Major industry groups called on President Rodrigo Duterte to sign into law the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) which was ratified by the House of Congress and the Senate on Monday, 1 February.
“We are hopeful that the President will sign the new law soon to avoid uncertainty and put the matter to rest once and for all,” according to Financial Executives Institute of the Philippines President Francis Lim.
CREATE’s final version would lower corporate income taxes (CIT) and provide incentives to businesses.
House Speaker Lord Allan Velasco called the measure a monumental law that will provide much-needed relief to investors — whether big or small — severely impacted by the ongoing global health crisis
Lim extolled both houses of Congress for passing CREATE as one of the pillars of the government’s national economic recovery program.
The measure would lower corporate income taxes and provide incentives to businesses.
“With the reduced corporate income tax rates, the government is leaving more money in the hands of the business sector. We are particularly happy that the reduced CIT will take effect on 1 July, 2020 despite the fact that the new law will take effect in 2021,” Lim added.
He said his group has no reason to doubt that more companies will redeploy their revenue prudently and efficiently not only to help businesses recover from the pandemic but also to stimulate the economy and help retain jobs for the Filipino workforce.
For his part, European Chamber of Commerce and Industry president Nabil Francis said the swift and ultimate passage of CREATE will dispel increasing uncertainties of investors due to the ongoing pandemic.
“Opening up other investment activities such as retail and construction, as well as the further easing of doing business will also prove beneficial in attracting more investments into the country,” according to Francis.
He added that the speedy and effective rollout of the immunization program is also critical in stabilizing the current economic landscape.
“Also, with MSME (micro, small and medium enterprises) and the national economy reeling from billions of losses, there is an urgent need to swiftly put in place necessary government support measures such as Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery Act (GUIDE),” Francis said.
European Chamber of Commerce and Industry president Nabil Francis cited the need to dispel increasing uncertainties of investors due to the ongoing pandemic.
Meanwhile, American Chamber of Commerce Senior Advisor John Forbes has called on legislators to pass other laws that would liberalize foreign ownership restrictions to drive growth.
“Implementation of CREATE, GUIDE and FIST and the vaccine are top priorities. But for recovering economic growth, Congress should repeal the Foreign Investment Act, Retail Trade Liberalization Act (RTLA) and other considered foreign equity restrictions, to attract significant and new foreign direct investment inflow, same as the CREATE Bill,” Forbes told the Daily Tribune.
Under Republic Act 8762 or RTLA, enacted in 2000, foreign-owned entities are allowed to engage and invest in the retail trade business, provided they register with the Securities and Exchange Commission and Department of Trade and Industry. They are also subject to the rules providing categories to determine who are qualified to engage in retail trade.
On Friday, the House of Representatives approved on second reading House Bill 7749 or the proposed GUIDE Act that will help MSME recover from the pandemic.