The Board of Investments (BOI) hopes for the passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill in time for the filing of taxes by April, according to its managing head Ceferino Rodolfo.
Rodolfo said this way, enterprises will immediately enjoy the benefits of reduced corporate income tax (CIT) rate of 25 percent, a 5 percentage point drop from 30 percent retroactive to July 2020.
Rodolfo sees the period between the resumption of Congress on January 14 and April as the window for the bicameral conference committee to reconcile the final version of CREATE.
He said this window is an important period as companies prepare for the filing of their income tax by February and March.
“The timing is critical not just for those companies with incentives but for all enterprises,” Rodolfo added.
He said BOI trusts in the wisdom of legislators the enrolled bills in the House of Representatives known as the Corporate Income Tax Rationalization Act (CITIRA) and in the Senate which is the CREATE will strike a good balance between the need to attract investments and generate revenues for the government.
“We trust the legislative process…We just hope (CREATE) will be approved immediately,” said Rodolfo adding the BOI is now promoting the provisions in the proposed law to investors with the Senate version as the baseline for incentives.
“Under the bicameral version, CREATE could even be better. As it is, CREATE is a good bill, it’s a good balance,” said Rodolfo.
Rodolfo also noted legislators see the importance of providing tax reprieve as the CREATE works in conjunction with the Bayanihan w2 We Recover as One Act where under the latter, companies can charge their losses in 2020 and 2021 to their income for the succeeding three years or 2022 to 2025.
Rodolfo said if the enterprise earns, the highest tax rate it will pay is 25 percent and 20 percent for small companies.
“With CITIRA, the House was able to come up with a good framework of timebound, performance-based, transparent and focused incentive regime.
Taking off from CITIRA, the Senate took some of its provisions especially in the current context of the pandemic and the need to attract more investments and heightened competition through the use of incentives.
Senate came up with a framework that balances ability to attract investments and generate much-needed revenues. Hopefully, those provisions in CREATE carry forward in the enrolled bill,” Rodolfo said,
According to Rodolfo, some concerns were raised at the House over of the impact on the share in revenues of local government units under a longer transition of 10 years for companies to stay in the current tax regime while some have eyed to
carve out certain investment promotion agencies from the Fiscal Incentives Review Board process.