AMENDMENTS to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act are expected to accelerate the country’s reclassification as an upper middle-income country, the Philippine Economic Zone Authority (PEZA) said.
In a statement on Tuesday, PEZA Director General Tereso O. Panga said that the investment promotion agency (IPA) welcomes President Ferdinand R. Marcos, Jr.’s pronouncement of prioritizing the CREATE to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill.
“We are elated at his recognition of the benefits of the CREATE law and the assurance that the CREATE MORE bill will be a priority and passed into law this year,” he said via Viber message.
He said that the passage of CREATE MORE will allow IPAs to create a conducive business climate for investors that can compete with those of the rest of ASEAN.
“This will accelerate our country’s bid to graduate to an upper middle-income economy as we position the Philippines as the smart investment choice in the region,” he added.
During his third State of the Nation Address, Mr. Marcos recognized how the rationalized incentives scheme under the CREATE Act was able to generate investments amounting to over P1 trillion and more than 100,000 new jobs.
Last week, PEZA said that the passage of CREATE MORE will allow the IPA to hit its target of P200 billion-P250 billion worth of approvals this year.
The CREATE MORE bill, currently pending in the Senate Ways and Means Committee, seeks to cut the corporate income tax to 20% from 25%.
If passed, CREATE MORE will also revert the mandate to approve and deny tax incentives to IPAs. Currently, the mandate to grant appropriate tax incentives to registered business enterprises is with the Fiscal Incentives Review Board.
At a post-SONA briefing on Tuesday, Secretary Frederick D. Go, who heads the Office of the Special Assistant to the President for Investment and Economic Affairs, said CREATE MORE is the top priority item among the bills currently in the Senate.
“We have received very strong signals of very strong support from the Upper House,” he said, adding that the decision to amend the CREATE law resulted from the comments solicited during the President’s travels.
“Now we have the CREATE MORE Bill, which will achieve several things, foremost of which is to speed up the processing of applications for fiscal incentives for foreign direct investment as well as domestic-market enterprises,” he added.
Other provisions of the bill include the simplification of the value-added tax (VAT) provisions and clarification on the non-income tax benefits of IPA registrants.
He also said that CREATE MORE will address VAT refund issues, which are a key investor concern.
Business groups such as the American Chamber of Commerce of the Philippines (AmCham) and the IT and Business Process Association of the Philippines (IBPAP) also expressed support for the swift passage of CREATE MORE.
“Last week, we called on President Marcos to support critical legislation that will further our shared goals of inclusive growth through job generation, poverty reduction, and global competitiveness,” AmCham said in a statement.
“We appreciate that the President highlighted … CREATE MORE to update the country’s investment incentive policies to strengthen competitiveness,” it added.
IBPAP President and Chief Executive Officer Jack Madrid said that the information technology and business process management (IT-BPM) industry is hopeful that CREATE MORE will pass this year.
“This will help in clarifying and stabilizing issues with respect to fiscal incentives and remote work by allowing the different IPAs to determine the appropriate work-from-home regime,” Mr. Madrid told BusinessWorld via telephone.
“We believe that the IPAs should be able to establish their own guidelines for remote work. So, CREATE MORE will be welcome news for investors for those reasons,” he added. — Justine Irish D. Tabile
