Several business groups have called on the Senate to accelerate the reduction of the corporate income tax (CIT) to 20 percent in 2025 instead of 2027 under the proposed Corporate Recovery and Tax Incentives for Enterprises (Create) bill.
In a joint statement over the weekend, 12 business groups also urged senators to consider the insertion to the current version of Create the grandfathering of incentives that they said will ensure the retention of competitiveness of the industries engaged in export activities such as manufacturing, business process outsourcing (BPO), and shared services.
Create, which proposes to reduce the CIT to 25 percent from the current 30 percent, also seeks to rationalize incentives currently enjoyed by select firms especially those located in economic zones.
Sen. Ralph Recto earlier proposed that a grandfather rule should be included in the proposed law. This would allow current investors to enjoy their current incentives while the new set of incentives would be applied to future investors.
“Although Create will give these firms a nine-year transition period before raising their CIT rate, grandfathering will provide them the confidence to remain in the Philippines long-term,” the business groups said.
They also urged senators to include in the proposed bill a provision that will allow currently operating registered business enterprises (RBEs) to avail of incentives for their existing and expansion export activities.
The joint statement pointed out that the due to the uncertain global economic conditions, risk for exports is high especially to the jobs of 1.3 million workers in the information technology-BPO sector, 380,000 in the semiconductor sector, 255,000 in the wearables sector, and 25,000 workers at regional operating headquarters.
The business groups said that in May 2020, the Confederation of Wearable Exporters of the Philippines (Conwep)already reported that a total of 25,418 jobs were being furloughed.
“Many buyers transferred their materials and production to Cambodia, Myanmar, and Vietnam. We pray that Create will not add another nail in the coffin for an industry whose annual exports were valued at $1 billion in 2019 with 280,000 direct and more than 1 million indirect jobs,” they added.
The business group said the amendments they are proposing are crucial to ensure that the Philippines can compete for more foreign investment in the future years.
The joint statement was signed by the American Chamber of Commerce of the Philippines; Australian-New Zealand Commerce of the Philippines; Canadian Chamber of Commerce of the Philippines; Conwep; European Chamber of Commerce of the Philippines; Information Technology and Business Process Association of the Philippines; Japanese Chamber of Commerce and Industry of the Philippines; Korean Chamber of Commerce of the Philippines; Philippine Association of Multinational Companies Regional Headquarters Inc.; Philippine Ecozones Association; Semiconductor and Electronics Industries in the Philippines, Inc.; and the US-Asean Business Council. Asean is the Association of Southeast Asian Nations.
By Anna Leah E. Gonzales
Source: The Manila Times