We’ve heard enough: almost two trillion pesos will be lost out from our economy per the NEDA. But knowing these numbers mean little to the 900 thousand (even more), micro small and medium enterprises that are employing almost a fourth of our total workforce, many of whom now suffer from the weight of sales-less months of no revenue due to the necessary restrictions to prevent the spread of the COVID 19 virus.
They need quick relief to keep the workers, rents and suppliers paid so that we, consumers, will in turn get the products and services we need. Continuous losses will cause the business to fail, supply and value chains lost and worst of all, workers permanently laid off.
That bluntly said, we have to protect as many jobs and sustain as many of these business as we can.
The good news is that the Senate is now give the unenviable task of passing the new tax reform package known as the enhanced Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), previously known as Corporate Income Tax and Incentives Reform Act or CITIRA bill, package 2 of tax reforms to many of us, which the House of Representatives passed last year.
The CREATE bill, in our view is not only a tax reform package, but a tax relief and incentive package that is urgently needed to help struggling businesses and boost our economy. It gives a quick 5% drop in the corporate income tax rates, slicing it from 30-25%.
Equally important, if not more vital to many struggling businesses is the proposed five year Net Operating Loss Carryover (NOLCO), that allows businesses to charge their 2020 losses against future taxes over the next five years once they start recovering, lowering their taxes as they do.
Moreover, these reforms propose an ability to develop incentives that can attract new businesses to the countryside, rather than leave them concentrated in Metro Manila and surrounding regions, where almost 60% of our growth, and a third of our population reside. These can help boost the ability of the regions to generate investments and employment that support drives to decentralize opportunity, and decongest the bursting national capital region.
This makes CREATE not only timely, but urgent.