The Department of Commerce and Industry predicts 1.4 to 2 million jobs will be created due to the tax breaks and investment incentives introduced by the Corporate Reclamation and Tax Incentives Act (CREATE).
Congress recently ratified the bill proposing to lower the corporate tax rate from 30% to 25%. For companies with a taxable net income of 5 million pesetas or less and a balance sheet total of less than 100 million pesetas, the rate drops to 20%.
“The adoption of CREATE will consolidate the tax and incentive reforms that make the investment climate significantly more attractive than the current tax and incentive system,” said Commerce Minister Ramon M. Lopez in a statement on Monday.
“Based on our estimate and that of (Representative Jose Ma. Clemente S. Salceda), CREATE can bring in over 200 billion pesetas of new investment that can create 1.4 to 2 million additional jobs.”
Mr Lopez said in a mobile message to Reporter that the P $ 200 billion estimate was the result of talking to investors and evaluating investment results, finding that the typical investment to job ratio is P $ 100,000 for any job.
While finance estimated 1.4 million new job creation in a decade under the previous version of CREATE, known as tax reform to attract better, higher quality opportunities, Lopez said the schedule for job creation under CREATE “can be shorter.”
Some industry associations said in November that the loss of tax incentives under CREATE could jeopardize the Philippines’ attractiveness as an investment destination and increase unemployment. CREATE streamlines the tax incentive system to make it more time-bound and performance-oriented.
Action for Economic Reforms also pointed out some provisions of CREATE, warning that the exemption granted by Congress to franchisees from scrutiny by the Fiscal Incentives Review Board could be subject to abuse.
Investment projects under P1 billion are to be assessed by investment promotion agencies.
The CREATE bill is signed by President Rodrigo R. Duterte. – Jenina P. Ibañez