Senate President Francis ‘Chiz’ G. Escudero expects the creation of new jobs domestically with the influx of new investors into the country now that a more predictable and consistent tax incentives regime will be in place under the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act.
President Ferdinand Marcos Jr. is set to sign into law the CREATE MORE Act tomorrow, a priority legislation of the administration meant to spur economic growth in the country.
The law amends Republic Act 11534 or the original CREATE Act which was crafted to help enterprises recover from the impact of the pandemic by lowering the corporate income tax rates and making the country more appealing to businesses by rationalizing fiscal incentives.
“CREATE MORE seeks to encourage more investors to come to the Philippines by providing a more predictable and sustainable playing field,” Escudero said.
The new law will simplify and streamline the value-added tax provisions of RA 11534, particularly on the processing of VAT refund claims and the VAT zero-rating on local purchases.
According to Escudero, the discrepancies in the rules for the application of these incentives have led to confusion among the stakeholders, but with the kinks ironed out, CREATE MORE has the potential to turbocharge foreign direct investment flow into the country—one of only two ASEAN countries which have not bounced back to their pre-pandemic FDI catch.
“The bottomline is that it will create a more favorable investment climate that will create more jobs, spur progress without harming our revenue base. Ang hanap lang naman ng mga negosyante ay clear, coherent, consistent rules subject to uniform interpretation and implementation,” he said.
The corporate income tax rate of local and foreign companies will be reduced to 20 percent from 25 percent under the enhanced deductions regime, as CREATE MORE increases the deductions in power expenses of registered business enterprises (RBEs) to 200 percent.
“The Philippines has among the highest power rates in the region so this will help us in becoming competitive in bringing in investors,” Escudero said.
Essential services such as janitorial, security, financial consultancy, marketing, and human resources are exempted from the VAT.
RBEs would also be allowed to implement work-from-home arrangements for up to 50 percent of their employees.
In effect, local businesses will benefit just as much as foreign investors with the clarity on tax and other incentives and the expected uptick in economic activity.
“This is in line with our commitment for the Senate to make life easier for our people and for those who choose to do business with our people. This will also result in the creation of more jobs and the transfer of technology and know-how that will empower our workers and uplift their lives in the long-term,” Escudero said.
“Hopefully we’ll also be able to provide needed jobs here in the Philippines and give Filipino workers an option to work here instead of simply exploring options to work abroad. Para ‘di na kailangan pang umalis ni Juan dela Cruz at maging OFW. Nandito na ang trabaho kaya ‘di na nila kailangan pang mawalay sa pamilya nila,” he added.
Senate Bill No. 2762 is the consolidation of SBN 2564 authored by Gatchalian; SBN 2684 of Sen. Juan Miguel Zubiri; House Bill No. 9794; and Senate Resolution Nos. 219, 244, and 567 filed by Senators Risa Hontiveros, Minority Leader Aquilino Pimentel III, and Gatchalian, respectively.