DoF says CREATE incentives benefited P1T worth of projects

Projects benefitting from incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law have reached PHP 1.02 trillion in investment capital as of October, the Department of Finance (DoF) said. 

In a social media post, the DoF said this reflects the efforts of the Marcos administration to promote the Philippines as a good investment destination. 

“This landmark milestone also gained PHP 572.98 billion worth of foreign direct investment (FDI) pledges, with 910 CREATE-approved projects varying across priority sectors listed in the Strategic Investment Priority Plan,” it said.

Of the 910 CREATE-approved projects, around 49 big-ticket tax incentive applications with a total investment capital of PHP 817 billion were approved by the Fiscal Incentives Review Board.

The remaining 861 projects — with a combined investment capital of PHP 203 billion — were from investment promotion agencies (IPAs).

“These projects are expected to accumulate a committed employment count of around 99,400 jobs within its incentivized period, with the labor-intensive manufacturing sector having the highest number of approved projects among the priority sectors,” the DoF said.

“This underscores the employability of the country’s workforce in high-quality jobs that will contribute to long-term economic growth,” it added.

CREATE was signed into law in 2021 to aid enterprises that have yet to recover from the coronavirus pandemic. It reduced corporate income tax rates, provided tax relief measures, and rationalized fiscal incentives.

“As CREATE establishes a performance-based, time-bound, targeted, and transparent tax incentives regime in the country, incentivized projects or activities under the key structural tax reform are to achieve performance metrics to ensure that the grant of fiscal support to registered business enterprises leads to higher economic returns,” the DoF said. 

In August, Albay Rep. Jose Ma. Clemente S. Salceda filed the CREATE to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill, which seeks to reconcile disparities between the CREATE Act and its implementing rules, primarily on value-added tax (VAT)-related transactions. 

Under CREATE MORE, local and export companies, even those inside ecozones and freeports, would continue to enjoy duty exemptions, VAT exemption on importation, and the VAT zero-rating of local purchases as provided in their respective IPA registrations.

Registered export enterprises would also enjoy non-income tax incentives, VAT exemption on importation and VAT zero-rating on local purchases, as long as the registered firm maintains 70% of the total annual production as export sale and continues to be registered in good standing with the IPA.

The measure also proposes to lower corporate income tax to 20% for those under the enhanced deduction regime from 20-25%.

The bill is currently being taken up in the House of Representatives. — Keisha B. Ta-asan