Connect with us

Hi, what are you looking for?

Economy

CREATE bill finally hurdles Senate

Economic managers are hoping the timely passage of the measure cutting corporate income tax and reforming the tax incentive system will help the economy bounce back faster. — REUTERS

By Charmaine A. Tadalan, Reporter

THE SENATE on Thursday approved on third and final reading a measure that will immediately lower the corporate income tax (CIT) to 25% from the current 30% rate as well as streamline fiscal incentives.

With 20 affirmative votes, one negative vote and zero abstentions, the chamber passed Senate Bill No. 1357, the “Corporate Recovery and Tax Incentives for Enterprises Act (CREATE),” which is also intended to capture investments of companies relocating out of China.

Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said the timely passage of the CREATE bill will help the economy bounce back faster from the recession.

“It will certainly help in our recovery and also to give all SME (small and medium enterprises) an incentive to be more productive and competitive,” Mr. Chua said in a Viber message on Thursday.

CREATE provides for a reduction of CIT to 25%, starting July 2020, and a reduction of one percentage point annually from 2023 to 2027.

Senator Pia S. Cayetano, chair of the Ways and Means Committee, said the bill’s current version provided to lower the CIT to 20% for businesses with income below P5 million.

“Just the other day, we also accepted a major change… 20% na lang ang CIT for those with income below P5 million,” she said during Thursday’s session. She noted the amendment was introduced by Senator Ralph G. Recto.

President Rodrigo R. Duterte had certified the bill as an urgent measure, allowing the chamber to do away with the three-day interval in passing measures on second and third reading.

Albay Rep. Jose M. Clemente S. Salceda, who chairs the House Ways and Means Committee, said there will be no need for a Bicameral Conference Committee since the House will adopt the version approved by the Senate.

“House will adopt the Senate version,” he told reporters via mobile phone message.

The CREATE bill forms part of the government’s economic stimulus package, along with the Bayanihan to Recover as One Act, under Republic Act 11494, that allocates up to P165 billion for assistance. The government will forego P40 billion in revenues for fiscal year 2020, and P650 billion in the next five years.

The CREATE bill will grant exporters and domestic industries between four to seven years of income tax holiday. They may later pay the 5% gross income earned (GIE) for 10 years.

The bill also increased the sunset provisions to 10 years from the initial proposal of four to nine years. A much earlier version, the Corporate Income Tax and Incentives Rationalization Act, provided a two- to seven-year period.

Ms. Cayetano also said the bill mandates the Fiscal Incentives Review Board (FIRB), chaired by Finance Secretary Carlos G. Dominguez III, to oversee incentives granted by investment promotion agencies (IPA) and other government agencies.

“There will be an FIRB, which based on the compromise version coming out of the period of amendments, investments P1 billion and below, IPAs will handle it.  But for (investments that are) P1 million above, FIRB will handle it, but it will still go through the IPA,” she said. “If it’s P1 billion and above then they submit it for the approval of the FIRB.”

Senator Richard J. Gordon, the lone senator to vote against the measure, had proposed to exclude the Subic Bay Metropolitan Authority, Clark Development Corp., Authority of Freeport Area of Bataan, Cagayan Economic Zone Authority, Zamboanga City Special Economic Zone Authority, and Tourism Infrastructure and Enterprise Zone Authority among others from the bill’s coverage.

The amendment, however, was rejected by a vote of 16-5. The chamber had planned to approve the bill on Wednesday evening, but was deferred until Thursday to accommodate Mr. Gordon.

Senate Majority Leader Juan Miguel F. Zubiri said he had called Mr. Dominguez on Thursday morning to find a compromise, but the secretary said the proposed exemption would be a “deal-breaker.”

“He was very firm that this is a deal-breaker, that they will veto it,” Mr. Zubiri said.

CREATE is among the priority measures President Duterte mentioned in his fifth State of the Nation Address. It is also among the bills listed down by 14 business groups as priorities in the opening of the session.

Its counterpart measure, House Bill No. 4157, was approved by the House in September 2019. — with Beatrice M. Laforga

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

Economy

Globe Telecom, Inc. said on Friday that it had inked loan facilities with BDO Unibank, Inc. and Land Bank of the Philippines for P10...

Economy

Metro Pacific Investments Corp. (MPIC) announced on Friday that its president and chief executive officer, Jose Ma. K. Lim, will be retiring effective Dec....

Economy

REAL ESTATE developer Arthaland Corp. raised P3 billion from its Series D preferred share offering, according to the Philippine Stock Exchange, Inc. (PSE) said...

Economy

Venture capital firm Kickstart Ventures, Inc. on Friday said the Ayala group had invested in SlashNext, a company that combats phishing attacks. Kickstart manages...

Economy

Volunteerism has been a key part of Globe’s corporate culture through its various employee engagement programs. In contributing to nation-building, the company is encouraging...

Investing

The UK Government’s Flexible Working Taskforce has published practical guidance for employers designed to support hybrid working models, in a bid to help organisations...

You May Also Like

Investing

Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...

Economy

Ivermectin, an existing drug against parasites including head lice, has had a checkered history when it comes to treating COVID-19. The bulk of studies...

Investing

As a traditionally rigid insurance industry becomes bogged down by antiquated processes and operations, a handful of industry leaders are seeking to shake things...

Investing

Insomnia is the most common sleep disorder in the global population. Therefore, it is a problem that many people suffer or have suffered throughout...

Disclaimer: SmartRetirementReport.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.