A formidable group of 32 local and foreign business organizations have called on the Congress to act “quickly and decisively” in restoring market confidence and providing the “most direct, cost-efficient and instant relief” to enterprises suffering from the coronavirus pandemic’s economic fallout by passing the proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) before its sine die adjournment next week.
In a joint manifesto, these groups representing a broad spectrum of small, medium and large businesses and professions in the country told lawmakers any further delay in the CREATE bill’s approval would lead to the loss of more jobs and investments.
These organizations noted that the immediate reduction in the corporate income tax (CIT) rate from 30 percent to 25 percent by July translates into a “direct infusion of financial assistance to businesses, giving them more resources to retain employees and to keep up with financial difficulties.”
“We humbly request the Senate and the House of Representatives to move quickly and decisively to push CREATE forward and ensure its passage urgently, ideally before Congress adjourns on June 3. Any further delay comes at the risk of losing more jobs and hemorrhaging more investments. Pass CREATE now!” stated the manifesto.
The manifesto was read by Eduardo Yap, the chairman of the national affairs committee of the Financial Executives Institute of the Philippines (FINEX), during a virtual joint meeting of local and foreign business groups held Thursday via Zoom.
It was then presented online to Finance Secretary Carlos Dominguez III, one of the guest speakers during the virtual meeting, who then thanked the business organizations for their support for the CREATE bill.
“We value it. (The CREATE bill) is a real step forward for the country,” Dominguez said in response to this overwhelming show of support for the corporate tax reform measure, which is the redesigned Package 2 of the Duterte administration’s Comprehensive Tax Reform Program (CTRP).
The joint manifesto will also be submitted by the business organizations to the Senate and House of Representatives next week. The 18th Congress is holding next week the last session week of its First Regular Session before going on its June 6-July 26 adjournment.
Among the organizations supporting the CREATE bill are the Philippine Chamber of Commerce and Industry (PCCI), Federation of Filipino-Chinese Chambers of Commerce & Industry, Inc. (FFCCCII), FINEX, Philippine Center for Entrepreneurship (Go Negosyo), Management Association of the Philippines (MAP), Philippine Council of Associations and Association Executives (PCAAE), Rural Bankers Association of the Philippines (RBAP), Shareholders Association of the Philippines (SharePHIL), Tax Management Association of the Philippines (TMAP), Alyansa Agrikultura, Bankers Association of the Philippines (BAP), Foundation for Economic Freedom (FEF), National Real Estate Association (NREA), Philippine Retailers Association (PRA) and the Philippine Hotel Owners Association Inc. (PHOA).
“We expressly reiterate our strong support for the immediate passage of the CREATE. CREATE is a bold, historic economic reform, one of the largest and most game changing in decades,” the manifesto said.
In their manifesto, the business organizations also expressed their support for the extension of the net operating loss carryover (NOLCO) for businesses from the current 3 years to 5 years, for losses incurred in 2020.
Extending the NOLCO “drastically reduces the downside a company expects from COVID-19, and tilts the decision-making process very strongly towards maintaining operations through the recovery years after 2020–making the amendment a very robust job protection measure, considering that, in 2020, substantial losses will cut across all businesses, whether large or non-large, and all sectors, especially those hard-hit by COVID 19,” they said.
The business groups also backed the CREATE provision on lengthening the maximum sunset period for current incentive recipients from 2 to 7 years to 4 to 9 years; and on providing flexible authority to the Fiscal Incentives Review Board (FIRB) and the President in granting both fiscal and non-fiscal incentives to investors.
“This will make the tax incentives system an agile mechanism that can adapt easily to changes in the global business environment, and can very decisively seize high-value investment opportunities when they are presented. However, we urge that proper safeguards must be put in place to prevent abuse of discretion or be a political tool to grant favors to undeserving recipients,” the manifesto stated.
In seeking the support of the business community for the CREATE bill during the virtual meeting, Dominguez said this long-due corporate tax reform measure will usher in the country’s biggest stimulus program for enterprises and send the strongest signal that the Philippines is “back in the game” amid the coronavirus pandemic.
Dominguez told business leaders this reform package entrusts in the private sector the funds and resources needed to fire up the economy and quickly bring back the country to the path of high-and inclusive-growth.
Rather than increase the national budget and pass funds through less efficient government programs, Dominguez said the Duterte administration has decided that the more prudent and effective approach in ensuring the country’s recovery from the COVID-19 crisis is by reenergizing the business community through this tax reform, now dubbed the CREATE.
Dominguez, who heads President Duterte’s economic team, said the large and immediate CIT cut from 30 percent to 25 percent will send “a strong signal to the world that the Philippines is positioning itself as a premier investment destination for companies that are looking to diversify their supply chains” in the wake of the global health emergency triggered by COVID-19.
With the theme “Recovering with Resilience: The Philippine Economic Bounce Back Plan,” the meeting also included presentations by Bangko Sentral ng Pilipinas (BSP) Gov. Benjamin Diokno, Acting Socioeconomic Planning Secretary Karl Kendrick Chua, and Presidential Adviser for Flagship Programs and Projects Vivencio Dizon, who is also the president-CEO of the Bases Conversion and Development Authority (BCDA).
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