Corporate tax-reform bill’s bicam version elates PEZA
AFTER having some reservations before, the Philippine Economic Zone Authority (PEZA) threw its support behind the corporate tax reform bill, which was recently approved by the bicameral conference.
PEZA Director General Charito B. Plaza said she was “happy” with the final version of the Corporate Recovery and Tax Incentives for Enterprise (CREATE) bill, supporting its passage into law. The bicameral conference of the Senate and House of Representatives approved the bill last February 3.
“We are now happy [with] the final CREATE bill after all those years of struggle,” Plaza said. “We recognize the need to change our national tax system, particularly the reduction of the corporate income tax especially during this time. We have seen the impact of the pandemic to our economy.”
The regulator of economic zone locators highlighted what appears to be flexibility when it comes to granting tax incentives for the companies. “Once the transition period will end, our investors will have the option to reapply if they want to apply for the 5-percent GIE [gross income earned] or the CIT [corporate income tax] regime,” Plaza explained.
The CREATE bill aims to reduce the CIT to 25 percent from 30 percent in its first year of implementation. However, the current incentives being enjoyed by the existing locators, including the tax on GIE, will be removed after the transition period.
Plaza earlier reiterated the agency’s call to exempt the exporters from the said provisions and allow them to retain their current fiscal incentives. This, as investments in economic zones slowed down amid the lockdown protocols due to the coronavirus pandemic.
The PEZA chief shared that power vested to the President in granting longer income tax holidays will be beneficial as this can be provided for “strategic and big-ticket projects” in the countryside. Plaza said this, in turn, will support the development in the provinces to achieve inclusive growth.
“With the CREATE law, PEZA hopes to attract more foreign direct investments to the Philippines especially to the countryside,” she added.
Plaza earlier said that PEZA is aiming to book P100-billion worth of investment pledges this year.
Last year, PEZA saw a decline in investment approvals as the lockdown measures amid the pandemic discouraged expansion plans among locators. The total investments approved by the agency in 2020 reached P95 billion, which was 19-percent lower than the P117.54 billion it registered in 2019. Projected employment from these investments is 72,703.
“The approval of a better CREATE into law will aggressively pursue marketing and promotion of our economic zones to global investors,” Plaza said. “[The] PEZA can now aggressively pursue our investments marketing and promotion activities and will, in turn, achieve our goal of fully industrializing the Philippines.”
Image credits: PIA CAR