Senate to scrutinize CREATE bill for possible insertions

MANILA, Philippines — While the bicameral conference committee has approved the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill, senators will still go over the tax measure for possible insertions.

The staff of both sides of the bicameral panel the Senate and the House of Representatives are still finalizing the exact wording of the CREATE bill, which President Duterte certified as urgent last year.

The bicameral committee convened to reconcile conflicting provisions in the versions of a bill passed by both chambers. Once signed, CREATE would still have to be circulated to all members of both chambers before being ratified.

Among the provisions reportedly written into the bill by the panel that were not in the versions previously passed in the Senate and the House was Section 15, on the fair treatment for petroleum refiners. The draft provision exempts crude oil intended for refining from duties and excise, and taxes the product upon removal once refined, to avoid stranded value-added tax credits, consistent with international practice.

Sen. Pia Cayetano, chair of the Senate ways and means committee, said CREATE will end investor uncertainty in the country.

“I would like to report to the Filipino people and to our business community that the CREATE bill, the landmark legislation that the Senate passed in November last year, is finally moving forward,” she said.

“I can now say more confidently that the cloud of uncertainty that has hovered over our country’s investment climate due to unwarranted delays in CREATE’s passage is about to end. The wait-and-see period would soon be over and investors can look forward to doing business in our country under a tax and fiscal incentives regime that favors job generation, ensures flexibility and accountability and promotes sustainable and inclusive growth,” she added.

‘Greatest economic reform’

“This will be the greatest economic reform of the post-EDSA years, second only to economic amendments to the 1987 Constitution. Removing the uncertainty will be like opening the floodgates to investment,” Albay Rep. Joey Salceda said.

Salceda, chairman of the House ways and means committee, said the measure is expected to generate “at least P12 trillion in combined domestic and foreign investment over the next decade due to CREATE alone.”

Salceda also said foreign direct investments are likely to reach $90 billion.

“This will also result in around 1.8 million jobs over the next 10 years. Combined with economic amendments to the Constitution to maximize impact, we can produce some 8.4 million jobs,” he said.

The House leader denied, however, insinuations that CREATE’s bicam signing was delayed due to a move by Speaker Lord Allan Velasco to allegedly insert a provision exempting tax and duties for petroleum refiners.

“No, that’s very wrong,” Salceda, who heads the House contingent in the bicam, reiterated. The alleged insertion would supposedly exempt crude oil intended for refining from duties and excise taxes.

Salceda also said the approval of CREATE will “end investor uncertainty on the country’s fiscal regime.”

“We are also ending hesitation to invest in the Philippines. Because it took us time to come up with a consensus version, however, we lost $18 billion in foregone FDIs from 2018 to 2020. The bleeding stops now,” he said.

“Fixing the incentives regime to make it more performance-based is also crucial. The current investment priorities plan covers some 70 percent of GDP. While I am willing to give incentives, they must be linked with economic outcomes,” he pointed out.

“Better jobs for our people. Higher wages, more training, more research and development, stronger business, more competitiveness,” Salceda reiterated in his remarks to the committee.

He also said that while CREATE will result in some P931 billion in tax savings for businesses, there will be frontloading of relief to cover the economic gap brought about by COVID-19.

The final bicameral version shaved off P282 billion from the original revenue loss under the Senate version. “We are frontloading relief now because relief is needed now,” Salceda said.

He also said competitiveness is a key issue that CREATE hopes to resolve.

“With CREATE, we are also lowering corporate income tax to bring it closer to the ASEAN region’s average. ASEAN has been the fastest growing economic region in the world. Our neighbors are our friends, but they are also our competitors. We must strive to keep up with them,” he added.

“We also introduced several tax relief provisions in this bill for all sizes of businesses, especially small and medium ones. With quick vaccine rollout, the chance is stronger that businesses will devote tax savings to creating new jobs,” he explained.

“That is why we have also introduced COVID-19 measures in this bill, including VAT and duty-free importation of vaccines,” Salceda pointed out.