The Financial Executives of the Philippines (Finex) yesterday urged Congress to focus on the passage of pending economic bills instead of amending the Constitution now.
Francis Lim, Finex president, in a statement urged Congress to pass the Corporate Recovery and Tax Incentives for Enterprises Bill (CREATE) and the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery Bill (GUIDE) and requested President Duterte to sign into law the Financial Institutions Strategic Transfer Bill (FIST).
Meanwhile, the Philippine Stock Exchange Inc. (PSE) and the Philippine Dealing System Holdings Corp. (PDS) also joined calls for the passage of CREATE, according to the Department of Finance (DOF).
“We agree the economic provisions of the Constitution must be amended to make the country a more attractive investment destination,” Lim said, but noted Finex is “strongly opposed to any initiative at this time to amend the Constitution.”
Lim likened this “to undertaking house renovation while the family struggles to pay for the food, basic education, hospitalization expenses and other basic necessities badly needed by the family.”
“We call on Congress to tackle the legislative initiatives on the economy at the earliest possible time, rather than devote its time and the country’s meager resources to a highly controversial and divisive issue at this time,” Lim said.
Lim said CREATE and GUIDE are low-hanging fruits which Congress can focus on to help the country
successfully emerge from the pandemic and make it more attractive to investors.
There
are also efforts to put in place a new stimulus package to revive and restore our
economy to normalcy, one of them is the FIST which was ratified by Congress before its Christmas break.
Meanwhile, the DOF said in a statement yesterday the country’s equities and fixed-income exchanges have issued a joint statement for the passage of the bill, to make the Philippines an attractive investment hub in the region and the domestic capital market a viable venue for raising funds.
The immediate lowering of the corporate income tax to 25 percent for large businesses and foreign corporations, and to 20 percent for micro, small and medium enterprises with net taxable income of P5 million and below and total assets of not more than P100 million (excluding land), will leave more funds in the hands of publicly listed companies either for business expansion or distribution to stockholders, the PSE and PDS said.
“The investment of said tax savings in other business undertakings or investment vehicles can set off a chain of positive economic consequences such as employment generation, higher spending and increased domestic business activity as a result of the multiplier effect,” they said.
Aside from the CREATE bill, the PSE and PDS also expressed their support for the expansion of the list of transactions qualifying as tax-free exchanges in Section 40(C)(2) of the National Internal Revenue Code.
They also backed the removal of the requirement to obtain prior confirmation or tax ruling from the Bureau of Internal Revenue for the purpose of availing of this benefit in Section 40(C)(2) of the Tax Code.
They said such reforms “will streamline the process of reorganization typically conducted by companies preparatory to going public.”
“This is a very welcome development and a move that has long been clamored for by the market,” the PDS and PSE said.
Along with CREATE and the removal of the Initial Public Offering tax in Republic Act No. 11494 or the Bayanihan to Recover as One Act, these reforms on tax-free exchanges “will spur business creation in the Philippines, incentivize capital-raising activities in the Philippine capital market, and overall, accelerate the country’s recovery from economic losses brought about by the coronavirus disease 2019 pandemic,” they said. (I. Isip and A. Celis)
