By Alithea De Jesus
With the joint approval CREATE bill that will reduce the rate of corporate income tax in a bid to attract more foreign investment and help the coronavirus-hit Southeast Asian economy recover, Department of Trade Secretary Ramon Lopez is confident of the bill once signed by President Rodrigo Duterte.
The National Employment Recovery Strategy (NERS) Task Force chaired by the Department of Trade and Industry (DTI) and co-chaired by the Department of Labor and Employment (DOLE) and the Technical Education and Skills Development Authority (TESDA), which was signed last February 5 by several agencies, will be given a big boost by the recent bicameral approval of the game-changing Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
DTI Secretary Ramon Lopez said, “The landmark tax and incentives reform bill that we expect to be signed by the President is expected to bring in massive inflow of investments that will create more jobs, especially as we focus efforts in the National Employment Recovery during this period of the pandemic and beyond. The passing of CREATE will firm up the tax and incentive reforms that will make the investment climate significantly more attractive than the current tax and incentive regime.”
“The bill will certainly encourage more investments with the lowering of the corporate income taxes rate from 30% to 20% for Micro, Small, and Medium Enterprises (MSMEs), and 25% for large corporations. Modernizing the incentives system likewise makes the incentives such as Income Tax Holiday (ITH), Special Corporate Income Tax Rates (SCIT) or Enhanced deductions (ED), available to industries considered Strategic, Critical or export oriented,” he added.
The Trade Secretary further explained, “The length of incentives, such as 4-7 years of ITH plus 5 or 10 years of SCIT or ED, will depend on the nature of industry, export or domestic oriented, degree of technology and value adding, and geographical location, with additional years outside the Metro Manila and urban centers. There is also longer transition period for those currently granted incentives. Thus, incentives are now made more performance-based, focused and timebound.”
CREATE is a bill certified urgent by President Rodrigo Roa Duterte upon the recommendation of the economic team led by Finance Secretary Carlos Dominguez III.
The trade chief also thanked the legislators at the Senate and the House of Representatives (with Sen. Pia Cayetano and Cong. Joey Salceda, respectively, as Principal authors), for the hardwork of the committee members, in bringing the CREATE bill to fruition.
Sec. Lopez said: “The passing of CREATE will unleash the growth potential of investments by removing uncertainties during the period that the bill was under deliberation.”
“Based on our estimate and those from Cong. Joey Salceda, CREATE can bring in over Php 200 billion of new investments that can generate 1.4-2 million incremental jobs,” he added.
This will help achieve the task of the national employment recovery group. NERS brings together DTI as chair, DOLE and TESDA as co-chairs, with members including the Departments of Transportation (DOTr), Tourism (DOT), Public Works and Highways (DPWH), Science and Technology (DOST), Social Welfare and Development (DSWD), Agriculture (DA), Agrarian Reform (DAR), Interior and Local Government (DILG), Information and Communications Technology (DICT), Environment and Natural Resources (DENR), Education (DepEd), Commission on Higher Education (CHED), and National Security Council (NSC), as well as the Office of the Cabinet Secretary (OCS), Departments of Finance (DOF) and Budget and Management (DBM), and the National Economic and Development Authority (NEDA) as members of the Oversight Committee.
“NERS shall also consolidate all measures, programs, and institutions that influence the demand and supply of labor, as well as the functioning of labor markets,” the trade chief stated.
The NERS 2021-2023 is a medium-term plan anchored on the updated Philippine Development Plan 2017-2022 and ReCharge PH by expanding the Trabaho, Negosyo, Kabuhayan initiative and improving access and security of employment. The strategy also takes into consideration the changes in the labor market brought about by the pandemic and the fast adoption of Fourth Industrial Revolution ( FIRe ) technologies.
The Trade Secretary further stressed the importance of continuing with our calibrated and safe reopening of the economy to allow the country to regain the growth momentum that it had before the pandemic.
The vaccine rollout is also another complementary program that will help further improve consumer and business confidence as immunity of the majority of the population are achieved.
Sec. Lopez said: “Vital wide-ranging and integrated policy measures are needed. These should focus on: stimulating the economy and jobs; supporting enterprises, employment and incomes; and protecting workers in the workplace, including occupational safety and health.”
DOLE Secretary Silvestre Bello III, on the other hand, said: “This JMC will fortify our collective undertaking as a Task Force working to develop a policy environment that encourages the generation of more employment opportunities, improves employability and productivity of workers, and supports existing and emerging businesses.”
CREATE will help boost investments in the Philippines, which would support the 2021 target of the Board of Investments (BOI) of Php1.25-trillion investment approvals. A report by the United Nations Conference on Trade and Development (UNCTAD) had also estimated that the Philippines bucked the trend in Southeast Asia, and had increased its foreign direct investments (FDIs) during the pandemic by 29% last year.
