May 25, 2020
In light of the pandemic situation, Makati Business Club applauds the Department of Finance for swiftly proposing CREATE, a revision of its corporate income tax reform bill to assist businesses at this time. CREATE could also attract companies around the world who are re-thinking how to mitigate supply chain risks in the wake of the coronavirus crisis. There is a potential window of opportunity for the Philippines to attract businesses looking to diversify global locations.
We welcome cutting the corporate income tax to 25 percent this year and 20 percent as soon as possible, and delaying any changes to already-granted incentives. MBC urges Congress to quickly deliberate on and, subject to the final wording, pass a CREATE bill to end two years of uncertainty for investors, which is all the more important now.
As the DOF and Congress discuss the bill, we urge them to consider the following suggestions, some of which we share with key industry groups:
- We support a Financial Incentives Review Board system for very large investments above certain set thresholds, such as size of investment and jobs to be created. Proponents of very large investments are more willing and able to negotiate, and the government can and should give them special attention.
- We reiterate our support for the DOF’s objective to make incentives performance-based, targeted, time-bound, and transparent. Especially for investments below the aforementioned threshold, we urge the government to codify these as soon as possible and then market them aggressively. Most investors decide by comparing packages offered by different countries and may bypass the Philippines if the process entails indefinite discussions with the government.
- We support the move to a uniform menu of incentives especially for investments below the aforementioned threshold. However, in light of the COVID-19 situation, including the improved incentives other countries are quickly offering, we urge the DOF and Congress to add 5 years to the sunset provisions in CITIRA for existing investors, and offer new investors at least 10 years. PEZA is one of the most successful investment generators of the country and we should enable it to be a leader in attracting relocators.
- We would support other improvements and initiatives to make the Philippines more compelling to new investors, including in the services industry, where our young and talented population is a global brand, still in light of the wave of relocators, and our neighbors’ intensified campaigns to attract them.
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Source: https://mbc.com.ph/2020/05/26/mbc-statement-on-create-bill/