HOUSE Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) thanked his Senate counterparts for the swift proceedings of the bicameral conference committee on the CREATE MORE Act. The Senate adopted Salceda’s proposals for making petroleum suppliers for all tax-exempt entities eligible for tax refunds, allowing local government units to set the RBE local tax lower than 2 percent, and to apply the 20 percent rate on corporate income tax to both CREATE-era and CREATE MORE-availing enterprises.
Salceda earlier announced his requests after the Senate approved its version on 2nd reading.
“I thank the Senate President, my counterpart Senator Gatchalian, and Minority Leader Pimentel, for agreeing to the House’s positions. The House accepted all the Senate’s revisions,” Salceda said.
Excise tax refunds are only currently in effect on the basis of a 2021 Supreme Court ruling. The RBE local tax, meanwhile, is a tax rate in lieu of all local taxes and fees, minimizing the administrative burden and interface of registered firms with local government units.
The 20 percent rate will also now apply to all registered business enterprises (RBEs) that are under the Enhanced Deductions Regime.
CREATE MORE a win for manufacturing
Salceda said that “CREATE MORE builds on the progress achieved by the CREATE Act and responds to emerging developments in the global economy.”
“It’s also a big win for manufacturing. We solve their VAT issues, which cost some 120,000 jobs over the past 3 years. We also address the country’s high power cost with the additional or enhanced deduction on power cost, basically making power cheaper by around 3 pesos per kwh for manufacturing.”
“The global environment has also changed rapidly since the enactment of CREATE, particularly in three key areas: the rapid decline of China as the global manufacturing hub, the introduction of the global minimum corporate tax, and the increase in global commodity prices particularly fuel due to ongoing world conflicts. In this regard, we cannot afford to bungle our tax treatment of investors.”
“That is why any ambiguity in the CREATE Law that has led to misinterpretations either in the IRR or in the application of the law must be resolved. The VAT regime must be simple, clear, and transaction-based. The incentives regime under the CREATE transition period must be without any ambiguity. And the VAT refund system must work.”
“Our tax incentive approval mechanism must also be agile – while maintaining the government’s oversight of the process. That is why the power to grant incentives is being reverted to the Investment Promotion Agencies (IPAs) but the FIRB’s policymaking and oversight functions are being maintained.”
“While CREATE improved job creation in the services sector due to lower CIT, there is evidence that the VAT-sensitive manufacturing sector suffered due to the CREATE IRR, which deviated from legislative intent. The sector lost 41,840 jobs more than it usually does every year since the issuance of these IRRs.”
“Finally, high power cost is an existential threat to Philippine industries, especially in the manufacturing sector. Because we cannot afford to subsidize power costs as our neighbors do, an enhanced deduction for power cost will be more targeted towards those who need competitive power rates to create jobs.”
Salceda says he hopes that President Marcos will sign the measure “soon given his own certification of urgency on the matter.”
“It sustains the President’s very strong pro-investment record, and could cement his legacy as the President who fixed manufacturing.”
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