Thirty-two of the Philippines' biggest business groups have called on Congress to immediately pass the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), but warned that cautionary measures should be put in place to prevent abuse.
In a virtual press conference on Thursday, the groups said Congress must prioritize the passage of CREATE before the session is adjourned on June 3, 2020.
"Business and professional associations and chambers banded together to issue a joint statement addressed to Congress," said Eduardo "Eddie" Yap.
Yap currently serves as the chairman of the National Affairs Committee of the Financial Executives of the Philippines (FINEX), which co-hosted the joint meeting of the business community along with the Management Association of the Philippines (MAP).
"We expressly reiterate our strong support for the immediate passage of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE). CREATE is a bold, historic economic reform, one of the largest and most game-changing in decades," the statement read.
"As a stimulus package, CREATE will be a life-restoring boost to market confidence, providing the most direct, cost-efficient, and instant relief to businesses suffering from business reverses due to COVID-19," it added.
CREATE is a repackaged version of the Corporate Income Tax and Incentives Rationalization Act (CITIRA), which seeks to immediately reduce the corporate income tax to 25% from 30% currently.
"The instant 5% tax savings by July is a direct infusion of financial assistance to businesses, giving them more resources to retain employees and to keep up with financial difficulties," the statement read.
"As an investment-attracting move, the CIT cut drastically alters, for the better, the financial prospectus of the Philippines," it added.
The business groups noted, however, that the proposal to give flexible authority to the Fiscal Incentives Review Board (FIRB) and the President in granting both fiscal and non-fiscal incentives should be watched.
"This will make the tax incentives system an agile mechanism that can adapt easily to changes in the global business environment, and can very decisively seize high-value investment opportunities when they are presented," they said.
"However, we urge that proper safeguards must be put in place to prevent abuse of discretion or be a political tool to grant favors to undeserving recipients," the statement read.
The 32 business groups that signed the statement are the following:
1. Alyansa Agrikultura
2. Anvil Business Club
3. Bankers Association Of The Philippines (BAP)
4. Cebu Business Club (CBC)
5. Cebu Leads Foundation (CLF)
6. Chinese Filipino Business Club, Inc. (CFBCI)
7. Entrepreneurs’ Organization (EO) Philippines
8. Federation Of Filipino-Chinese Chambers Of Commerce & Industry, Inc. (FFCCCII)
9. Federation Of Indian Chambers Of Commerce (Phil) Inc. (FICCI)
10. Financial Executives Institute Of The Philippines (FINEX)
11. Foundation For Economic Freedom (FEF)
12. Institute For Solidarity In Asia, Inc. (ISA)
13. Institute Of Corporate Directors (ICD)
14. Investment House Association Of The Philippines (IHAP)
15. Management Association Of The Philippines (MAP)
16. National Real Estate Association (NREA)
17. Organization Of Socialized Housing Developers Of The Philippines (OSHDP)
18. People Management Association Of The Philippines (PMAP)
19. Philippine Center For Entrepreneurship (GO NEGOSYO)
20. Philippine Chamber Of Commerce & Industry (PCCI)
21. Philippine Council Of Associations And Association Executives (PCAAE)
22. Philippine Hotel Owners Association Inc. (PHOA)
23. Philippine Institute Of Certified Public Accountants (PICPA)
24. Philippine Retailers Association (PRA)
25. Philippine Women’s Economic Network (PHILWEN)
26. Procurement And Supply Institute Of Asia (PASIA)
27. Rural Bankers Association Of The Philippines (RBAP)
28. Shareholders’ Association Of The Philippines (SHAREPHIL)
29. Subdivision And Housing Developers Association (SHDA)
30. Tax Management Association Of The Philippines (TMAP)
31. Up School Of Economics Alumni Association (UPSEAA)
32. Women’s Business Council Philippines (WBCP)
The statement was welcomed by Finance Secretary Carlos Dominguez III.
"Thank you for this support. We value it and we think this is a real step forward for the country," he said during the same event.
Earlier this week, Ateneo de Manila University School of Government dean and economist Ronald Mendoza warned that rushing the passage of another tax reform measure would do more harm than good.
"Let's not rush TRAIN2/CITIRA/CREATE (or whatever they are calling it now) and make an effort to get it done better compared to TRAIN1 and rice tariffication," he said in a position paper. — BM, GMA News