President Rodrigo Roa Duterte.
By Tracy Cabrera
MANILA — Finally, President Rodrigo Duterte has signed the Corporate Recovery and Tax Incentives for Enterprises Act, or CREATE, which cuts corporate income taxes and provides incentives to help businesses recover from the pandemic and encourage foreign investments.
The chief executive, however, rejected several provisions that would have limited the power of the Fiscal Incentives Review Board (FIRB) and would have given the President the power to exempt any investment promotion agency from reform, saying the latter could become a “highly political tool.”
Duterte also quashed several sections that would have granted redundant incentives, automatic approval of applications for tax incentives after a certain number of days and allowed registered companies to apply for new incentives they already enjoy.
He also vetoed that provisions that would have increased the threshold for value-added taxes on sales of real property, the 90-day period for the processing of general tax refunds, and the definition of investment capital.
Also dismissed was the provision enumerating the industries up for incentives. This was vetoed because there are industries mentioned that do not merit support through incentives or are expected to become obsolete in the short term.
Although Singapore’s 17-percent corporate income tax rate remains the lowest in Southeast Asia, the law brought the Philippine rate—which has now been cut to as low as 20 percent—to below the regional average of 23 percent.
In signing the CREATE law, the President noted that the law came at an opportune time as it would provide financial relief and help businesses recover from the effects of the Covid-19 pandemic.
“The measure is intended to provide long-term reform but its provisions must be “reasonable and not redundant. (This) will be the guiding document for many of (local) businesses and industry over the next decades. With over PhP600 billion in tax relief for job creation in the next five years, we lay our faith and invest in Filipino businesses for them to reinvigorate the economy, create more quality jobs, and generate more revenues for the government to tide us along these trying times,” he said in a letter to lawmakers.
Meanwhile, the local government of Antipolo has offered tax relief to private schools in the city to help ease the economic impact of the coronavirus pandemic.
“This means, no tax will be paid on business permit renewal. The fees and charges that need to be paid for renewing your business permit is also waived,” the city government explained it a social media post
However, it added that private school owners should pay the fire safety inspection fee of the Bureau of Fire Protection and the barangay clearance fee because the two mentioned institutions do not belong to the local government of Antipolo.
“I hope this will help our private schools and their students just like the previously given tax relief to businessmen earning below P200,000 annually, and the PUV drivers (tricycle, jeep, and UV) who are also no longer charged for their territorial stickers and franchise renewal,” the city government said. (AI|MTVN)