With some reservations, the Philippine Economic Zones Authority (PEZA) has put its support behind the corporate tax reform bill recently approved by the bicameral conference.
Charito B. Plaza, director general of PEZA, said she was “satisfied” with the final version of the Corporate Reclamation and Tax Incentives Act (CREATE), which supported the passage of the law. The bicameral conference of the Senate and the House of Representatives approved the bill on February 3.
“We are happy now [with] the final CREATE bill after all these years of struggle, ”said Plaza. “We recognize the need to change our national tax system, especially lowering corporate taxes, especially during this time. We have seen the impact of the pandemic on our economy. “
The Economic Zone Locators Regulator highlighted what appears to be flexibility in providing tax incentives to businesses. “After the transition period has expired, our investors have the opportunity to reapply if they would like to apply for the 5 percent GIE [gross income earned] or the CIT [corporate income tax] Regime, ”explained Plaza.
The CREATE law aims to reduce the CIT from 30 percent in the first year of implementation to 25 percent. However, the current incentives of the existing locators, including the tax on GIE, will be removed after the transition period.
Plaza previously reiterated the agency’s request to exempt exporters from these regulations and allow them to maintain their current tax incentives. This is because investments in economic zones slowed down due to the coronavirus pandemic as part of the lockdown protocols.
The PEZA boss announced that the authority conferred on the president to grant longer income tax holidays will be advantageous as this can be provided for “strategic projects and projects with big tickets” in the country. Plaza said this in turn will support development in the provinces to achieve inclusive growth.
“With the CREATE bill, PEZA hopes to attract more FDI to the Philippines, especially in the countryside,” she added.
Plaza previously said that PEZA intends to book investment commitments worth 100 billion pesetas this year.
Last year, PEZA saw a decline in investment permits as lockdown measures eased amid locators’ expansion plans discouraged by the pandemic. The total investment approved by the agency in 2020 was PTS 95 billion, 19 percent less than the PTS 117.54 billion registered in 2019. The projected employment from these investments is 72,703 pesetas.
“Approval of a better CREATE in Law will aggressively market and promote our economic zones with global investors,” said Plaza. “[The] PEZA can now aggressively pursue our investment marketing and advertising efforts and, in turn, will achieve our goal of fully industrializing the Philippines. “
Photo credit: PIA CAR