This November 2019 file photo shows Finance Secretary Carlos Dominguez 3rd delivering a speech during the World Rice Conference at the Makati Shangri-La, Manila hotel in Makati City. PHOTO BY PAUL SUGANO
The Department of Finance (DoF) on Friday expressed confidence that the proposed Corporate Recovery and Tax Incentives for Enterprises (Create) Act would be passed this year.
“We have been engaged with the Senate very intensely [on Create] over the last two or three weeks. We see [the] light at the end of the tunnel, and we expect this to be done by the end of this year,” Finance Secretary Carlos Dominguez 3rd said during a virtual conference hosted by the Philippine embassy in Washington, D.C.
The second package of the government’s Comprehensive Tax Reform Program, the measure seeks to reduce the corporate income tax rate from the current 30 percent to 25 percent this year, and further trim it by 1 percentage point starting in 2023 to reach 20 percent in 2027. It also seeks to rationalize incentives currently being enjoyed by select firms, especially those in economic zones.
The Senate is currently deliberating on its own version of Create.
“Through Create, we see an opportunity to deepen our trade and investment partnership with the United States by incentivizing industries with higher value-added,” Dominguez said.
Also on Friday, the Joint Foreign Chambers (JFC) of the Philippines lauded the Senate for the “measured and deliberate process” it is undertaking to craft the bill.
“In particular, we strongly support the amendments proposed by Sen. [Ralph] Recto and the points he raised during his interpellation which successfully underscored the fierce competition exporters based in the Philippines face in the global export market,” it said in a statement.
It added that Recto’s proposal for “grandfathering” incentives would ensure that existing investors would continue to invest in the country in the long term and signal prospective investors that there is stability and consistency in the implementation of policy in the country.
“While it has been a long and exhausting process to get the Create bill close to the finish line, we trust that in the following weeks the immense effort that the Senate has expended on the measure will pay off in a law that will not only benefit foreign and Filipino companies, but more importantly, continue to allow global export firms to provide jobs to millions of Filipinos and help to power up the restart of the Philippine economy,” the JFC said.
Meanwhile, the Semiconductor and Electronics Industries in the Philippines Foundation Inc. (Seipi) said it appreciated the efforts of Recto and other senators for introducing amendments to the Senate version of Create on rationalizing incentives.
“His proposed options demonstrate an astute understanding of the business-decision factors that multi-national companies, which have factories in other Asian countries, consider in order to retain and/or increase investments in the Philippines,” it added.
Without competitive incentives, Seipi said, it would be extremely difficult to attract new investments. It added that without competitive incentives to attract investments in new products, existing electronics companies would run mostly legacy products until obsolescence, after which they may shut down.
It also warned that the country runs the risk of significant job losses over the next five years.
“We appeal to our Senators to retain our fiscal incentives to ensure the continuity of operations and jobs, as well as investments, for the survival of the electronics industry,” the industry group said.