The Department of Trade and Industry (DTI) said the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act recently approved by the bicameral panel of Congress will help generate some two million new jobs and boost the country’s economic recovery.
The CREATE measure, principally authored by House Ways and Mwans Committee chair and Albay Rep. Joey Salceda seeks to reduce corporate income tax will attract more investments and help create more jobs.
DTI Secretary Ramon Lopez said recent bicameral approval of the game-changing CREATE Act can also provide a big boost to the National Employment Recovery Strategy (NERS) Task Force chaired by the DTI and co-chaired by the Department of Labor and Employment (DOLE) and the Technical Education and Skills Development Authority (TESDA), which was signed last Feb. 5 by several agencies.
“The landmark tax and incentives reform bill we expect the President to sign is expected to bring in (a) massive inflow of investments that will create more jobs, more so as we focus efforts in the National Employment Recovery during this period of the pandemic and beyond. The passing of CREATE will firm up the tax and incentive reforms that will make the investment climate significantly more attractive than the current tax and incentive regime,” Lopez said in a statement.
He assured the measure will surely encourage more investments with the lowering of the corporate income taxes rate from 30 percent to 20 percent over five years. It immediately reduces the 30% tax to 25% during its first year of implementation.
“Modernizing the incentives system likewise makes the incentives such as income tax holiday (ITH), special corporate income tax rates (SCIT) or enhanced deductions (ED), available to industries considered strategic, critical or export oriented,” he added.
Lopez said the length of incentives, such as four to seven years of ITH plus five or 10 years of SCIT or ED, will depend on the nature of industry, export or domestic oriented, degree of technology and value adding, and geographical location, with additional years outside the Metro Manila and urban centers.
“There is also (a) longer transition period for those currently granted incentives. Thus, incentives are now made more performance-based, focused and timebound,” he added.
CREATE is a bill certified urgent by President Duterte upon the recommendation of the economic team led by Finance Secretary Carlos Dominguez III.
Lopez also thanked the legislators at the Senate and the House of Representatives, with Sen. Pia Cayetano and Rep. Joey Salceda, respectively, as principal authors, for the hard work of the committee members in bringing the CREATE bill to fruition.
He said the passing of CREATE “will unleash the growth potential of investments by removing uncertainties during the period that the bill was under deliberation, and based on our estimate and those from Cong. Joey Salceda, CREATE can bring in over P200 billion of new investments that can generate 1.4 to 2 million incremental jobs.”
CREATE will help boost investments in the Philippines, and support the Board of Investments’ (BOI) 2021 target of P1.25-trillion investment approvals.
A report by the United Nations Conference on Trade and Development (UNCTAD) had also estimated that the Philippines bucked the trend in Southeast Asia, and had increased its foreign direct investments (FDIs) during the pandemic by 29% last year.