The Senate yesterday passed on third and final reading a measure reducing the country’s corporate income tax (CIT) rate and rationalizing its incentives.
Twenty of the 21 senators present during the hybrid session voted in favor of the passage of Senate Bill 1357 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill. Sen. Richard Gordon was the only one who voted against the passage of the measure.
President Duterte certified the bill as urgent last March.
Once enacted into law, the CIT rate will immediately be lowered from 30 percent to 25 percent, and gradually reduced until the rate hits 20 percent by 2027. It also seeks to rationalize fiscal incentives by making them time-bound and performance-based.
Also under the measure, the Fiscal Incentives Review Board (FIRB) would be empowered to approve investors’ tax perks.
Gordon had opposed this provision of the bill as this “would not automatically attract investments.”
Gordon previously proposed that some economic zones like the Subic Metropolitan Authority, Clark Development Corporation, Authority of the Freeport Area of Bataan, Aurora Pacific Economic Zone and Freeport, among others, be excluded from the CREATE bill, questioning the blanket authority given to FIRB to act as oversight body of all investment promotion agencies.
Senate Minority Leader Franklin Drilon sided with Gordon, saying giving additional powers to the FIRB to include the approval of tax incentives for entrepreneurs would centralize government powers.
“I am really in favor of the rationalization of the fiscal incentives because a number of our incentives right now are prone to abuse and therefore our coffers would suffer. I had hoped that we would tackle the bill separately from income tax portions as I have proposed,” Drilon said.
Sen. Pia Cayetano, sponsor of the bill, said: “This is a very different product that we have before us today compared to what it first was in the Corporate Income Tax and Incentive Reform Act (CITIRA) and then what is was later on, when it was reinvented and renamed CREATE.”
With 14 negative votes and five affirmative votes, Gordon’s proposed amendment was rejected by the plenary.
A counterpart measure at the House of Representatives was approved on final reading last year.