Marcos to introduce amendments to CREATE law

MANILA, Philippines — President Marcos has vowed to propose amendments to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act to address concerns raised by investors.

The CREATE law was one of the topics discussed during Marcos’ meeting with executives of Marubeni Corp. on the sidelines of the third Asia-Pacific Economic Cooperation Business Advisory Council meeting in Cebu City last Friday.

Presidential Communications Secretary Cheloy Garafil said Marubeni raised various issues during the meeting, including the 12-percent value added tax imposed on indirect exporters supplying goods and services to export-oriented enterprises; non-refund of VAT on local purchases by domestic market enterprises, “tedious” documentary requirements, slow process and “unpredictability” on VAT refund claims.

“As a response, the government said the proposed amendment to the CREATE Act and the implementing rules and regulations will allow the sales of indirect exporters to export-oriented enterprises to be subject to VAT zero-rating, provided such sales are directly and exclusively used in the registered project or activity of the exporters,” Garafil said in a statement.

Under the proposed amendment to the CREATE Act’s implementing rules and regulations, domestic market enterprises under the five percent gross income tax regime will have an option to register as VAT taxpayers, allowing them to charge output VAT to domestic customers or to receive a refund from the Bureau of Internal Revenue (BIR).

The tax bureau has also issued several directives to streamline the procedures and reduce documentary requirements for filing and processing of VAT refunds, Garafil said.

Marcos said the administration is ready to consider the amendments proposed by investors.

“We’re working on those issues and we will be introducing the amendments for the CREATE law to take care of this,” the President said.

“If you have your own amendments with you, we’d like to see, we will be happy to look at one. I want to hear from everyone what their ideas are, or even just, from your experience in other countries, what has worked for you,” he added.

Described by the finance department as the “largest fiscal stimulus package for businesses in the country’s history,” the CREATE Act aims to provide private firms more than P1 trillion worth of tax relief over the next 10 years.

It lowered the regular corporate income tax rate from 30 percent to 20 percent for domestic corporations with a taxable income of P5 million and below and with total assets of not more than P100 million.

The corporate income tax for big corporations with assets of above P100 million was reduced from 30 percent to 25 percent.

Marubeni Corp., which started overseas activities in Manila in 1909 as a trader of textiles and abaca, posted a Philippine revenue of P20.7 billion in 2022. Its primary line of business in the country includes infrastructure development, investments in power, water, heavy equipment, health care; as well as large-scale import and export of commodities.

Other meetings

Marcos also met with executives of Austal Ltd. and Tsuneishi Heavy Industries (Cebu) Inc. (THI) last Friday.

Austal, the world’s largest aluminum shipbuilder, is seeking clarification on the 12-percent VAT exemption on locally built vessels. The company operates industry-leading shipyards in Australia, the Philippines, US and Vietnam.

In his meeting with officials of THI, Marcos said he would talk to Environment Secretary Maria Antonia Yulo-Loyzaga regarding its project in Cebu. The company has land reclamation plans as part of the expansion of its business in Cebu. The reclamation plan would cover 32 hectares at the northern side of the company’s current reclamation area in Barangay Buanoy in Balamban town. It obtained its reclamation permit in 2008.

“I’ll talk to the (environment) secretary and I think that they’re undergoing that review process now. Because we have to be very careful,” the Chief Executive said.

THI is a Philippine Economic Zone Authority-registered ecozone export enterprise engaged in shipbuilding and repair at the West Cebu Industrial Park in Balamban.

The company has invested P11.90 billion since its registration in September 1998. It employs 801 direct employees and provides jobs to some 10,000 people through its subcontractors. THI has constructed 337 vessels as of July this year.

House ways and means committee chairman Rep. Joey Salceda is urging President Marcos to certify as “urgent” the Ease of Paying Taxes (OEPT) Act which is pending before the Senate.

In a statement yesterday, Salceda said that by certifying Senate Bill 2224 as “urgent,” the upper chamber can have it approved on second and third reading on the same day.

“I think it’s time to modernize the way we administer taxes. Bringing the tax system into the 21st century will be a PBBM legacy,” the Albay representative noted.

“So, respectfully, I request the President to certify this measure as urgent, considering that he has already mentioned this as a priority in both SONAs,” he added.

The House of Representatives, on the other hand, has approved its version under HB 4125, principally authored by Salceda.

According to the lawmaker, most of the key issues have already been settled, including the “concern among enterprises that the shift to an invoice-only system would cost those who are unable to get their receivables on time.”

Under the measure, most tax processes would be done online. The measure also allows a shift to an invoice system to accelerate VAT refunds, as well as create a special division in the BIR for small and medium taxpayers.

Salceda said Filipinos are “highly global people” and the EOPT will allow taxpayers abroad, especially overseas Filipino workers (OFWs), to update their tax records and even file for TINs anywhere.

He underscored that many overseas Filipinos want to invest locally or settle land issues here, “but they cannot, because they can’t do their taxes remotely.”

“As a result, we’ve been missing out on potential OFW investments, all while we try to attract foreign direct investments and make foreign capital come easier. It’s time we put family first,” he added.