JAPANESE Ambassador Endo Kazuya said he is hoping fo the effective implementation of the CREATE MORE Act to draw in more Japanese investment.
In a statement, the Japanese Embassy in Manila said Mr. Endo made the remarks during a Dec. 19 visit to Trade Secretary Cristina A. Roque.
The newly signed CREATE MORE, formally known as the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Act, lowers corporate taxes to 20% from 25%, raising the prospect of more Japanese investment, the Embassy said.
The law also grants registered business enterprises (RBEs) a 100% deduction on power expenses within a taxable year, which the Embassy said will improve business conditions.
“Ambassador Endo noted that Japan is one of the major sources of investment for the Philippines,” it said. “He also expressed his hope that the effective implementation of the CREATE MORE Act, enacted in November, will contribute to an improved business environment.”
The government is expecting to forego about P5.9 billion in tax revenue in the next four years as a result of the new law, which it expects to be offset by an increase in foreign direct investment (FDI) and the taxes collected from the new businesses.
The Bangko Sentral ng Pilipinas has reported that FDI inflows fell to $368 million in September from $577 million a year earlier.
This was the lowest monthly FDI reading since the $314 million posted in April 2020, during the lockdown to curb the spread of the coronavirus disease 2019 (COVID-19).
Senator Juan Miguel F. Zubiri last year said that Japanese companies have threatened to leave the Philippines after encountering value-added tax refund issues after CREATE MORE’s precursor, the CREATE Law, came into force.
Under CREATE MORE, RBEs with capital stock of over P15 billion will be granted VAT zero-rating on local purchases, value-added tax exemptions on imports, and duty exemptions on imports of capital equipment, raw materials, spare parts and accessories. — John Victor D. Ordoñez
