Salceda: Create to boost economy, produce jobs

The proposed Corporate Recovery and Tax Incentives for Enterprises (Create) Act would support the Philippine economy toward a V-shaped recovery from the coronavirus disease 2019 (Covid-19) pandemic, and create and save much-needed jobs this year.

This is according to Albay Rep. José María Clemente “Joey” Salceda, who joined Finance Secretary Carlos Dominguez 3rd and Sen. Pilar Juliana “Pia” Cayetano in a briefing with reporters on Tuesday.

At the briefing, Salceda said Create— a recalibrated version of the Corporate Income Tax and Incentives Reform Act (Citira) — which aims to reduce the corporate income tax rate to 25 percent by July this year, would optimize the profit of local firms that wouold enable them to create 120,000 immediate, long-term and sustainable jobs amid the pandemic.

The proposed measure also extends the net operating loss carryover for nonlarge taxpayers from the current three years to five, which will be credited for losses incurred in 2020. This would allow as much as 99 percent of corporate taxpayers to utilize net losses this year as additional deductions from their taxable income from 2021 to 2025, according to the Department of Finance.

Salceda also said the bill would also make the Philippines an attractive market for “refugee firms,” or foreign companies affected by the escalating trade war between the United States and China.

Another key feature of Create is the extension of the sunset period for current incentive recipients from four to nine years. It would also introduce flexibility to the Fiscal Incentives Review Board, which will be allowed to recommend to the President the granting of longer incentives and additional nonfiscal ones for deserving investments.

“The Philippines must be ready to provide ‘asylum incentives,’ so that we can give these firms a good [reason] to invest here,” Salceda said.

He also said all these benefits would result in an annual 1.2-percent gross domestic product (GDP) growth for five years starting 2021. It would also generate 1.1 million jobs during this period.

“So I think we need Create in order to trigger a V-shaped recovery for this country,” Salceda stressed.

Meanwhile, Dominguez underscored that the measure would also limit job losses during the pandemic.

“You know, we’re still suffering from the contagion, but definitely it (Create) will help them keep people rather than considering putting them on furlough or retrenching them… I think you can stem the flow of unemployment because that’s really the danger…right now,” he said.

The Finance chief also thanked the Senate for committing to do its best to pass Create before Congress adjourns sine die next month, and the House of Representatives for expressing openness to adopting a “fiscally responsible Senate version” to speed up the measure’s approval and get it implemented by July.

“At this point, every session hour counts, and we thank the Congress for working hard on this historic reform,” Dominguez said.