DEPARTMENT of Trade and Industry (DTI) Secretary Ramon Lopez has vowed to support the Corporate Reform and Tax Incentives for Enterprises Act (Create).
In a statement to SunStar Pampanga on Friday, May 29, Lopez said “the DTI, including the Board of Investments (BOI), fully supports Create because it is better than the Status Quo and it is better than the Corporate Income Tax and Incentives Reform Act (CITIRA); and it is better for new investors and for incumbent investors.”
He said Create is what is needed by the country now as businesses wrestle with the disruption in supply chains and markets brought about by the Covid-19 pandemic.
Lopez added that Create will provide immediate relief by way of a big drop in the Corporate Income Tax (CIT) rate from 30 percent to 25 percent by July 1, 2020; it will give a certain and competitive incentive regime for attracting new investors; and for those enjoying the current five percent tax on Gross Income Earned (GIE)--a longer transition period which will allow them to enjoy the same five percent GIE up to 2029. The net operating loss carryover (Nolco) application is also being made longer at five years.
Moreover, for highly strategic projects (e.g. high employment generation or employing distinctly innovative technology), the Philippines would now be able to match other countries that are able to offer flexible negotiated incentive packages as Create empowers the President to offer tailor-fitted incentives beyond the regular menu provided under the proposed bill.
“This is what’s needed now. We have been talking about why the Philippines is not getting a big share of foreign investments. This is definitely one of the key answers. Aside from the infrastructure factor (which is being addressed by Build, Build, Build), economic reforms needed to correct foreign equity limitations and other issues, and the non-passage of corporate tax reform, confusion over Create fosters uncertainties in the business environment and we have to address this,” Lopez said. (JTD)