After several revisions and fierce debates, the Senate approved on 3rd and final reading Senate Bill No. 1357 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Bill, which aims to cut corporate income taxes and rationalize tax perks.
Twenty senators voted in favor, while only Senator Richard Gordon opposed the measure.
The measure aims to immediately trim corporate income taxes from 30% to 25%. For firms whose income is below P5 million a year, taxes would be even lower at 20%.
The Philippines currently has the highest corporate taxes in the region.
CREATE would also give the President flexibility and power to modify the period or manner of availment of incentives
The Department of Finance aggressively pushed for the measure, noting that lowering corporate taxes and making incentives time bound, performance-based, and targeted would attract the necessary investors to help the Philippine economy rise from the coronavirus pandemic.
Gordon opposed the bill as he primarily wanted to exempt investment promotion agencies (IPAs) from CREATE, as he fears that the measure would mean loss of investments in Clark in Pampanga, and Subic in Zambales. Gordon was the first chairman of the Subic Bay Metropolitan Authority.
He got at least 5 senators to back him in his various proposed amendments, but only Gordon ultimately voted against CREATE.
Senator Pia Cayetano noted that Gordon's proposal to exempt IPAs from CREATE would essentially defeat the purpose of the measure.
Gordon was also emotional over the the new powers granted to the Fiscal Incentives Review Board (FIRB), particularly its ability to grant incentives to registered projects or activities with capital of over P1 billion.
Cayetano noted that the FIRB, chaired by the Finance Secretary, would ensure that companies receiving perks would honor its investment commitments.
Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said in a statement on Friday, November 27, that the bill, once signed into law, "will help small and medium enterprises become more competitive and productive to support the recovery of our economy.”
“With CREATE, the country will also be able to attract more foreign direct investment with an improved incentives menu, which will maximize desirable economic outcomes such as job creation, domestic value-added, and technology transfer,” Chua added. – Rappler.com