CREATEing Relief During the COVID-19 Pandemic
By Euan S. Limon
The COVID-19 pandemic has brought negative impacts for the country, especially for the economy. One of the proposed remedies to combat this unfortunate event is the proposed Corporate Recovery and Tax Incentives for Enterprises (CREATE) Bill. But what does the bill do, and who will benefit from this?
The CREATE bill aims to reform the country’s corporate tax system and fiscal incentives system through new policies. It is believed to be “the first revenue-negative tax reform package and the largest fiscal stimulus program for enterprises” (Cometa, 2020).
Corporate Income Taxes (CIT) will be reduced to 20% for domestic corporations – the largest CIT cut in recent history. Corporations with total assets less than P100 Million and P5 Million of net taxable income would qualify for the 10% cut while remaining corporations would only enjoy a 5% cut for their CIT.
Other reforms within the bill include the lowering of the Minimum Income Corporate Tax rate (MCIT) from 2% to 1%. Housing, E-books, Medicines, and PPEs, including the COVID-19 vaccine, are exempted from value-added tax (VAT).
Micro, Small, and Medium Enterprises (MSMEs) are expected to fully benefit from the CREATE bill the most, given that they comprise 99% of enterprises in the country. The bill helps MSMEs to recover from the impact the pandemic brought to the economy.
The bill’s final reading has been approved by the Senate last November 2020. Though, disagreeing provisions by the House of Representatives delayed the passage of the bill. Once it has been settled and signed by the president, the bill would start to take effect by the latter half of 2021 on July 1.
Cometa, A. A. (2020, November 30). CREATE Bill: An early Christmas gift?
Department of Finance. (2020, November 29). Dominguez thanks Senate for passing CREATE bill. https://www.dof.gov.ph/dominguez-thanks-senate-for-passing-create-bill/
Hilario, E. M. (2020, December 04). Everything you need to know about the CREATE bill. https://manilastandard.net/opinion/columns/about-town-by-ernesto-m-hilario/341165/everything-you-need-to-know-about-the-create-bill.html
Ramos, C. (2020, December 17). Lawmaker says delayed passage of CREATE bill a huge setback. Inquirer.net. https://newsinfo.inquirer.net/1372807/lawmaker-says-delayed-passage-of-create-bill-a-huge-setback