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As the enactment of the Corporate Recovery and Business Tax Incentives (CREATE) looms, the Chairman of the House Ways and Means Committee said Tuesday that the proposal could spur up to $ 7 billion to $ 10. billion in additional new foreign investment in 2021 alone and at least 2 million jobs in two years.
With this, Albay’s representative, Joey Sarte Salceda, described CREATE as a much-needed “shot in the arm” for the country’s economy hit by the pandemic.
With the fog of uncertainty about tax incentives all but removed, Salceda also said that companies can now make investment decisions in the Philippines too.
Previously, Salceda already conveyed the intention of his committee that the full House adopt the Senate version of CREAR to speed up its approval.
Salceda confirmed that the Senate version of CREAR will be adopted by the House Plenary on Wednesday (December 9).
“I will be working with the Board of Investment and the ecozones on how we can promote the Philippines as an investment destination more aggressively, now that the cloud of uncertainty due to the delay in CREATE approval is almost over,” said Salceda, the director. author of the proposal CREAR en la casa.
If the country succeeds in its advocacy strategy, the Chamber leader said CREAR could result in $ 7 billion to $ 10 billion in additional new foreign investment. He promised to work with the Department of Finance (DOF) to ensure that the Fiscal Incentive Review Board (FIRB), which CREATE will strengthen as the country’s central incentive administration agency, can handle an influx of new investment requests.
Once signed by the president, CREATE will implement a 10 percent corporate income tax cut for corporations earning P5 million or less in net taxable income; and a 5 percent reduction for all other corporations.
Salceda said that the reform “modernizes the tax incentive regime to make it simpler, fairer and more efficient.”
Investment promotion
Salceda, for his part, called on the Department of Commerce and Industry (DTI) to intensify its business promotion and investment programs.
He said DTI must now “redouble its efforts to help small businesses create jobs and large investors create new opportunities.”
With CREATE alone, 1 million new jobs can be created in the next 2-3 years, Salceda said, “but we have to be very aggressive to help companies expand.”
As “a much-needed injection in the arm for our pandemic-hit economy,” CREATE “will inject about P39 billion this year alone for business expansion, while ultimately resolving the fog of uncertainty over tax incentives. If we get this right , we can configure 2021 for a very fast double-digit recovery. But we have to act decisively, “added the legislator.
In October, Salceda wrote to the DOF and DTI, asking them to share with Congress plans to attract more investment to the country.
“They informed me that we are seeking a double taxation agreement to attract more foreign investors of all sizes, and the DTI is already conducting trade missions, but we have to go double, because our competitors are doing it too,” Salceda added.
Market boom
Meanwhile, Salceda said the country can expect a stock market boom in 2021 with the approval of CREAR.
“I did the math. The real net present value of the private sector capital infusion due to CREATE is as much as P5.7 trillion over the next 10 years, or 38 percent of the market capitalization. You don’t always get a policy that provides you with so much private sector capital. CREATING is once in a generation, ”said Salceda.
“That’s why when pandemic concerns ease and uncertainty fades, I look forward to a stock market boom in 2021. Now may be the time to invest in resilient companies, because if the private sector can maximize the gift of CREATE , I look forward to a very good earnings year in 2021, relative to this year. Perhaps earnings growth will even outpace GDP growth, ”Salceda added.
In addition, the Chamber’s tax panel and the head of economic recovery also asked the DTI to boost the efforts of the Negosyo Centers to formalize small businesses that are currently not registered and therefore cannot benefit from the loan programs. existing.
