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PCCI urges immediate passage of CREATE bill

By BERNIE CAHILES-MAGKILAT

Business groups are calling for the immediate passage of Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), the enhanced version of the Corporate Income Tax and Incentives Reform Act (CITIRA), but also batted for longer sunset period in the availment of incentives, especially for locators in the economic zones in the country.

PCCI President, Amb. Benedicto Yujuico

PCCI President, Amb. Benedicto Yujuico

Philippine Chamber of Commerce and Industry (PCCI) President Ambassador Benedicto V. Yujuico said the enhanced tax incentives under the CREATE Bill will boost the recovery of firms reeling from the economic slowdown. PCCI is the largest umbrella of business organizations in the country representing an estimated 30,000 large, medium, small and micro-enterprises (MSMEs) nationwide.

While the CREATE bill also gained the support of big businesses based in the country’s premier financial center, the Makati Business Club has called for longer sunset provisions before shifting to the new corporate income taxation regime.

In light of the COVID-19 situation, Makati-based businesses have urged the Department of Finance and Congress to add 5 years to the sunset provisions in CITIRA for existing investors, and offer new investors at least 10 years. This refers to companies located in various economic zones in the country. “The Philippine Economic Zone Authority (PEZA) is one of the most successful investment generators of the country and we should enable it to be a leader in attracting relocators,” MBC said in a statement.

For its part, the PCCI was in favor of the granting of a maximum transitory period of nine years will provide businesses currently enjoying fiscal incentives adequate time to make the necessary adjustments before finally shifting to the new tax regime.

On the immediate reduction of the Corporate Income Tax from thirty percent to twenty-five percent, Yujuico said the savings generated from which would help fund the continued operation of businesses. “Bringing the country closer to the ASEAN average of 23 percent will help draw in multinational firms seeking alternative sourcing markets and manufacturing base,” he said.

On the extension of the applicability of the net operating loss carryover (NOLCO) for losses incurred in 2020 from the current three years to an extended five years will allow companies to deduct incurred losses from tax payments for a longer period, providing them more time to set their finances in order, PCCI requested that the extension to be applicable to all firms, regardless of size.

This is in view of the fact that the community quarantines have resulted to substantial losses across all industries and sectors.

Yujuico added that including more flexibility in granting fiscal and non-fiscal incentives will be critical as the country competes internationally for high-value investments. We support the proposed strategic, tailored approach to attracting potential investments that are uniquely deserving of incentives.

Yujuico noted that the damage COVID-19 and the corresponding lockdown imposed to mitigate its spread has seriously damaged the economy. The business sector needs the package of reforms introduced under CREATE to help businesses recover, ensure their resilience and create more sustainable economic opportunities.

“We therefore call on the Senate and the House of Representatives to accelerate the enactment of the bill into law,” he urged.

In addition, the MBC support to the role of the Financial Incentives Review Board system in the granting of incentives for very large investments above certain set thresholds, such as size of investment and jobs to be created.

“Proponents of very large investments are more willing and able to negotiate, and the government can and should give them special attention,” the statement added. MBC also reiterate support for the Depart of Finance’s (DOF) objective to make incentives performance-based, targeted, time-bound. They are also in favor of the uniform menu of incentives.

“We urge the government to codify these as soon as possible and then market them aggressively. Most investors decide by comparing packages offered by different countries and may bypass the Philippines if the process entails indefinite discussions with the government,” said MBC.

MBC welcomed cutting the corporate income tax to 25 percent this year and 20 percent as soon as possible, and delaying any changes to already-granted incentives. MBC urges Congress to quickly deliberate on and, subject to the final wording, pass a CREATE bill to end two years of uncertainty for investors, which is all the more important now.

“We would support other improvements and initiatives to make the Philippines more compelling to new investors, including in the services industry, where our young and talented population is a global brand, still in light of the wave of relocators, and our neighbors’ intensified campaigns to attract them,” MBC said.

The CREATE bill is a potential window of opportunity for the Philippines to attract businesses looking to diversify global locations, MBC said.


Source: Manila Bulletin (https://business.mb.com.ph/2020/05/26/pcci-urges-immediate-passage-of-create-bill/)

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