The Philippines should maximize the tax incentives being offered under the Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act to attract more foreign direct investments, according to a foreign business leader said.
Chris Nelson, executive director of the British Chamber of Commerce of the Philippines, said during a television interview, the need for the Philippines to further bolster its attractiveness as an investment destination.
“I think what is needed with CREATE and others is to continue looking at how you can bring in investments through tax incentives,” said Nelson.
The former top executive of Philip Morris Philippines cited the need to simplify the system in availing of the tax incentive under CREATE. The measure reduces the corporate income tax (CIT) to 25 percent for large businesses and 20 percent for micro, small and medium enterprises from 30 percent.
While he believes that CREATE is a useful measure in attracting foreign investments, he also said that it came during the pandemic wherein economies are challenged and forced to go digital. Thus, Nelson said, CREATE should be bolstered by further tax reform.
This is because, Nelson said, the CIT cut under CREATE does not really put the Philippines at the lowest level of taxation in the region.
With that, Nelson has urged for the passage of three economic bills — Retail Trade Liberalization Act (RTLA), Foreign Investments Act (FIA), and Public Service Act (PSA).
The RTLA is already with Malacanang for President Duterte’s signature, but the two other economic reform measures are still at the legislative mill.
Nelson stressed the country needs these legislations to open up the economy to drive more foreign direct investments and assist the economy in its recovery from the pandemic.
According to Nelson, the British Business Council is trying to help get UK companies to invest in the country and make the Philippines its staging point into the huge Southeast Asia market.
He said the number one strength of the Philippines is its local talents and the very significant domestic market of 110 million people.
But the Philippines has to compete with its neighbors in the region, he said, thus the need to move ahead in economic reforms.