Business groups have passed a resolution seeking the retention of incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act or Republic Act (RA) 11534.
The American Chamber of Commerce, Clark Investors and Locators Association (CILA), Subic Bay Freeport Chamber of Commerce, Metro Clark Chamber of Commerce and Industry, Tarlac Chamber of Commerce and Industry, Metro Clark ICT Council and IT and Business Process Association passed a joint resolution that calls for the immediate suspension of Revenue Regulation (RR) 21-2021, Revenue Memorandum Circular (RMC) 24-2022 issued by the Bureau of Internal Revenue (BIR) and for a review on the implementing rules and regulations (IRR) of CREATE.
The groups said the issuances effectively levied some companies with value-added tax and other forms of taxes contrary to the objective of CREATE.
The groups said CREATE, approved on Feb. 3, 2021, is meant to lower the corporate income tax rate, rationalize and streamline fiscal incentives.
They added CREATE stipulated a so-called sunset provision that allows registered enterprises to continue enjoying the five percent tax on gross income earned (GIE) up to 2031. Payment of GIE is an incentive in lieu of all national and local taxes.
However, they said the IRR and BIR revenue regulations RR-21-2021, RMC 24-2022 went beyond and against the provision of the CREATE Act insofar as the transitory provision in Section 311 of Chapter VI is concerned.
The groups said what made CREATE Act acceptable to stakeholders is the transitory or sunset provision in Section 311 of Chapter VI of the act that allowed registered enterprises that were currently availing of the five percent tax on gross income in lieu of all national and local taxes earned prior to the effectivity of the act to continue availing of said incentive for 10 years.
But this was negated under the IRR crafted by DOF together with subsequent BIR issuances.
The resolution said the IRR and assailed BIR issuances have also “caused massive confusion as well as substantive impairment to the cost structure, business models and the viability of existing and potential investors.”
CILA expressed fears if the issue on tax perks is not resolved, the Philippines’ ranking in Global Competitiveness of World Bank may further slide down (109th among 141 countries under the Burden of Government Regulation category).
The groups said they will shall seek audience with government towards the resolution of the issue.
