New law to create more jobs – Escudero

November 11, 2024 | 12:00am

MANILA, Philippines — As President Marcos is expected to sign today a law that will lower corporate taxes and offer tax incentives to businesses, Senate President Francis Escudero expressed optimism of an influx of new investors, creating more new jobs in the country.

Escudero said the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (Create More) Act will simplify and streamline the value added tax provisions of Republic Act 11534, particularly on the processing of VAT refund claims and the VAT zero-rating on local purchases. 

“Create More seeks to encourage more investors to come to the Philippines by providing a more predictable and sustainable playing field,” Escudero said.

Marcos is set to sign into law the Create More Act, a priority legislation of the administration meant to spur economic growth in the country.

Escudero said the law amends RA 11534, or the Create Act, that was crafted to help enterprises recover from the impact of the pandemic by lowering corporate income tax rates and making the country more appealing to businesses by rationalizing fiscal incentives.

He added that while discrepancies on the rules for the application of these incentives earlier led to confusion among stakeholders, the kinks have been ironed out.

The Senate President noted that Create More has the potential to turbocharge foreign direct investment flow into the country – one of only two ASEAN countries which have not bounced back to their pre-pandemic FDI catch.

“The bottom line is that it will create a more favorable investment climate that will create more jobs and spur progress without harming our revenue base. Businessmen simply wanted a clear, coherent and consistent rules subject to uniform interpretation and implementation,” Escudero said.

The Senate President said the corporate income tax rate of local and foreign companies would be reduced to 20 percent from 25 percent under the enhanced deductions regime, as Create More increases the deductions in power expenses of registered business enterprises (RBEs) to 200 percent.

“The Philippines has among the highest power rates in the region so this will help us in becoming competitive in bringing in investors,” Escudero said.

Under Create More, essential services such as janitorial, security, financial consultancy, marketing and human resources are exempted from the VAT. The RBEs will also be allowed to implement work-from-home arrangements for up to 50 percent of their employees.

Escudero said local businesses would benefit just as much as foreign investors with the clarity on tax and other incentives and the expected uptick in economic activity. 

“This is in line with our commitment to the Senate to make life easier for our people and for those who choose to do business with our people. This will also result in the creation of more jobs and the transfer of technology and know-how that will empower our workers and uplift their lives in the long term,” he said.