THE DELAY in Congress’ approval of the proposed Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act will likely hurt the recovery prospects of businesses affected by the coronavirus pandemic, a senator said.
This after the House of Representatives decided to convene the Bicameral Conference Committee in January to reconcile the conflicting provisions of the House and Senate versions of the CREATE bill.
“As your Chair of the Senate Committee on Ways and Means, I would like to put on record that this delay in the passage of CREATE this year is a huge setback,” Senator Pia S. Cayetano said during the plenary session, Wednesday evening.
“Precisely why we had daily deliberations to the extent of setting aside other very important bills is because we recognize the importance of this bill particularly for the MSMEs (micro, small, and medium enterprises) and the business sector,” Ms. Cayetano said.
Economic managers earlier said the timely passage of the CREATE bill, which cuts corporate income tax and rationalizes fiscal incentives, will help the economy bounce back faster from the recession.
Under the approved Senate Bill No. 1357, CREATE seeks to immediately cut the corporate income tax to 25% from 30% starting July 2020. It will also cut the corporate income tax for enterprises with net taxable income not exceeding P5 million and net assets worth up to P100 million to 20%.
The CREATE bill will also allow exporters and domestic industries to enjoy four to seven years of income tax holiday. Exporters and critical domestic industries may continue to pay the 5% on gross income tax earned (GIE) in lieu of all local and national taxes for 10 years.
The Fiscal Incentives Review Board, to be led by the Finance and Trade departments, will be mandated to review incentives granted by investment promotion agencies. It will also have the authority to approve investments worth more than P1 billion.
“I’d like to point out that the reason the incentives portion was so important was because we wanted to plug the leakages and we wanted accountability,” Ms. Cayetano said.
“There is roughly P400 billion last recorded, I believe that was 2017, unaccounted for incentives that are being given away,” she added.
The House lawmakers have raised concerns on some key provisions of the Senate version of CREATE, such the revenue sharing scheme between the local government units and the National Government for registered businesses whose Special Corporate Income Tax lapsed. — C.A. Tadalan