BOTH the Senate and the House of Representatives on Wednesday, February 3, 2021, ratified the bicameral conference committee report on the proposed Corporate Recovery and Tax Incentives for Enterprises Act (Create).
The final version of the bill, which amends provisions of the National Internal Revenue Code, will be forwarded to Malacañang for approval by President Rodrigo Duterte.
Under the bill, corporate income tax (CIT) will be reduced outright to 25 percent from the current 30 percent.
While this would reduce government revenues by an estimated P37 billion, the same amount is expected to help businesses finance their operations and retain employees.
The CIT will be reduced further by one percentage point every year from 2023 to 2027.
Department of Finance (DOF) Secretary Carlos Dominguez III earlier described this measure as the “largest fiscal stimulus program for enterprises in the country’s history.”
It forms part of the government’s stimulus package for the country’s recovery from the Covid-19 pandemic economic fallout.
The measure also extends by two years the sunset period for firms paying the existing five percent tax on gross income earned (GIE) in lieu of all national and local taxes. The new sunset period is four to nine years from the existing two to seven years.
The measure also gives the President more flexibility in granting fiscal and non-fiscal incentives upon the recommendation of the Fiscal Incentives Review Board.