DTI pushes urgent passage of CREATE bill

The Department of Trade and Industry (DTI) is seeking the immediate passage of the proposed Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act as the uncertainty on the incentives regime has been the main obstacle to attracting investments in the country.

During the European-Philippine Business Summit, Trade Undersecretary Ceferino Rodolfo said the CREATE bill needs to be passed in the very short term in a version that would be welcomed by investors.

“That would remove at least the uncertainty. At least for the past two or three years, that has been the biggest stumbling block in terms of attracting investors,” he said.

Under the proposed CREATE, the government would immediately cut the country’s corporate income tax rate to 25 percent from the current 30 percent which is considered to be the highest in Southeast Asia.

The proposed measure  seeks to make changes to the incentives system.

On the rationalization of fiscal incentives which is the contentious part of the bill, Sen. Ralph Recto has proposed three different options such as excluding Philippine Economic Zone Authority, Subic Bay Metropolitan Authority, Clark Development Corp., Authority of the Freeport Area of Bataan, and Aurora Pacific Economic Zone and Freeport Authority as well as  making a distinction between domestic and export enterprises and applying the grandfather rule.

“I think we already have a good framework…Hopefully, prior to the resumption of the plenary session on Nov. 9, we come up with a much better version,” Rodolfo said.

Rafael de Bustamante, acting head of the delegation of the European Union to the Philippines, said the EU is hopeful the passage of CREATE will help the country attract more companies including those from the bloc to set up shop.

“Likewise, we hope the uncertainties revolving around this reform will quickly be resolved, ” he said.

He said getting more European investors to enter the Philippines would create more quality jobs and help in the economy’s growth and recovery from the impact of the pandemic.

“One way to ensure this is to provide certainty and security in terms of competitive tax rates and fiscal incentives for investors,” he said.

Apart from CREATE, Rodolfo said other measures that need to be passed to entice investors to the country are the amendments to the Public Service Act, Foreign Investments Act, and the Retail Trade Liberalization Act.