The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act can bring in over P200 billion in new investments and generate as much as 2 million additional jobs, according to Trade and Industry Secretary Ramon M. Lopez.
According to Lopez, the bicameral approved CREATE will be a big boost to the National Employment Recovery Strategy (NERS) Task Force chaired by the Department of Trade and Industry (DTI) and co-chaired by the Department of Labor and Employment (DOLE) and the Technical Education and Skills Development Authority (TESDA), which was signed last week by several agencies.
“CREATE can bring in over P200 billion of new investments that can generate 1.4-2 million incremental jobs,” said Lopez, who said that the jobs estimate could be generated over a shorter period of time than the 10-year projection of the Department of Finance.
Lopez said the estimated investment inflow and jobs creation is based on the DTI discussions with investors and the investment leads and estimates of economist Congressman Joey Sarte-Salceda. A typical investment to job ratio is P100,000, he said.
“The landmark tax and incentives reform bill that we expect to be signed by the President is expected to bring in massive inflow of investments that will create more jobs, especially as we focus efforts in the National Employment Recovery during this period of the pandemic and beyond. The passing of CREATE will firm up the tax and incentive reforms that will make the investment climate significantly more attractive than the current tax and incentive regime,” he said.
CREATE, he said, will certainly encourage more investments with the lowering of the corporate income taxes rate from 30 percent to 20 percent for micro, small, and medium enterprises (MSMEs), and 25 percent for large corporations. Modernizing the incentives system likewise makes the incentives such as Income Tax Holiday (ITH), Special Corporate Income Tax Rates (SCIT) or Enhanced deductions (ED), available to industries considered Strategic, Critical or export oriented, he said.
He further cited the length of incentives granted to investors under CREATE, such as the 4-7 years of ITH plus 5 or 10 years of SCIT or ED depending on the nature of industry, export or domestic oriented, degree of technology and value adding, and geographical location, with additional years outside the Metro Manila and urban centers. There is also longer transition period for those currently granted incentives. Thus, incentives are now made more performance-based, focused and timebound.
“The passing of CREATE will unleash the growth potential of investments by removing uncertainties during the period that the bill was under deliberation,” Lopez added.
CREATE is a bill certified urgent by President Rodrigo Roa Duterte upon the recommendation of the economic team led by Finance Secretary Carlos Dominguez III.
The trade chief also thanked the legislators at the Senate and the House of Representatives (with Sen. Pia Cayetano and Cong. Joey Salceda, respectively, as principal authors), for the hardwork of the committee members, in bringing the CREATE bill to fruition.