Finance department seeks immediate passage of CREATE bill

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Metro Manila (CNN Philippines, May 26) — With just a few session days left in the legislative calendar, the Department of Finance seeks swift passage of the Corporate Recovery and Tax Incentives for Enterprises Act, otherwise known as the CREATE Act.

Under the proposed measure, all businesses will only need to settle 25 percent of their net taxable income starting July if the measure is approved in Congress, a big reduction from the current 30 percent rate.

Finance Assistant Secretary Tony Lambino told CNN Philippines the passage of the bill will bring the Philippines closer to the regional average, in the process attracting more foreign investments.

"A drop from 30 percent to 25 percent is actually a ₱42 billion reduction in our revenues in the second half of 2020 alone, ₱625 billion for the succeeding five years," Lambino said in an interview. "This is really the first time the Department of Finance of the Philippines has proposed to the Philippine Congress a revenue-eroding tax reform measure. But we need it, and this is something that will really help our businesses."

Lambino said the government is looking to offer both tax and non-tax incentives for 'highly desirable' foreign investors who will serve public interest.

"If a company needs something other than tax incentives, we should be able to negotiate," Lambino said. "The jobs that will be created from these investments should be high value jobs. We are looking at high-tech sort of investments that will bring new research and technology in the country."

Lambino added that government may offer 'superior incentives' to investors setting up in less developed areas of the country, to make sure jobs "go to the areas in the country where they are needed most."

When asked what was the probability of the CREATE bill being implemented this July, Lambino said there is much going in their favor, adding that the House has already passed the bill on third and final reading, but time is short.

"The bill is a certified bill by the President, so second and third reading can happen on the same day," Lambino said. "House Ways and Means Chairman Joey Salceda has also said he is willing to forgo bicam and adopt a Senate version that is fiscally responsible."

Trade Secretary Ramon Lopez also expressed support for the immediate passage of the CREATE bill, saying this will help the Philippines attract foreign investors moving out of China.

"We have started to study what shall make them invest in the Philippines and find out what would be a tailor-fit incentive that would be meaningful for them," Lopez said in a briefing on Tuesday. "These things we’re also giving, so we’re giving it a fight and we want to compete of course in this arena."

The Philippine Chamber of Commerce and Industry, one of the largest umbrella of business organizations in the country, has also called on the Senate and House of Representatives to accelerate the enactment of the bill into law.