The list of sectors qualified for tax perks under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law is now complete and will be submitted to President Duterte for his approval next week, a leader of the House of Representatives said at the weekend.
House Committee on Ways and Means Chairman Joey Sarte Salceda said the Department of Trade and Industry (DTI) has notified him that the final draft of the Strategic Investment Priorities Plan (SIPP) is now ready.
Salceda said he will make a manifestation to President Duterte for the urgent approval of the SIPP once it is transmitted by the DTI.
“Give it around a month, and the President will likely be ready to issue it,” Salceda said.
Salceda said, citing the DTI, that the final draft was presented to the technical committee of the Fiscal Incentives Review Board, CREATE Law’s government superbody, last Friday.
“[Trade] Undersecretary Perry Rodolfo also told me they will transmit this to PRRD next week. That means all the basic implementing guidelines of CREATE will be in effect before PRRD’s term ends. That’s a very big gift to whoever the next president will be,” Salceda added.
According to Salceda, the move will allow investments under “Tier 2” and “Tier 3” of the law, for high-tech and high-value sectors, to receive higher tax incentives, encouraging more investments in these sectors.
CREATE is the Duterte administration’s centerpiece investment policy reform, right after the Public Service Act amendments, said Salceda.
“I thank the DTI for delivering on commitments agreed upon last December. On CREATE’s anniversary, we can finally say we are ready for a full-swing implementation. Thank you to [Trade] Secretary [Ramon] Lopez for getting this done,” Salceda said.
“I also thank [Finance] Secretary [Carlos] Dominguez for adopting our transitional SIPP framework. This conversation among agencies and the House tax committee has been quite fruitful,” Salceda added.
With this, Salceda said he expects the 2022 foreign investment performance “to exceed the 2021 record.”
The House leader pointed out, “The country’s net FDI inflows for 2021 were its highest ever on record.” Salceda said, “the goal should be US$20 billion in FDI by 2026, or five years after CREATE. I think with CREATE, PSA amendments, and the other liberalization and doing business reforms, we will get there.”
Meantime, he said, “the issuance of the SIPP now means CREATE can be fully carried out and investors will now know whether their sectors qualify for better tax incentives. I am very pleased with this development.”
Under the CREATE law, export-oriented activities may qualify for up to 17 years of incentives for exporters, with 4-7 years of income tax holiday (ITH) and 10 years of special corporate income tax (SCIT). The SCIT is a 5-percent tax on gross income.
Meanwhile, domestic-market enterprises under the SIPP may qualify for up to 12 years of incentives, with 4-7 years of ITH and 5 years of SCIT for enterprises with investment capital not less than P500 million, and 5 years of enhanced deductions otherwise.
Extra tax incentives of 2 years of ITH are available for locators in areas recovering from disaster, and 3 years of ITH for those relocating from NCR.