June 25th, 2021
Salceda thanks DOF, DTI for releasing implementing rules on CREATE; wants aggressive foreign investor promotion by BOI
House Ways and Means Chair and principal author of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act Joey Sarte Salceda (Albay, 2nd district) lauded the signing of the implementing rules and regulations of the tax incentives reform aspects of the law, which the House tax panel chair says will help the government gain more investments and boost its economic recovery.
“This is like installing an additional set of propellers to our economic recovery. The boost this will give our efforts to create jobs and new industries is immense,” Salceda said.
Earlier today, Finance Secretary Carlos Dominguez III and Trade and Industry Secretary Ramon Lopez announced that they signed on Monday (June 21, 2021) the implementing rules and regulations (IRR) of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, more than two weeks ahead of the July 10, 2021 deadline set under this law.
The rules released cover Title XIII of the Tax Code, on Fiscal Incentives.
“As these rules have already been released, I am confident that investors will gain more solid footing to make decisions about investing in the Philippines,” Salceda said.
“I also hope the DTI and the investment promotion agencies will help the provinces sell their own narratives about attracting investment. CREATE is strongly pro-countryside in its investments, so I am hopeful for the impact this will have on jobs in the provinces,” Salceda added.
The law cuts the regular CIT rate by up to 10 percent, from 30 percent to 20 percent for domestic corporations with a taxable income of P5 million and below, and with total assets of not more than P100 million; and 25 percent for big corporations with assets of above P100 million.
The CREATE law also introduces an improved incentives package that is performance-based, time-bound, targeted, and transparent.
The reconstituted Fiscal Incentives Review Board (FIRB), chaired and co-chaired by Dominguez and Lopez, respectively, previously instructed the IPAs to identify at least two leading companies in each industry tier in the Strategic Investment Priority Plan (SIPP) and to determine what incentives should be offered to these potential investors to encourage them to set up shop in the Philippines.
With the issuance of the IRR covering the incentives section, the CREATE Law can be fully implemented given the previous Revenue Regulations (RRs) on the other tax provisions that were released by the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR).
The IRR clarifies several questions that were raised during the consultations that include, among others, the scope of the enhanced deductions, the items that are allowed to be considered as deductions to arrive at the gross income about the special rate, and the total length of the transition period for currently registered activities or projects.
“I’m also glad that we have streamlined the procedure for applications through an electronic filing system. This is crucial. My experience during my days as an analyst and investment banker was that it was very difficult to invest in countries where you could not transact remotely. The move towards electronic applications is a welcome ease-of-doing-business move,” Salceda explained.
“The next thing to do, now that the product is here, is to sell the product. I hope the Board of Investments will really be aggressive in promoting the new incentives package. I will be seeking a briefing with my Committee on the rules soon, to see how we can help,” Salceda added.