More than 50 private sector groups are urging lawmakers to immediately enact a bill that would cut corporate income tax and streamline fiscal incentives.
Legislators are set to convene the bicameral conference committee to reconcile clashing provisions in the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act passed by the Senate in November and the House version passed a year earlier. Versions of the tax reform measure have been under deliberations over the past three years.
The 51 private sector groups represent the banking, real estate, insurance, and outsourcing sectors, along with foreign chambers representing Spain, France, and Nordic countries. The Management Association of the Philippines, Makati Business Club, university groups, and other business councils are also represented.
“We join the multisectoral call for the passage of this important legislative measure with urgency,” the groups said in a statement on Friday.
“After three years of deliberation, every day of delay comes at the risk of losing more jobs and hemorrhaging more investments.”
The groups said that the law would improve market confidence and help businesses affected by the pandemic.
CREATE streamlines the tax incentives system to make it more time-bound and performance-based.
It would also reduce corporate income tax to 25% from 30% starting July 2020, and then by one percentage point each year from 2023 to 2027. The rate falls to 20% for local smaller companies with net taxable income of P5 million or lower and total assets less than P100 million.
“These would instantly bring the country’s CIT (corporate income tax) rate closer to the ASEAN average of 21.65% and give us more resources to retain our employees and to keep up with financial difficulties,” the groups said, adding that the reduced tax would help attract investments.
Industry group Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) is asking lawmakers to raise the potential cap on investments reviewed by investment promotions agencies (IPA) under the law.
Under CREATE, IPAs like the Philippine Economic Zone Authority will review investment projects valued at P1 billion or lower, while the Fiscal Incentives Review Board (FIRB) approves larger projects. SEIPI wants to raise this threshold for quicker approval under IPAs.
But policy think tank Action for Economic Reforms last year said that increasing the threshold would weaken tax reform by removing investments from scrutiny.
Trade Secretary Ramon M. Lopez, in a recent meeting with the new chairman of the House committee on trade and industry asked to include CREATE among priority measures this year.
He also asked Navotas Representative John Reynald M. Tiangco to prioritize the passage of a revised Consumer Act of the Philippines, as well as an expanded Price Act. — Jenina P. Ibañez