MANILA – Businesses would pay lower corporate income tax (CIT) once the proposed Corporate Recovery and Tax Incentives for Enterprises (CREATE) is enacted into law this month, an official of the Department of Trade and Industry said.
In a recent interview with reporters, DTI Undersecretary Ceferino Rodolfo expressed confidence the lawmakers would pass the bill this month even as the Senate and House of Representatives are set to reconcile conflicting versions in a bicameral conference.
One of the disagreeing provisions is the sunset period for registered enterprises.
In the House of Representatives version, the Corporate Income Tax and Incentives Rationalization Act (CITIRA), wants shorter transition period for firms enjoying the 5 percent gross income earned (GIE).
From CITIRA’s transition period of two to seven years, CREATE adjusted the sunset provision to a minimum of four years up to nine years.
Rodolfo said most enterprises are preparing for their fiscal report and tax filing in February, and if CREATE would be passed and enacted into law this month, firms would enjoy lower CIT of 25 percent from July 1, 2020.
Under the CREATE, the proposed 25 percent CIT will be applied retroactively to July 1, 2020.
However, if CREATE is not yet enacted into law when firms already filed for their income tax return, they will pay the current CIT rate of 30 percent, which cannot be invoked, Rodolfo said.
He added that the CREATE bill goes hand in hand with the Bayanihan 2 in helping businesses bounce back from the impacts of the pandemic.
“The legislators all see the importance of providing some tax reprieve,” Rodolfo said.
In Bayanihan 2, net operating losses carry over is extended from three years to five years. This means that if an enterprise incurred losses in 2020 and 2021, the losses can be charged in its tax calculation for the next five years instead of three years.
“These (CREATE and Bayanihan 2) are good combination for tax reprieve at this time,” Rodolfo said. “We’re still optimistic that by January, they can pass the CREATE.” (PNA)
