SENATORS on Monday voted on third and final reading for passage of the CREATE MORE bill, the measure meant to improve on the CREATE law and address gaps in fiscal policy.
“Now that it is close to becoming a law, the proposed Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) is expected to bring in more foreign direct investments (FDI) that will support the country’s economic growth,” chief author and sponsor Senator Win Gatchalian said after the vote.
“With the expected enactment of the measure, CREATE MORE is anticipated to draw in more foreign direct investments, creating a ripple effect that includes job generation, improved living standards, lower prices for goods and services, and enhanced infrastructures,” added Gatchalian.
The measure, he noted, “focuses on enhancing the tax incentives regime for registered business enterprises, clarifying existing rules and policies on the grant and administration of fiscal incentives, and fostering an investment climate favorable for FDIs.”
Once enacted, CREATE MORE is seen to provide much-needed clarity regarding VAT zero-rating on local purchases and VAT exemption on the importation of goods and services. In simple terms, VAT zero-rating and exemption will now apply to goods and services clearly linked to the registered project or activity, including essential services like janitorial, security, financial, consultancy, marketing, and even administrative functions such as human resources, legal, and accounting services.
The proposed measure also introduces a not more than 2-percent Registered Business Enterprise Local Tax (RBELT) based on gross income to simplify the tax process for businesses. “Instead of paying so many different taxes to local government units, businessmen now just have to pay one kind of tax,” he added, partly in Filipino
The bill also provides for a 100-percent additional deduction on power expenses of businesses and corporations and seeks to grant a 50-percent additional deduction for reinvestment in the tourism industry.
Even the minority bloc voted for its approval as Deputy Minority Leader Risa Hontiveros, in her explanation of vote, admitted she “didn’t expect to give my support to this bill when I read the draft filed at the Senate as well as the House version of the bill.”
“I thought that the agenda of those in the Executive branch was merely to weaken the newly created FIRB [Fiscal Incentives Rationalization Board] to make it easier for businesses to get fiscal incentives, as in the old days, before the CREATE law.”
She thanked Gatchalian “for accepting the complementary amendments coming from her, together with Minority Leader Koko Pimentel, Senator Joel Villanueva and from the sponsor of the original CREATE Law, Senator Pia Cayetano.”
The trigger for approval was the agreement “to address the ambiguities in the original law and to provide extended transition periods for establishments that enjoyed privileges under the old incentives regime,” she explained.
“We also agreed to bring our fiscal incentives offerings and processes at par with those of our neighbors in the region, even as we also tried to ensure that our Investment Promotion Agencies will remain prudent, will become competent over time, and under the strong supervision of the FIRB, will only commit the government to fiscal expenditures when the proposals are aligned with our national investment priorities.”
Meanwhile, Hontiveros expressed hope that the leadership of the House of Representatives and Malacañang will consider the Senate version “and accept the provisions that we so painstakingly developed with the stakeholders of the original CREATE Law.”
This may be tough hurdle, however, as Gatchalian’s counterpart in the House, Ways and Means committee chief Rep. Joey Salceda, earlier said they will stand strongly behind the House version.
Image credits: Bibo Nueva España/Senate PRIB
