Senator Ralph Recto. (File photo)
MANILA – Senator Ralph Recto on Friday said members of the bicameral conference committee are expected to pass the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act within the next two weeks.
In his speech during an electronics industry group’s event, Recto said the law that should be passed by both chambers to recalibrate the incentives regime must not lead to the uprooting of investments in the country.
“So where are we now with CREATE? We are on the last mile,” he said. “I expect to pass CREATE in both chambers in the next two weeks.”
Recto said the recalibration in the current incentives regime may hurt some businesses, but must help, in general.
“Let me say that when we did not fully get what we wanted, I’m comforted by the fact that we have minimized the pains and maximized some gains,” he added.
The proposed CREATE Act aims to cut corporate income tax (CIT) rate from 30 percent to 25 percent, which is retroactive from July 1, 2020.
While reducing CIT rate, the legislation also targets to streamline incentives that are given to investors in investment promotion agencies, making it performance-based, time-bound, and focused on selected strategic industries.
“Because of the last-minute rally from the bigger house, we, in the better house thought our work was done last Christmas,” Recto said.
One of the disagreeing provisions that both chambers need to reconcile is the sunset period for registered enterprises.
The Corporate Income Tax and Incentives Rationalization Act (CITIRA), the version of the House of Representatives, eyes a two to seven-year transition period for the 5-percent gross income earned (GIE).
The Senate, on the other hand, wants a longer sunset period of four to nine years.
Meanwhile, registered firms had been requesting lawmakers to retain the current incentives regime for them, which include the perpetual 5-percent GIE in lieu of all taxes.
“But the dance of legislation is a game of compromise. Better to go home with half a loaf of bread than none at all. Fifty percent of one is better than 100 percent of zero. Take it, rest then fight another day,” Recto said. (PNA)
