Albay Representative Joey Sarte Salceda on Friday thanked President Duterte for approving the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
Salceda, chairman of the House of Representatives ways and means committee chairman, said he is happy to finally help CREATE bring to the finish line as principal author and sponsor.
‘’I have received word from friends in the Palace that the core of the reform, lower corporate income tax and fiscal incentives rationalization, is intact even with some veto items on other areas. I am yet to receive a full copy of the veto message, but I am certain that Corporate Income Tax is now 20 percent for MSMEs (micro, small and medium enterprises), and 25 percent for all other corporations,’’ he disclosed.
Salceda said that the key pandemic relief, such as lower Minimum Corporate Income Tax (MCIT) and percentage taxes were also retained until June 2023.
Proprietary educational institutions and hospitals which are non-profit will pay a corporate income tax rate of one percent instead of the current 10 percent, from July 1, 2021 to June 30, 2023. This will help schools and hospitals that are crucial to the country’s post-COVID-19 recovery.
Salceda was also elated that the law retained the pro-countryside preference of his version.
Under CREATE, regions will receive the longest and biggest tax incentives, of up to 17 years for new locators, and a bonus of three years of income tax holiday (ITH) for those relocating from the National Capital Region (NCR) to these areas.
‘’We will also grant a bonus two-year ITH to areas recovering from calamities. This brings the maximum length of incentives for less-developed, disaster-recovering areas to 22 years, among the most generous in Asia.
‘’I have been assured, however, that the core of the reform was maintained,’’ he said.
As the lead tax policymaker in the House, Salceda said that he would engage in conversations with his counterpart in the Executive Branch, Finance Secretary Carlos Dominguez III, to see what they could work out on tax administration to ensure that people have enough time or leeway during the April 15 tax filing deadline.
‘’The changes in the tax code due to CREATE will clearly entail some significant accounting work on the part of businesses. If an extension is not doable, we may work out other arrangements,’’ he pointed out.
‘’CREATE has been created. This is one of the pins of light signaling the end of this dark economic tunnel,’’ he said.