The passage into law of the proposed Corporate Recovery and Tax Incentives for Enterprises Act bill is expected to give the country a “fighting chance” of luring more foreign direct investments under the “new normal,” an umbrella group of business organizations representing 30,000 large and micro, small and medium enterprises across the country said.
Philippine Chamber of Commerce and Industry president Benedicto Yujuico pushed for the immediate passage of the CREATE bill. He said the revisions to the original Corporate Income Tax and Incentives Rationalization Act which is now known as the CREATE bill would boost the recovery of companies reeling from the economic slowdown spawned by the health crisis.
Yujuico said in an online meeting of local and foreign business groups held via Zoom that the immediate reduction of the corporate income tax from 30 percent to 25 percent would bring the country’s rate closer to the ASEAN average and help “draw in multinational firms seeking alternative sourcing markets and manufacturing base.”
“COVID-19 and the corresponding lockdown imposed to mitigate its spread seriously damaged the economy. The business sector needs the package of reforms introduced under CREATE to help businesses recover, ensure their resilience and create more sustainable economic opportunities,” Yujuico said.
“We therefore call on the Senate and the House of Representatives to accelerate the enactment of the law,” he said.
PCCI’s members include private companies and enterprises, industry associations, local chambers of commerce and foundations operating in the Philippines.
Most of these member-companies are MSMEs that represent different areas of activities such as export and import, manufacturing and processing and distribution and logistics.
The PCCI also supported the bill’s provisions on extending the net operating loss carryover for businesses from the current three years to five years, for losses incurred in 2020; lengthening the maximum sunset period for current incentive recipients from two to seven years to four to nine years; and providing flexible authority to the Fiscal Incentives Review Board and the president in granting both fiscal and non-fiscal incentives to investors.
“Including more flexibility in granting fiscal and non-fiscal incentives will be critical as the country competes internationally for high-value investments. We support the proposed strategic, tailored approach to attracting potential investments that are uniquely deserving of incentives,” the PCCI said in a statement.
Nabil Francis, the president of the European Chamber of Commerce in the Philippines and chief executive of Republic Cement Services Inc., said the Philippines needed “to act decisively” in restarting the economy with strict safety and health protocols in place to help businesses survive.
He said the CREATE bill was “in the right direction” and essential for the Philippine economy to bounce back from the impact of the COVID-19 contagion.
About 32 local and foreign business organizations called on Congress to act “quickly and decisively” in restoring market confidence and providing the “most direct, cost-efficient and instant relief” to enterprises suffering from the coronavirus pandemic’s economic fallout by passing the CREATE bill before its sine die adjournment.
These groups representing a broad spectrum of small, medium and large businesses and professions in the country said any further delay in the CREATE bill’s approval would lead to the loss of more jobs and investments.