MANILA - The Philippine Chamber of Commerce and Industry and the Makati Business Club on Monday said they support the revised bill seeking to lower corporate income taxes and reform fiscal incentives.
The Finance Department recently said it had recalibrated the proposed Corporate Income Tax and Incentives Reform Act (CITIRA) in light of disruptions caused by the COVID-19 pandemic.
The new proposal called Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) is "more responsive to small businesses negatively affected by the pandemic."
PCCI president Benedicto Yujuico said the changes made to the tax reform package "will boost the recovery of firms reeling from the economic slowdown."
The MBC said the revised bill will help businesses affected by the COVID-19 crisis.
Under CREATE, the corporate income tax would be reduced to 25 percent from 30 percent as early as July.
Yujuico said savings generated from the reduced tax rate would help fund the continued operation of businesses. This would also bring the country closer to the ASEAN average of 23 percent and help draw in multinational firms seeking alternative sourcing markets and manufacturing base, the PCCI official said.
"The extension of the applicability of the net operating loss carryover (NOLCO) for losses incurred in 2020 from the current three years to an extended five years will allow companies to deduct incurred losses from tax payments for a longer period, providing them more time to set their finances in order," Yujuico said in a statement.
PCCI suggests that the extension of NOLCO be given to all firms regardless of size to help firms maintain jobs as "the community quarantines have resulted to substantial losses across all industries and sectors."
Last week, Finance Secretary Carlos Dominguez said the new tax bill also extends the sunset period for firms under the gross income earned to 4 to 9 years, from the earlier proposal of 2 to 7 years.
PCCI said that "including more flexibility in granting fiscal and non-fiscal incentives will be critical as the country competes internationally for high-value investments."
"The business sector needs the package of reforms introduced under CREATE to help businesses recover, ensure their resilience and create more sustainable economic opportunities," the business group said.
PCCI called on lawmakers to speed up the approval of the new tax bill.
The MBC echoed the call, but suggested new provisions.
"We support a Financial Incentives Review Board system for very large investments above certain set thresholds, such as size of investment and jobs to be created," the MBC said in a statement.
The Makati business group also said the government should codify incentives as soon as possible then market them aggressively, and further extend incentives for existing investors to at least 10 years.
CREATE is the fourth version of the corporate tax bill, which started as TRAIN 2 (Tax Reform for Acceleration and Inclusion) before being rebranded as TRABAHO (Tax Reform for Attracting Better and High-Quality Opportunities), and then as CITIRA.
Business groups, particularly those in business process outsourcing and export-oriented industries, had opposed earlier versions of the bill, saying it removes fiscal incentives needed to keep the Philippines competitive, and could lead to job losses.
Dominguez, however, has said that while earlier versions of the bill were "revenue-neutral", the new bill will actually see the government foregoing revenues just to support small businesses.
The Finance chief said the new bill is "an economic stimulus" measure.