The signing of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law, which is the centerpiece corporate tax reform legislation of President Rodrigo Duterte, can’t be more propitious as the nation climbs back to its feet.
Returning most of the capital region to a more relaxed quarantine restriction after much thought from the decision makers was meant to preserve the gains emerging from the passage of the law.
Employment prospects, according to the Department of Finance, are improving.
Instead of subsidy packages, which business groups are demanding, the calibrated tax relief through the new law will provide the needed spark for enterprises to hurdle the challenges of the pandemic.
Micro, small and medium enterprises (MSME), which comprise the backbone of the economy and are considered the sector which absorbed the strongest backlash of the lockdowns, are expected to gain from the reduced corporate income tax.
CREATE provided the biggest tax cut to MSME from 30 percent to 20 percent.
The United States is mimicking the reform measure and is moving away from the policy of providing huge subsidies for businesses.
Similar to CREATE, the US government is proposing to back both a minimum global corporate tax rate as well as a reallocation of corporate tax to jumpstart its economy.
With the unemployment rate still at a precarious 8.8 percent, Filipinos can also look forward to a wider source of livelihood either through jobs or better still setting up their own businesses as a result of the perks available under the law.
The quarantine period had tested the resiliency of most businesses, which are thriving with the barest assistance from the government, which is saddled with protecting the welfare of the poorest sector.
Time-bound solutions are emerging as the strategy of the government in addressing the crisis similar to the fiscal incentives which are targeted and offered for a limited period under CREATE.
Quarantine measures are also moving toward being localized and time-bound to prevent serious disruptions to the wheels of the economy.
Contrary to the detractors’ claim that there is no battle plan against the coronavirus disease 2019, Mr. Duterte’s reform-minded economic managers had long prepared the country for major shocks but which the myopic critics failed to appreciate.
Confusion, however, is evident among the nitpickers since one group would clamor for relaxing the lockdown measures and allow a normal course for businesses, while their cohorts indict Mr. Duterte for the rising infections and deaths which are, however, happening in most open economies.
Most of the neighbors that claim to have placed the outbreak under control are under restrictive governments, such as Singapore and Vietnam.
Solutions to the nation’s problems are forthcoming since the fundamentals for a quick recovery are in place.