October 6, 2020
Local and business organizations yesterday appealed to Congress and to President Duterte to retain current incentives given to exporters and regional operating headquarters (ROHQ) under a grandfather provision of the Corporate Recovery and Tax Incentives for Enterprises (CREATE).
The grandfather rule will allow those registered business enterprises (RBEs) to continue enjoying their current incentives.
In a joint statement, the Philippine business groups and the joint foreign chambers expressed support to this provision offered by Senate President Pro Tempore Ralph Recto.
They quoted Recto as saying the current draft of CREATE which sets a transition period of four, five, seven, or 9 years before switching to corporate income tax (CIT) from the current tax on gross income earned will double the income tax on most export firms.
The business groups also pushed for the explicit inclusion in Senate’s CREATE version (No. 1357) of a provision that will allow existing RBEs to register expansion activities and/or renew incentives, if qualified, after their incentives expire.
They said the registration of expansion activities and renewal of incentives were repeatedly promised to the private sector both by House Ways and Means committee chair Rep. Joey Salceda and former finance undersecretary Karl Chua in various fora and by Sen. Pia Cayetano.
“Giving the registrants the opportunity to register their expansion activities or renew their expiring incentives will further encourage foreign investment into the country and would still be in keeping with the government’s aim to make the incentives time-bound and performance-based,” the groups added.
Over 3,000 firms – almost all foreign-owned – engaged in manufacturing, business processing, and regional headquarters and employing nearly 2 million Filipinos are facing large increases in their future income taxes under the proposed CREATE. – I. Isip