THE SENATE on Monday approved on third and final reading the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill, which seeks to lower taxes on domestic and foreign companies to 20% from 25%.
Senators also approved on final reading a measure that raises the allocation for the Rice Competitiveness Enhancement Fund (RCEF) to P30 billion from the current P10 billion up to 2031.
Twenty-three senators voted in favor of Senate Bill No. 2762 or the CREATE MORE bill.
Under the bill, large, registered business enterprises (RBEs) with a capital stock of over P20 billion will be granted value-added tax (VAT) zero-rating on local purchases made and VAT exemption on imports and duty exemptions on imports of capital equipment, raw materials, spare parts and accessories.
Export-oriented RBEs are also entitled to VAT zero-rating on essential services such as janitorial, security, financial consultancy, marketing and human resources, based on a copy of the bill.
The Senate’s version of CREATE MORE transfers the responsibility of processing VAT refund claims to the Department of Finance from the Bureau of Internal Revenue (BIR) to cut delays.
“CREATE MORE offers enhance and targeted incentives to further drive investment and economic recovery in the country… To achieve this, the measure focuses on enhancing the tax incentives regime for RBEs, clarifying existing rules and policies on the grant and administration of fiscal incentives, and fostering an investment climate favorable for FDIs,” Senator Sherwin T. Gatchalian, who sponsored the bill, said in a statement.
Under the bill, RBEs may get a full 100% additional deduction on power expenses in a taxable year, up from 50% under the Tax Code, to address high power costs.
The bill also proposes a not more than 2% RBE local tax (RBELT) based on gross income. RBEs will also be allowed to have a work-from-home setup for up to half of their workforce, without losing their incentives.
Under the bill, the Philippine President would be allowed to give nonfiscal incentives to enterprises without the need for a recommendation from the Fiscal Incentives Review Board (FIRB).
The bill gives the review board the power to suspend the authority of investment promotion agencies (IPA) that grant incentives to projects and activities with an investment capital over the P20-billion threshold, programs not listed on the national or local Strategic Investment Priority Plan, or for failing to comply with regulations and orders issued by the FIRB.
Under the bill, IPAs are to oversee the operations of different economic zones and freeports and to issue incentives to businesses in these areas.
The FIRB is mandated to review and monitor the compliance of these agencies in granting these perks.
“It should improve business confidence in the Philippines, particularly as the bill sees to compete with neighboring countries in imposing corporate income tax rates for both domestic and foreign corporations,” Terry L. Ridon, a public investment analyst and convenor of the think tank InfraWatch PH, said in a Facebook Messenger chat.
The Senate’s version of CREATE MORE also exempts international carriers from paying VAT on imported fuel, goods and supplies used for international shipping or air transport operations.
RICE RESERVESMeanwhile, senators unanimously approved Senate Bill No. 2779, which amends the Agricultural Tariffication Act or Republic Act No. 11203.
The measure allows the Department of Agriculture to sell the National Food Authority’s rice reserves in areas suffering shortages or “extraordinary” high prices of rice, replenish the inventory with domestic rice, and import grain of no domestic option is available.
Under the bill, the RCEF allocation will be raised to P30 billion, which will be used for equipment to allow farmers to grow high-quality inbred rice seeds, as well as provide cash aid for farmers.
The Rice Tariffication Law had deregulated rice imports, allowing private parties to import while paying a 35% tariff on the product brought in from Southeast Asia, which generates funds for RCEF. — J.V.D.Ordoñez
