MANILA - The country's top businessmen said the passage of a bill that will cut corporate taxes from 30 percent to 25 percent will attract not just foreign investors, but also re-investments from big local firms.
The Corporate Recovery and Tax Incentives for Enterprises or CREATE Act was recently ratified by the Senate and House of Representatives, and is now awaiting approval from the president.
Other than the big firms, CREATE bill also seeks to lower taxes for small businesses to 20 percent.
Jamie Augusto Zobel de Ayala, chairman of Ayala Corp, and Manuel V. Pangilinan, the chief executive officer of PLDT, both said their tax savings from CREATE will be re-invested back to the economy, to aid the country's recovery from pandemic-related losses.
“We are grateful also to [Finance] Secretary [Carlos] Dominguez for the CREATE bill...[This] allows us to reinvest the money back in the country and the telecom industry [which] is one example of an industry that needs to keep reinvesting," Zobel said on Wednesday.
"All these moves by the DOF are encouraging us to keep reinvesting in the country," he added.
Ayala Corp has Globe Telecom, which has set aside P70 billion budget for investments this year.
Pangilinan said CREATE will do the same for telco PLDT, and contribute taxes from its capital expenditures (capex) set this year which will be in between P88 billion and P92 billion.
"We are raising our capex this year, especially there is a bit more cash on our hands because of the CREATE bill. So we are undertaking to put that increased capital expenditure this year and the coming years," the PLDT chairman said.
For his part, ports and resorts magnate Enrique Razon said CREATE is a "progressive" bill that encourages more investments for the country.
"Ang CREATE bill ay isang progressive tax bill, mag iincentivise sa mga kumpanya [at] negosyo, dahil sa lowering of corporate tax...at yung mga ibang incentives dun...makakatulong yan to invest more sa economy...yan ang center piece for business," said Razon, who owns ICTSI and Solaire operator Bloomberry.
(CREATE bill is a progressive tax bill that will incentivize businesses and enterprises to invest more as they lower corporate tax and provide incentives. It is the center piece for business.)
Dominguez noted that CREATE is acting as the government's "stimulus program", saying the bill can still lower up to 20 percent the 25-percent tax provision for big firms in the years to come.
"It is like a stimulus program. We leave it to the hands of the businesses on how they would use and invest the extra funds, so they can eventually create more jobs," the finance secretary said in Filipino.
He said the government wants to meet with foreign investors to know their needs and give fiscal and non-fiscal incentives accordingly through CREATE.
"We are prepared to give foreign investors more fiscal and non-fiscal incentives, so that we can be more competitive with Vietnam, with Thailand, with Indonesia, who are all competing for foreign investnments," Dominguez said.
Amid the clamor to pass CREATE, President Rodrigo Duterte recently signed into law the Financial Institutions Strategic Transfer (FIST) Act to help banks and financial institutions from the build up of bad loans due to the COVID-19 crisis.