Senator Pia Cayetano is confident that both small and big businesses will benefit from the Corporate Recovery and Tax Incentives for Enterprises or CREATE Law.
President Duterte signed on Friday, March 26, the Republic Act No. 11534, which lowers the corporate income tax (CIT) and rationalizes fiscal incentives.
"The news that my baby, the CREATE bill has been signed into law gives me a similar feeling as finishing a marathon and taking the bar exams and being told you passed," Cayetano, head of the Senate Ways and Means Committee and sponsor of the measure in the upper chamber, said on social media Saturday, March 26.
"I am truly happy it’s been signed and relieved that it’s done," she added, noting that the "highly-debated measure" was pushed 25 years ago.
The lawmaker said: "I am confident that both big businesses and MSMEs (micro, small and medium enterprises) will benefit from this law. And that we will attract more investments in our eco-zones with better packages."
The streamlined incentives provided in the law will also "ensure that the foregone government revenues translate into investments in critical industries, improving our product output in the value chain and providing jobs," Cayetano said.
The CREATE law immediately reduces the CIT rate from the current 30 percent to 20 percent for MSMEs with a net taxable income below P5 million and total assets below P100 million; and 25 percent for other corporations.
It also reduces to one percent the Minimum Corporate Income Tax (MCIT), effective July 1, 2020 until June 30, 2023. After June 30, 2023, the MCIT will revert to two percent.
The law, among others, also includes exemptions on the imposition of value-added tax for medicines and personal protective equipment (PPE), as well as drugs and vaccines for novel coronavirus disease (COVID-19).
Duterte, however, vetoed nine provisions in the Congress-approved measure.