The Department of Trade and Industry (DTI), including the Board of Investments (BOI), fully supports the Corporate Reform and Tax Incentives for Enterprises Act (CREATE) because it is better than the Status Quo and it is better than the Corporate Income Tax and Incentives Reform Act (CITIRA); and it is better for new investors and for incumbent investors.

It is what is needed by the country now as our businesses wrestle with the disruption in supply-chains and markets brought about by the COVID-19 pandemic.

CREATE will provide immediate relief by way of a big drop in the Corporate Income Tax (CIT) rate from 30% to 25% by July 1, 2020; it will give a certain and competitive incentive regime for attracting new investors; and for those enjoying the current 5% tax on Gross Income Earned (GIE)–a longer transition period which will allow them to enjoy the same 5% GIE up to 2029. The net operating loss carryover (NOLCO) application is also being made longer at 5 years. Moreover, for highly strategic projects (e.g. high employment generation or employing distinctly innovative technology), the Philippines would now be able to match other countries that are able to offer flexible negotiated incentive packages as CREATE empowers the President to offer tailor-fitted incentives beyond the regular menu provided under the proposed bill.

This is what’s needed now. We have been talking about why the Philippines is not getting a big share of foreign investments. This is definitely one of the key answers. Aside from the infrastructure factor (which is being addressed by Build, Build, Build), economic reforms needed to correct foreign equity limitations and other issues, and the non-passage of corporate tax reform, confusion over CREATE fosters uncertainties in the business environment and we have to address this.♦

Date of Release: 28 May 2020