The Department of Finance (DOF) will look into the enrolled version of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, the country’s finance chief said, amid issues raised by concerned parties on the ratified bill.
Carlos Dominguez, DOF secretary, said this in a Viber group message to reporters yesterday, after he was sought for comment on the concerns raised by a non-government organization on the ratified measure.
“As far as I know, this bill has yet to be enrolled by the legislature and submitted to the Office of the President,” Dominguez said.
“We will study the final enrolled bill as well as the items mentioned above,” he added, referring to the concerns raised by Action for Economic Reforms (AER).
AER said the CREATE bill that both houses of Congress ratified still contains provisions that run contrary to its main objectives.
“These provisions, many of them insertions done at the bicameral conference committee, also run counter to sound economic policy,” AER said.
Specifically, its concerns are the exemption on taxes and duties for local petroleum refineries; insertion of crude oil refining as part of the Strategic Investment Priority Plan; exempting legislative franchises’ tax and duty incentives from the jurisdiction of the Fiscal Incentive Review Board to review, withdraw, suspend or cancel tax incentives and subsidies; exempting legislative franchises’ tax and duty incentives from the powers of the President to review, withdraw, suspend or cancel tax incentives and subsidies; and value-added tax exemption on housing.
The AER called on the President to exercise a line item veto of the contentious provisions, “to ensure that CREATE’s reforms are not weakened by lobbies from vested interests.”
“We proposed the measure, but as you know, the legislature does not necessarily pass any proposal en toto,” Dominguez said.
“We will study the final official enrolled bill,” he added.
CREATE proposes to lower the corporate income tax for micro, small and medium enterprises (MSMEs) from the current 30 percent to 20 percent.
The DOF said it aims to support the government’s efforts to keep businesses operating this year and preserving or creating hundreds of thousands of jobs, especially among MSMEs, which account for 99.5 percent of local enterprises and employ two-thirds of Filipino workers.
The measure, which is a modified version of the earlier proposed Corporate Income Tax and Incentives Rationalization Act, also provides for flexibility in the grant of fiscal and non-fiscal incentives.
Meanwhile, Dominguez said the President has signed the Financial Institutions Strategic Transfer (FIST) Act last February 16.
The DOF said FIST will allow banks to dispose of non-performing loans and assets through asset management companies.
The agency said this measure is an improved version of the special purpose vehicle bill that was created in the early 2000s, but which was a belated response to the Asian financial crisis that struck in 1997.
In a separate statement yesterday, the Management Association of the Philippines (MAP) thanked Congress for passing the FIST Act and the President for signing it into law.
“The new law is one of the pillars under the government’s national economic recovery program. It lays down an enabling environment for our banking industry to continue lending to the private sector,” the statement made by Aurelio Montinola, MAP president, said.
“With this new law and the recently passed CREATE bill, we are hopeful that our economy will get rehabilitated earlier than expected for the sake of our countrymen,” Montinola added.