AS the enactment of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) looms, the chairman of the House Committee on Ways and Means on Tuesday said the proposal could spur as much as $7 billion to $10 billion in new additional foreign investments in 2021 alone and at least 2 million jobs in two years.
With this, Albay Rep. Joey Sarte Salceda described the CREATE as a much-needed “shot in the arm” for the country’s pandemic-hit economy.
With the fog of uncertainty over tax incentives almost lifted, Salceda also said that businesses can now also make decisions about investing in the Philippines.
Earlier, Salceda already transmitted his committee’s intention to have the House plenary adopt the Senate version of CREATE to fast-track its approval.
Salceda confirmed that the Senate version of the CREATE will be adopted by the House plenary on Wednesday (December 9).
“I will be working with the Board of Investments and the ecozones on how we can promote the Philippines as an investment destination more aggressively, now that the cloud of uncertainty due to the delayed passage of CREATE is almost over,” said Salceda, the principal author of the proposed CREATE in the House.
If the country gets its promotion strategy right, the House leader said CREATE could result in $7 billion to $10 billion in new additional foreign investments. He promised to work with the Department of Finance (DOF) to ensure that the Fiscal Incentives Review Board (FIRB), which CREATE will strengthen as the central incentives management agency of the country, can handle an influx of new investment applications.
Once signed by the President, CREATE will implement a 10-percent corporate income tax cut for corporations that are making P5 million and below in net taxable income; and a 5-percent reduction for all other corporations.
Salceda said the reform “modernizes the tax incentives regime to make it simpler, fairer, and more efficient.”
Investment promotion
Salceda, meanwhile, called on the Department of Trade and Industry (DTI) to intensify its programs on business and investment promotion.
He said the DTI must now “redouble their efforts towards helping small businesses create jobs and large investors create new opportunities.”
With CREATE alone, 1 million new jobs can be created in the next 2 to 3 years, Salceda said, “but we have to be very aggressive in helping businesses expand.”
As “a much-needed shot in the arm for our pandemic-hit economy,” CREATE will “infuse some P39 billion just this year for business expansion, while finally settling the fog of uncertainty over tax incentives. If we get this right, we can set 2021 up for very rapid recovery in the double digits. But we have to act decisively,” the lawmaker added.
In October, Salceda wrote the DOF and DTI, asking them to share with Congress the plans for attracting more investment into the country.
“They informed me that we are pursuing double taxation agreement to attract more foreign investors of all sizes, and the DTI is already undertaking trade missions, but we have to go double time, because our competitors are doing so, too,” Salceda added.
Market boom
Salceda, meanwhile, said the country can expect a stock market boom in 2021 with the passage of CREATE.
“I did the calculations. The actual net present value of the infusion in private sector capital due to CREATE is as much as P5.7 trillion over the next 10 years, or 38 percent of market capitalization. You don’t always get a policy that gives you that much private sector capital. CREATE is once in a generation,” Salceda said.
“That’s why when the pandemic worries ease and uncertainty fades, I expect a stock market boom in 2021. Now may be the time to invest in resilient companies, because if the private sector can maximize the gift that is CREATE, I expect a very good earnings year in 2021, relative to this year. Maybe earnings growth would even exceed GDP growth,” Salceda added.
Also, the House tax panel and economic recovery chief has also asked the DTI to boost the efforts of Negosyo Centers to formalize small businesses that are currently unregistered and thus unable to benefit from existing loan programs.
2 comments
Very Stupid. This philippine government needs to Stop being So Racist. filipinos are Not the only race of people living in this country. Dump this 60/40 garbage. Get rid of this protection for lazy employees. Allow foreigners to own property and offer philippine citizenship to them. The foreigner will Not sell their vote. And this 5% reduction on their taxes is a joke.
There is a reason why Vietnam is doing good and the philippines is known as the Sick Man of Asia.
Interesting how you call Pilipinos racist and yet call the Philippine government stupid and the employees lazy.. Maybe you should look at the mirror first