November 7th, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) says that the House will send the Senate its approved version of the amendments to the CREATE Law, otherwise known as the CREATE MORE Act, by end of November, to “make the tax incentives system more responsive to the global market and more globally competitive.” This, Salceda said, is in response to the instruction of President Marcos and the House leadership under Speaker Ferdinand Martin Romualdez, to “fix all investor issues with the CREATE Act and how it is implemented.”
The House tax panel chair made the pronouncement in the committee’s hearing today, November 7, its first since session resumed.
“We will send the Senate our version by the end of November. We will also approve this in the Committee next week. We were prepared to do it today, but the Office of the President requested for a bit more time to finalize its comments,” Salceda said.
The House version seeks to address “VAT rate and refund issues, especially for exporters.”
Other enhancements include the reduction of the Corporate Income Tax to 20 percent for those under the enhanced deduction regime, a 200% deduction for power cost, which may be accumulated during the availment of income tax holiday, a 200% deduction for trade fair and trade mission expenses, and the application of the Net Operating Loss Carryover five years after the end of the ITH period.
A uniform 1.5% registered business enterprise local tax (RBELT) shall be collected by investment promotion agencies “in lieu of all local impositions” in order to reduce the point of contact with local government units.
A special skills visa will also be granted to highly technical personnel employed in registered business enterprises.
The IT-BPO sector will also be allowed to fully undertake work-from-home schemes.
“This will allow one of the country’s most durable sectors to remain globally competitive. The world has moved towards hybrid, and it does not make sense to limit ourselves in this area.”
Approval of tax incentives back to IPAs, per PBBM instruction
Salceda also said that the Committee “wholeheartedly supports the President’s direction to ‘wind down’ the power of the Fiscal Incentives Review Board to grant and approve fiscal incentives.”
‘’The President wants to make the approval process more responsive. And we agree fully. So, the Committee has reverted the power to grant and approve incentives to the Investment Promotion Agencies.”
“There is, however, a role for the FIRB in policy formulation, standard-setting, and oversight. The FIRB should also be able to grant off-menu incentives.”
“We are also considering removing the proposed motu proprio power of the President to grant tax incentives, to maintain the spirit of a performance-based and standards-based tax incentives system.”
Salceda also says they hope to strengthen the FIRB’s power to recommend policies against abuse of fiscal incentives for smuggling and tax evasion.