DOF backs CREATE Act amendments, stresses its crucial role in progressive fiscal administration and investment promotion
Finance Secretary Benjamin E. Diokno has expressed the Department of Finance’s (DOF) support for the proposed amendments to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, underscoring its importance in fully realizing the Philippines’ potential as a global investment hub.
“The proposed amendments to the CREATE Act will enhance the incentives, clarify the rules and policies on the grant and administration of incentives to qualified enterprises, and address issues affecting the country’s investment climate,” Secretary Diokno said.
The major areas of reform, as included in the CREATE to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill, cover the establishment of a streamlined tax refund system for registered business enterprises (RBEs) and institutionalization of risk-based classification of claims and audit framework. This is to improve the timeliness, efficiency, and predictability of the VAT refund process.
To improve the country’s presence and market share in the foreign market, the CREATE MORE bill expands the enhanced deduction regime. This increases the deduction for power expenses from 150 percent to 200 percent, and 200 percent deduction on expenses relating to approved trade fairs, exhibitions, and missions.
Moreover, the bill proposes to clarify the transitory provision by expressly exempting transitory RBEs under the 5% gross income earned (GIE) regime from all national and local taxes, including VAT and duty incentives.
The CREATE Act establishes a performance-based, time-bound, targeted, and transparent tax incentives regime in the country. Pursuant to the law, the Cabinet-level Fiscal Incentives Review Board (FIRB) is mandated to oversee the grant and administration of incentives of investment promotion agencies (IPAs).
As of August 2023, the FIRB has approved a total of 45 big-ticket tax incentive applications from various Registered Business Enterprises (RBEs), with a total investment capital of P721.29 billion.
The approved investment projects are expected to create 31,421 job opportunities, primarily in capital-intensive industries such as information and telecommunications infrastructure,