The government is considering giving companies which will retain workers an additional year of tax breaks under the proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).
This developed as Ramon Lopez, secretary of the Department of Trade and Industry (DTI) said the country may see a deeper economic decline for the year.
Lopez in a forum hosted by the European Chamber of Commerce of the Philippines, said from the original projection of a 3.4 percent GDP contraction for 2020, the number could “go bigger, or be worse depending on what will happen in the next few months or next few weeks.”
Lopez said even estimate of the Asian Development Bank which said the Philippines may contract by 3.8 percent may have changed, due to the adverse impact of the new coronavirus disease 2019.
Lopez’ statement comes ahead of the announcement of the second quarter GDP results on August 6.
The economy contracted 0.2 percent in the first quarter of the year.
Lopez said a provision in CREATE, one of the major reforms that are being finalized by Congress, considers incentivizing companies not to remove their workers by granting them an additional tax holiday of one year on top of the four to six years they may be entitled to.
CREATE, already a much-improved version of its predecessor bill, immediately brings down the corporate income tax rate from 30 percent to 25 percent. It also grants a longer transition period from two to five years to a maximum of nine years for those already enjoying some incentives.
Lopez said CREATE is just one of the legislative reforms being pushed by the economic managers, the others being the amendments to the Retail Trade Liberalization Act and the Public Services Act, measures of interest to foreign investors.
“We continue to give these top priority; to push for their (passage) hopefully before the end of year. Congress is doing double time hearings online,” Lopez said.
Lopez said the immediate interest is “how to create consumer confidence, how to create demand and how to support companies to keep jobs and incomes of people which will strengthen the demand and which will entice companies to produce more.”
The country’s unemployment rate soared to a record of 17.7 percent in April due to the pandemic.