MANILA, Philippines — The country’s largest business organization on Thursday called for the immediate passage of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill, citing its importance for local businesses.
The Philippine Chamber of Commerce and Industry (PCCI) said Senate Bill No. 2654 will improve the current tax regime including the incentives given by the government to registered businesses.
In this light, PCCI sent a letter of support to Sen. Sherwin Gatchalian, who chairs the upper chamber’s committee on ways and means.
In the letter, the PCCI said there are inconsistencies in the Corporate Recovery and Tax Incentives for Enterprises (Create) Act which was passed during the Duterte administration.
The group likewise mentioned discrepancies in the corresponding administrative issuances relating to taxes and incentives enjoyed in freeport and economic zones.
READ: Gatchalian seeks to further enhance CREATE Act
In particular, the PCCI said that the distinction between export and domestic enterprises has disadvantaged the latter.
The business group lamented that domestic enterprises have ceased to avail themselves of their incentives, including the 5-percent tax on gross income earned that they are supposed to enjoy for 10 more years as specified in the transitory provisions of the Create Act.
Competitiveness issue
“This situation not only disincentivizes local suppliers of manufacturers inside freeport zones. It also puts manufacturers and exporters at a disadvantage as they must now absorb the [value-added taxes or VAT] passed on to them by their local suppliers,” PCCI president Enunina Mangio said.
In turn, those costs are passed on to end-consumers, making them uncompetitive in the global market, Mangio added.
Aside from this, the PCCI said it is also supporting the Create More bill to improve the country’s tax refund process.
“VAT refunds represent sums of money owed by the government to zero-rated taxpayers and investors, who already paid the [VAT] upfront on their purchases or investment,” said Benedicta Du-Baladad, PCCI director for taxation and investment policy and promotion.
“These are taxpayer money trapped with the government, idle, instead of being used to generate economic activities,” Du-Baladad said. “Bureaucratic inefficiencies in the VAT refund system have resulted in higher costs of doing business in the country as compared with other countries vying for the same market or investment.”