CREATE amendments hurdle House panel

A bill seeking to amend the Corporate Recovery and Tax Incentives for Enterprises or CREATE Law, such as further lowering income tax rates for domestic and resident foreign corporations to 25 percent to 20 percent from the initial 30 percent to 25 percent, among others, hurdled a House panel on Tuesday.

The House Committee On Ways and means greenlighted an unnumbered substitute bill to House Bill 8968, which seeks to enhance the Philippine tax incentives policy and administration.

The panel-approved measure will be dubbed CREATE to Maximize Opportunities for Reinvigorating the Economy or CREATE More.

 Conflicting provisions on VAT

The Department of Finance and other stakeholders took part the deliberations to propose amendments to the CREATE Law that will bring the country's tax incentives in line with the global minimum tax scheme.

The CREATE Law amendments should explore how to build a tax incentive regime that complies with the global minimum tax while still attracting foreign investments, according to Salceda.

Misinterpreted provision

"Some investors have been driven away because they misinterpreted the VAT provision of the original CREATE… BIR (Bureau of Internal Revenue) application on VAT," Salceda told the panel.

 The bill proposes a 20 percent yearly income tax on domestic and resident foreign corporations that have elected the increased deductions scheme provided for in Section 294. C.

 Other amendments include the reduction of the Corporate Income Tax to 20 percent for those under the enhanced deduction regime and a 200 percent deduction for power cost from 150 percent previously, which may be accumulated during the availment of income tax holiday.

The bill also proposes a 200 percent deduction for trade fair and trade mission expenses and the application of the Net Operating Loss Carryover five years after the end of the ITH period.

Tax incentives more responsive

Salceda earlier said that CREATE MORE will make the tax incentives system more responsive to the global market and more globally competitive.

The chairman asserted that the proposal is aligned with President Ferdinand Marcos Jr. and the House leadership's objective to fix all issues by the investors with the current CREATE Act and how it is implemented.

The House, Salceda said, is targeting to pass the bill on final reading by the end of the month pursuant to the President's marching orders.