CREATE-related tax issues expected to be resolved soon

MANILA, Philippines — The Clark Investors and Locators Association (CILA) is hopeful that issues brought by tax regulations regarding the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act  will soon be resolved.

In a phone interview, CILA president Francisco Villanueva Jr. told The Star that they have been in constant negotiations with concerned government agencies as well as lawmakers to discuss issues raised by locators.

“We are hopeful that this will be resolved soon,” Villanueva said, noting President Marcos Jr.’s support in addressing investors’ concerns about the CREATE Act.

CILA and several business groups are urging the government to suspend the implementation of new rules that have started to take away tax incentives and other fiscal perks.

“We appeal in the strongest term for the government to cure the situation by ordering the review and amendment of the IRR and the immediate suspension of Revenue Regulation 21-2021, Revenue Memorandum Circular (RMC) 24-2022 in order to preserve the original intent of the CREATE Act,” a joint resolution by various business groups and freeport locator associations said referring to regulations issued by the Bureau of Internal Revenue (BIR).

RR 21-2021 issues the scope of what is covered and exempted from the value added tax(VAT)-zero rating, while RMC 24-2022 issued further clarification on the matter.

Among the signatories of the resolution include CILA, Subic Bay Freeport Chamber of Commerce, American Chamber of Commerce Philippines, Metro Clark Chamber of Commerce and Industry, Tarlac Chamber of Commerce and Industry, Metro Clark ICT Council, and IT and Business Process Association.

The CREATE Act, approved into law on February 3, 2021 is meant to lower the corporate income tax rate, and rationalize and streamline fiscal incentives.

The groups noted that a very important feature that made the CREATE Act acceptable to stakeholders is a transitory or sunset provision in Section 311 of Chapter VI of the act that allowed registered enterprises that were currently availing of the five percent tax on gross income earned (GIE) in lieu of all national and local taxes earned prior to the effectivity of the act shall continue availing of said incentive for 10 years.

CILA said the IRR and BIR issuances effectively stopped the enjoyment of the tax incentive and other fiscal perks as some investor firms are now levied with VAT and other forms of taxes.