Non-RE firms gain from new tax rate

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    Non-renewable energy firms are to benefit the most within the power sector with the passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill, which cuts corporate income taxes (CIT) and streamlines fiscal incentives for companies, according to online stockbroker Colfinancial.com.

    Colfinancial.com said this is evident given the reduction in tax rate to 25 percent from 30 percent under the proposed law.

    Among the listed companies, Colfinancial.com said First Gen Corp. will benefit the most given that its gas plants and non-renewable operations account for 65 percent of net profit.

    Aboitiz Power Corp. will also be a major beneficiary as its non-renewable energy power plants that are no longer under income tax holiday (ITH) account for around 52 percent of net profits.

    “Semirara Mining and Power Corp. will also benefit, but more in the next few years after the income tax holidays of its power plants and mining operations expire. This year, only the Calaca unit 1 and 2 which account for 51 percent of profits will enjoy a lower tax rate from 30 percent to 25 percent. Calaca unit 3 and 4 still have one year of income tax holiday so the company will only enjoy lower taxes when the income tax holiday expires,” Colfinancial.com said.

    It added that Semirara’s coal mining operations will only benefit after two years as both of its operating mines still enjoy ITH.

    For AC Energy Corp., the CREATE bill will reduce the effective tax rate of its South Luzon

    Thermal Energy Corp. coal plant and oil plants which account for 37 percent of net profits.

    In early February, the Congress’ bicameral committee approved the final version of the CREATE bill.

    Apart from the reduction of CIT to 25 percent, companies with taxable income below P5 million and total assets of P100 million will see their tax payment drop to 20 percent. The bill also proposes 17 years maximum for incentives of exporters and critical domestic enterprises that will be identified by the National Economic and Development Authority.

    Companies can also enjoy four to seven years of ITH and 10 years of special CIT.

    Likewise, the measure proposes to provide incentives of up to 12 years for businesses with investment capital of not less than P500 million, ITH of four to seven years and five years of special CIT.