While President Marcos is expected to sign a law today that will ban corporate taxes and offer tax incentives to businesses, Senate President Francis Escudero expressed optimism about the influx of new investors, which will create more new jobs in the country.
Escudero said that the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (Create More) Act will streamline and simplify the provisions of the value-added tax (VAT) of Republic Act 11534, particularly in processing VAT refund claims and the VAT zero-rating on local purchases.
"Create More aims to encourage more investors to come to the Philippines by providing a more predictable and sustainable business environment," said Escudero.
Marcos is set to sign the Create More Act, a priority bill of the administration aimed at stimulating economic growth in the country.
Escudero said that the law amends RA 11534, or the Create Act, which was created to help businesses recover from the effects of the pandemic by reducing corporate income tax rates and making the country more attractive to businesses through rational financial incentives.
He added that while misunderstandings regarding the policies for applying these incentives caused confusion among stakeholders, the issues have been resolved.
The Senate President pointed out that the Create More Act has the potential to boost the flow of foreign direct investment into the country – one of the two ASEAN nations that has yet to recover its pre-pandemic FDI catch.
"The most important thing is that it will create a more favorable investment climate that will generate more jobs and stimulate progress without harming our revenue base. Business owners want clear, coherent, and consistent policies with a single form of interpretation and implementation," said Escudero.
The Senate President said that the corporate income tax rate for local and foreign companies will be reduced to 20 percent from 25 percent under the enhanced deductions regime, while the Create More Act increases the deductions for electricity expenses of registered business enterprises (RBEs) to 200 percent.
"The Philippines has some of the highest electricity rates in the region, so this will help us become more competitive in attracting investors," said Escudero.
Under the Create More Act, essential services such as janitorial, security, financial consultancy, marketing, and human resources are exempt from VAT. Registered Business Enterprises (RBEs) will also be allowed to implement work-from-home arrangements for up to 50 percent of their employees.
Escudero said that local businesses, like foreign investors, will benefit from the clarity in taxes and other incentives, as well as the expected increase in economic activity.
"This is in line with our commitment in the Senate to make life easier for our people and for those who choose to do business with our people. This will also result in the creation of more jobs and the transfer of technology and knowledge that will empower our workers and uplift their lives in the long term," he said.
