Legislators vow to pass tax perks bill this month
Legislators have committed to pass the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) this month and give tax managers ample time to adjust their lower 2020 payments ahead of the filing deadline in April.
House ways and means committee chair and Albay Rep. Joey Salceda last week said both houses of Congress would fast-track the big cut in corporate income tax rate to as low as 20 percent for micro, small and medium enterprises (MSMEs) while providing flexibility in the fiscal incentives regime to attract more elephant-sized investments.
“The House leadership wants this done fairly and quickly. We approved our version more than a year before the Senate did, so we are obviously not trying to delay anything. In fact, the opinion of my delegation’s members is that we try to make our substitute provisions aligned with the consensus on both houses. I can assure you: Not one member of my delegation wants this to spill over to February. January 2021 is our internal deadline,” Salceda said.
After the Senate passed its version of CREATE in December last year, Salceda earlier on agreed to defer a bicameral conference committee to reconcile the two houses’ versions and fast-track transmission to President Duterte. But Salceda later backtracked and sought a bicam when Congress resumes session on Jan. 18.Salceda admitted having some differences in the House- and Senate-approved bills that they wanted to first address, including distribution of gains from CREATE across the country.
“We just want a stronger bias toward countryside development and gross value-added since that was the intent [of CREATE]. I suppose the differences are because we in the House mostly represent the provinces, while most senators come from big cities, so the perspective has some differences,” Salceda explained.
“The changes I hope to introduce are sensible and should be agreeable to both houses. I just want longer incentives for countryside investments, a premium on rural and high-value investments and some measures to make incentives recipients more accountable,” Salceda added.
According to Salceda, the plan was to finish bicam discussions in only a day despite constraints from pandemic restrictions.
Salceda assured tax managers that they would have enough time to comply with the deadline to pay 2020 taxes in April as the new tax rates would be retroactively applied starting July last year, hence entail recomputation of firms’ tax dues.
“If anything else happens, I will seek an extension from the BIR [Bureau of Internal Revenue] on the filing process,” Salceda said.
Last Friday, Finance Secretary Carlos Dominguez III reiterated his plea for Congress to approve in early 2021 the measures primed to aid in recovery from the pandemic-induced recession, which besides CREATE also included the proposed Financial Institutions Strategic Transfer (FIST) and the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) bills.
In the case of CREATE, Dominguez said its passage early this year would “finally erase the unpredictability in the country’s corporate tax and fiscal incentives system that have prompted foreign firms to adopt a wait-and-see attitude before investing or expanding their businesses here.” —Ben O. de Vera INQ
