By Filane Mikee Cervantes
September 10, 2024, 6:27 pm
The congressional bicameral conference committee on Tuesday approved the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill, which seeks to lower taxes on domestic and foreign companies to 20 percent from 25 percent.
House ways and means committee chair Joey Salceda said the Senate adopted the lower chamber’s proposals to apply the 20 percent rate on corporate income tax (CIT) to both CREATE-era and CREATE MORE-availing enterprises, permit local government units (LGUs) to set the registered business enterprise (RBE) local tax lower than 2 percent, and grant tax refunds to petroleum suppliers for all tax-exempt entities.
The CREATE MORE bill is one of the measures approved as “top priority” by the Legislative-Executive Development Advisory Council.
“I thank the Senate President (Francis Escudero), my counterpart Senator (Sherwin) Gatchalian, and Minority Leader (Koko) Pimentel, for agreeing to the House’s positions. The House accepted all the Senate’s revisions,” Salceda said in a statement.
Salceda said excise tax refunds are the only currently in effect on the basis of a 2021 Supreme Court ruling.
The RBE local tax, meanwhile, is a tax rate in lieu of all local taxes and fees, minimizing the administrative burden and interface of registered firms with LGUs.
The bill seeks to eliminate value-added tax (VAT) on essential services.
It shall also allow large domestic enterprises to receive VAT zero rating, exemption and duty exemptions.
Salceda said the CREATE MORE bill builds on the progress achieved by the CREATE Act and responds to “emerging developments in the global economy.”
“It’s also a big win for manufacturing. We solve their VAT issues, which cost some 120,000 jobs over the past 3 year,” he said.
He added the proposal would address the country’s high power cost with the additional or enhanced deduction on power cost, basically making power cheaper by around 3 pesos per kilowatt hour (kWh) for manufacturing.
“High power cost is an existential threat to Philippine industries, especially in the manufacturing sector. Because we cannot afford to subsidize power costs as our neighbors do, an enhanced deduction for power cost will be more targeted towards those who need competitive power rates to create jobs,” he said.
Salceda underscored the need to clarify any ambiguity in the CREATE Law that has led to misinterpretations either in the implementing rules and regulation or in the actual application of the law.
“While CREATE improved job creation in the services sector due to lower CIT, there is evidence that the VAT-sensitive manufacturing sector suffered due to the CREATE IRR, which deviated from legislative intent. The sector lost 41,840 jobs more than it usually does every year since the issuance of these IRRs,” he said.
The VAT regime, he said, must be simple, clear, and transaction-based.
“The incentives regime under the CREATE transition period must be without any ambiguity. And the VAT refund system must work,” he said.
The proposal, Salceda said, seeks to revert the power to grant incentives to the Investment Promotion Agencies (IPAs), while the policymaking and oversight functions of the Cabinet-level Fiscal Incentives Review Board (FIRB) shall be retained.
Salceda expressed hope that President Ferdinand R. Marcos Jr. will sign the measure “soon given his own certification of urgency on the matter.”
“It sustains the President’s very strong pro-investment record, and could cement his legacy as the President who fixed manufacturing,” he said. (PNA)
Source: https://www.pna.gov.ph/articles/1233062