Create to help attract more investments
The National Economic and Development Authority (NEDA) welcomed the enactment of the Corporate Recovery and Tax Incentives for Enterprises (Create) Act, noting the law will help the country attract more investments.
In a statement on Monday, NEDA Acting Secretary Karl Chua said Create will provide one of the country’s largest stimulus measures for micro, small and medium enterprises (MSMEs).
“The impact of Create is two-fold. First, it provides immediate relief to our MSMEs with a 5- or 10-percentage point reduction in the regular corporate income tax (CIT) rate. Second, it brings our corporate tax rate closer to our Asean peers and enhances our fiscal incentives system to help attract more foreign direct investments (FDIs), which will help generate more jobs and accelerate our recovery,” said Chua. Asean is the Association of Southeast Asian Nations.
The key provisions of the law include the reduction of the regular CIT from 30 to 20 percent for domestic corporations with a taxable income of P5 million and below, and with total assets of not more than P100 million.
It will also reduce the regular CIT from 30 to 25 percent for all other domestic corporations, as well as foreign corporations currently paying the regular rate, and provide stronger governance in the grant and review of tax incentives through the oversight function of the Fiscal Incentives Review Board, ensuring accountability and transparency.
“Create is an integral part of the economic recovery package, along with the Financial Institutions and Strategic Transfer Act and the Government Financial Institutions Unified Initiative to Distressed Enterprises for Economic Recovery bill. We thank the President and the Congress for approving this measure,” said Chua.
The NEDA chief said that Create will put the country in a better position to compete for investments.
He said, however, that gains from Create will be limited if the Philippines will not relax restrictions on foreign investments.
“To maximize the benefits from the enactment of Create, we urge Congress to urgently pass the amendments to the Public Service Act, the Foreign Investment Act, and the Retail Trade Liberalization Act this year. These bills will complement Create by easing restrictions on foreign investments,” said Chua.