May 29th, 2021
Salceda asks DOF, DTI to expedite CREATE IRR release, as commitment to release rules by May nears deadline
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) asked the Department of Finance and the Department and Trade and Industry to follow through with its commitment to release the implementing rules and regulations on the fiscal incentives provisions of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act “so that the country can begin to truly say it is open for serious business.”
“Their commitment was to release it this month, so I hope, at the very least, they could release the regulations for even just the applications process by Monday, the last day of the month,” Salceda said.
Salceda adds that “the application process rules will be essential because until then, we have little clue about the kinds of industries that are coming.”
Earlier this month, the DOF and the DTI targeted May 17 for the release of the implementing rules. The agencies then revised the target date to end of May.
“The Board of Investments also told investors last week that they hope to release the rules this month. It’s crucial that we do so soon. I am having conversations with several investors and they are telling me that they are just waiting for the ground rules and they will apply,” Salceda added.
House tax committee to hold briefing on CREATE IRR
Once the rules are released, Salceda said, his committee will exercise oversight powers and seek a briefing on the operation of the rules.
“We will continue to work with the implementing agencies to see how we can make the application process easier,” Salceda said.
Salceda adds that the rules on the “superincentives” that the President can issue to exceptional investments will also be crucial, “given global industry trends.”
“Global companies are looking for areas that will be friendly to big investments. The electronics sector in particular is looking for hubs for mass production, given the shortage for semiconductors,” Salceda said.
Under CREATE, the President “may, in the interest of national economic development and upon the recommendation of the FIRB, modify the mix, period, or manner of availment of tax incentives, or craft the appropriate financial support package for a highly desirable project or a specific industrial activity based on defined development strategies for creating high-value jobs, building new industries to diversify economic activities, and attracting significant foreign and domestic capital or investment, and the fiscal requirements of the activity or project, subject to maximum incentive levels recommended by the FIRB.”
The proposed IRR said the government’s financial support can include land use, water appropriation, power provision, as well as budgetary support through the yearly national budget.
In particular, the President can grant qualified firms a maximum of 40-years of fiscal incentives, with a maximum of eight-year income tax holiday (ITH).
“That area is straightforward, so we can release the rules for this already. The vaccination drive is making significant progress, and we will probably be able to reopen the manufacturing sector fully by end of this year. We also need the jobs now. We need to take the initiative, before our competitors are able to take better advantage,” Salceda explained.