passage by the Senate of the CREATE bill was delayed for about three weeks because it gave priority to the passage of the proposed 2021 General Appropriations Bill.
‘’I would like to put on record that this delay in the passage of CREATE this year is a huge setback. Precisely why we had daily deliberations to the extent of setting aside other very important bills is because we recognize the importance of this bill particularly for the MSMEs (Micro, Small and Medium Enterprises), and the business sector,’’ she explained.
Cayetano said the CREATE version of the Senate immediately lowers the Corporate Income Tax from 30 to 25 percent, immediately.
‘’If you would compare this to the House version, their version is only a lowering of Corporate Income Tax by one percent every year. Further, for MSMEs, if their earning is less than P5 million, they would only be paying 20 percent corporate tax,’’ she added.
Cayetano said the second part of CREATE is the incentive portion.
‘’The reason the incentives portion was so important was because we wanted to plug the leakages and we wanted accountability. There is roughly P400 billion last recorded, I believe that was 2017, unaccounted for incentives that are being given away,’’ she said.
Cayetano stressed that the importance of this measure was simply for accountability and transparency.
‘’These are incentives that otherwise would have been tax collections by the government,’’ she pointed out.
‘’There’s a 10-year transition period for companies that are currently receiving incentives, much longer than the version of the House, even longer than the original version of the Senate. And then, when they apply, for new applicants or those who will reapply, also very generous provisions,’’ she said.
Finance Secretary Carlos Dominguez III has thanked the Senate for making history with its approval on Thursday of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
Once signed into law, CREATE would finally put in place long-needed reforms in the country’s corporate tax and fiscal incentives system, he explained.
Dominguez said the Senate’s timely passage of the CREATE bill would provide businesses with one of the largest economic stimulus measures in the country’s history to help them recover from the economic turmoil caused by the COVID-19 pandemic.