Lower taxes, investment boost
President Marcos signed yesterday the CREATE MORE Act, which aims to make the country’s tax regime more globally competitive and investment-friendly.
CREATE MORE – the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy – would make the Philippines a “destination of choice for investments,” Marcos said.
Republic Act 12066 amends RA 11534 or the CREATE Act, which was enacted in 2021 to provide economic relief to businesses affected by the COVID-19 pandemic and which had previously introduced changes in the incentives system.
CREATE MORE seeks to improve the country’s fiscal incentives policies by clarifying issues in the implementation of the CREATE Act.
Among the CREATE MORE’s key provisions is the establishment of a simplified value-added tax (VAT) refund system to streamline and reduce delays in tax processes, which at present can take over five years.
In addition, the CREATE MORE streamlines the process for projects that can enjoy incentives by raising the investment capital threshold for approval by investment promotion agencies to P15 billion from P1 billion.
“Through this law, we seek to attract both domestic – and this is an important point – both domestic and global investments, focusing on strategic industries that will shape our future,” the President said in his speech during the ceremonial signing of the CREATE MORE at Malacañang.
In addition, the CREATE MORE Act extended the maximum duration of tax incentives availment to 27 years from 17 years.
Registered business enterprises (RBEs) are set to benefit from a reduced corporate income tax rate of 20 percent. The law also grants a 100 percent additional reduction on power expenses.
The law simplifies local taxation by imposing a local tax on RBEs in lieu of all other local taxes, fees and charges.
It raised the investment capital approval threshold for Investment Promotion Agencies from P1 billion to P15 billion, ensuring that only projects exceeding this amount will now require review by the Fiscal Incentives Review Board, the President said.
CREATE MORE institutionalizes the adoption of flexible work arrangements as a business model for RBEs operating inside economic zones and freeports, without disruption in the enjoyment of their tax incentives.
“By doing this, we position the Philippines as a forward-thinking, agile economy – one that is ready to meet the demands of the digital age,” Marcos said.
The law provides tax or duty exemption on donations of capital equipment, raw materials, spare parts or accessories to the government.
In an interview at Malacañang, Special Assistant to the President for Investment and Economic Affairs Frederick Go said the CREATE MORE is now the country’s “main attraction tool” for foreign direct investments.
“So, this will attract everybody from Americans to Japanese to Koreans to Australians to British to Chinese,” Go said.
He said various foreign direct investors from various sectors, including electronics, steel, offshore wind, renewable energy and shipyard building have expressed interest in the country.
The Philippine Economic Zone Authority (PEZA) and business groups welcomed the signing of the measure, with the law anticipated to create a more favorable environment for investments.
In a Viber message yesterday, PEZA director general Tereso Panga said the enactment of the CREATE MORE Act, “strengthens the country’s ability to attract foreign direct investments and positions the Philippines as a competitive destination for export-driven industries.”
He also said the legislation directly supports PEZA’s mandate to drive investment growth, create jobs and promote sustainable development, especially in the countryside.
The Joint Foreign Chambers (JFC) composed of the American, Canadian, European, Japanese and Korean chambers, as well as the Philippine Association of Multinational Companies Regional Headquarters Inc. said that the enactment of the CREATE MORE Act is a significant milestone for the country, which aims to solidify its position as a competitive destination for investments.
Revenue losses due to CREATE MORE were estimated at P5.9 billion or equivalent to 0.0044 percent of the projected gross domestic product from 2025 to 2028.
Finance Secretary Ralph Recto, however, said the new law would open the gates to more high-impact investments both from international investors and domestic enterprises.
“This will not only attract new investments and grow existing businesses to make more money but also enable us to create more high-quality jobs, increase our people’s income and reduce poverty,” Recto said.
With the expected revenue impact from the law, Recto said the government is pursuing other revenue measures.- Louise Maureen Simeon
Source: https://www.philstar.com/business/2024/11/12/2399395/create-more-signed-law