Marcos seeks to defer rationalization of incentives under CREATE bill

The rationalization of incentives under the corporate income tax reform bill should further be reviewed if not outrightly deferred amid the present COVID-19 situation, according to Senate Committee on Economic Affairs chairperson Imee Marcos on Monday.

Before the period of debates for the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill was wrapped up, Marcos said she was speaking on behalf of the exporters whom she claimed would bear the brunt of rationalizing the tax perks.

"In this pandemic, we must indeed care for each other more and tax each other less, whether Filipino workers and for foreign investors," she said.

"And if indeed, as  the Finance Department has repeatedly asserted that CREATE is the first revenue-reduction tax measure in the world, so be it—a mutual sacrifice of a compassionate and humane government seeking only to lessen the burden of its already plagued and suffering people," she added.

The senator said the export sector has already contracted in the past five months due to the COVID-19 pandemic.

"As of September 2020, while 373,338 workers continued working in their different employer companies, these companies never actually produced or operated which are now at risk of perilously at risk of closing even as the COVID crisis continues," Marcos said.

She added that the semiconductor industry anticipates thousands of lay-offs next year as investors freeze any other investments.

Around 19% of the 280,000 workers in the garment sector has already been retrenched in the second quarter of the year after export orders plummeted by up to 45%, the senator further said.

"An additional deprivation of tax incentives would render our country costly and uncompetitive as a destination," Marcos said.

She also stressed that the Board of Investments has been unable to cite cases of alleged tax perks abuses committed by firms in investment promotion agencies.

"How much do we seek to raise by denying our exporters these incentives and how much more do risk losing from the exodus of the investors, jobs, and foreign currency as a result?" she asked.

Marcos said that if the rationalization of incentives under the CREATE bill would not be deferred, the inclusion of the "grandfather clause" for existing investors should at least be considered.

The CREATE bill, which seeks to immediately reduce the corporate income tax rate from 30% to 25% down to 20% in the succeeding years, also aims to rationalize tax incentives by making them time-bound and performance-based.

Senate Minority Leader Franklin Drilon previously proposed to split the bill into two.

The bill, certified as urgent by the President, is still under the period of amendments in the Senate. The senators target to approve it on third reading this week before Congress goes on break. — BM, GMA News