Voting 20-1, the long discussed and awaited second tranche of the tax reform program, now called the CREATE bill has been passed by the Senate on Third reading.
This measure lowers corporate income taxes from one of ASEAN`s highest rates at 30% to the 25%.
This feature alone is timely, as it means lowers taxes for majority of businesses, and help boost their recovery in these trying times.
Moreover, it puts our rates at par with our ASEAN neighbors, making our corporate taxes conpetititve in attracting investments.
Lowering taxes for businesses is an even bigger must if we want to help companies recover from the economic impacts of the pandemic and other recent disruptions.
We recall how the South Korean ambassador raised the possibility of more investments but flagged our high tax rates. (https://www.bworldonline.com/south-korea-eyes-more-investments-in-phl-but-flags-high-corporate-tax/). With this reform, we may see more investments coming in.
This measure also provides for a new way of giving tax incentives rationalize incentives in order to allow more businesses to avail of them, especially in areas where these enterprises and industries are sorely needed, such as the Visayas and Mindanao.
Rationalizing incentives is a must nowadays, since we need to make sure that the right incentives go to the economic sectors where jobs are created, products are needed and can be moved, such as the Visayas and Mindanao.
It is obvious that under the current incentives scheme, job generating investments are concentrated only in a small area of the country, which is the area around metro manila, including Central Luzon, from the Clark and Subic areas And Cebu. It is time for us to spread these further to create new pockets development. We cannot allow job generating Manufacturing investments to remain in only a few areas as they are now.
The 30 or so business organizations that supported CREATE, led by the Philippine Chamber of Commerce and Industry were not mistaken Ain expressing their support.
In all, we hope that this major reform will eventually be signed by President Duterte, who certified it as urgent.