Senate President Francis “Chiz” Escudero on Sunday, November 10 said he expects the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act to generate new jobs domestically and attract more foreign investments in the country once signed into law.
Escudero expressed optimism on the measure ahead of its signing into law by President Ferdinand Marcos Jr. on Monday.
The Senate leader said CREATE MORE provides at least a more predictable and consistent tax incentives regime for investors, and therefore, spur the country’s economic growth.
The measure specifically amends Republic Act 11534 or the original CREATE Act that was crafted to help enterprises recover from the impact of the pandemic by lowering the corporate income tax rates and make the country more appealing to businesses by rationalizing fiscal incentives.
“CREATE MORE seeks to encourage more investors to come to the Philippines by providing a more predictable and sustainable playing field,” Escudero said of the measure tagged as a priority legislation by the Marcos administration.
The Senate chief further said CREATE MORE will simplify and streamline the value added tax (VAT) provisions of RA 11534, particularly on the processing of VAT refund claims and the VAT zero-rating on local purchases.
Discrepancies on the rules for the application of these incentives have led to confusion among the stakeholders, Escudero noted.
But once the vague provisions are ironed out, CREATE MORE has the potential to turbocharge foreign direct investment flow into the country—one of only two ASEAN countries which have not bounced back to their pre-pandemic FDI catch, according to the senator.
“The bottomline is that it will create a more favorable investment climate that will create more jobs, spur progress without harming our revenue base,” he said.
Ang hanap lang naman ng mga negosyante ay clear, coherent, consistent rules subject to uniform interpretation and implementation (What businessmen are looking for is clear, coherent, consistent rules subject to uniform interpretation and implementation),” added Escudero.
Based on the proposed law, the corporate income tax rate of local and foreign companies will be reduced from 25 percent to 20 percent under the enhanced deductions regime.
Under CREATE MORE, deductions in power expenses of registered business enterprises (RBEs) are increased to 200 percent.
“The Philippines has among the highest power rates in the region so this will help us in becoming competitive in bringing in investors,” the lawmaker pointed out.
Meanwhile, janitorial, security, financial consultancy, marketing and human resources and other essential services are exempted from the VAT. Under the soon-to-be-law, RBEs would also be allowed to implement work-from-home arrangements for up to 50 percent of their employees.
“This is in line with our commitment for the Senate to make life easier for our people and for those who choose to do business with our people,” Escudero stressed.
“This will also result in the creation of more jobs and the transfer of technology and know-how that will empower our workers and uplift their lives in the long-term,” he further said.
“Hopefully we’ll also be able to provide needed jobs here in the Philippines and give Filipino workers an option to work here instead of simply exploring options to work abroad,” he added.