Senate President Francis Escudero said the soon-to-be-enacted Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act will greatly improve the country’s tax incentives regime, leading to an influx of new investors, and, in turn, create new local jobs.
President Marcos is set to sign the CREATE MORE Act into law today as a priority legislation of his administration, meant to spur economic growth in the country.
The law amends Republic Act 11534 or the original CREATE Act which was crafted to help enterprises recover from the impact of the pandemic by lowering the corporate income tax rates and make the country more appealing to businesses by rationalizing fiscal incentives.
“CREATE MORE seeks to encourage more investors to come to the Philippines by providing a more predictable and sustainable playing field,” Escudero said in a statement.
The new law will simplify and streamline the value-added tax provisions of RA 11534, particularly on the processing of VAT refund claims and the VAT zero-rating on local purchases.
According to Escudero, the discrepancies in the rules for the application of these incentives have led to confusion among the stakeholders, but with the kinks ironed out, 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 bottomline is that it will create a more favorable investment climate that will create more jobs, spur progress without harming our revenue base. In any case, what investors are really after are clear, coherent, consistent rules subject to uniform interpretation and implementation,” he pointed out.
The corporate income tax rate of local and foreign companies will 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 noted.
Essential services such as janitorial, security, financial consultancy, marketing and human resources are exempted from the VAT.
RBEs would also be allowed to implement work-from-home arrangements for up to 50 percent of their employees.
In effect, local businesses will 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 for 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,” Escudero said.
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