Albay Rep. Joey Salceda said Sunday the Senate and the House of Representatives finally ironed out the differences on the proposed reform of corporate income tax and fiscal incentives or Package 2 of the Corporate Recovery and Tax Incentives for Enterprises (CREATE).
“It’s done. Both panels are now ready to sign. The secretariats are now preparing the final copy, we will sign this weekend, and ratify by Monday or Tuesday,” Salceda said in a statement.
Salceda, House Ways and Means Committee chairman, said both panels in a bicameral meeting over the weekend concurred major items, including shorter incentives for domestic enterprises, stringent controls against illicit trade in certain ecozones, and longer incentives for all areas outside the National Capital Region.
Another concession arrived at was that domestic enterprises will be able to avail of five years shorter special corporate income tax (SCIT) or enhanced deductions compared to the Senate version. Additionally, those with investment capital of at least PHP500 million qualify for the SCIT.
As for critical domestic industries, they will be able to avail of incentives similar to those of export enterprises.
The industries qualified as “critical” will be determined by the National Economic Development Authority, the “arbiter between fiscal health and industrial development” as Salceda described.
Salceda said some USD18 billion in foreign direct investments (FDIs) were lost over the past three years of uncertainty over the delays in passing the reform.
“Now that it’s done, I expect the investment overhang to close. Investors can now stand on more solid footing,” he said. “As far as investment uncertainty over (the) tax regime is concerned, that’s finished.”
Salceda said the bicameral conference committee of the Senate and House has agreed to grant value-added tax (VAT) and duty-free exemptions once the Package 2 of the CREATE was passed.
He said the VAT exemption and the duty-free exemption for coronavirus disease 2019 (Covid-19) vaccines would be granted until 2025.
This, Salceda said, will help expedite Covid-19 procurement, especially by the private sector.
“Vaccine rollout is the most important economic stimulus measure. We are happy to report that CREATE/CITIRA (Corporate Income Tax and Incentives Rationalization Act) will also help get it done,” he added. (PNA)