BoI to identify industries for CREATE incentives
THE Board of Investments (BoI) will be releasing a preliminary list of industries eligible for incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, Trade Secretary and BoI Chairman Ramon M. Lopez said.
Albay Representative Jose Ma. Clemente S. Salceda last week said that he wants the BoI to release the initial list to be covered by the law.
“We need to have the list as soon as possible, and this is up for discussion, together with the IRR (implementing rules and regulations), in the first meeting of the FIRB (Fiscal Incentives Review Board),” Mr. Lopez said in a Viber message to reporters on Saturday.
He said that government agencies assured stakeholders like investors and legislators of continuity.
“The Investment Priorities Plan (IPP) will serve as the initial platform in transitioning from EO (Executive Order) 226,” he said. The executive order is the investment code of 1987.
The IPP 2020 was signed by President Rodrigo R. Duterte in December. The plan detailing which industries would receive tax incentives from the government included projects addressing the coronavirus disease 2019 (COVID-19) among its priorities.
The CREATE law cutting corporate income taxes and rationalizing tax incentives took effect on Sunday.
The law will lower corporate income tax to 25% from 30% starting July 2020, and then by one percentage point each year from 2023 until it reaches 20% in 2027. The rate immediately falls to 20% for local small companies.
CREATE streamlines the tax incentives system to make it more time-bound and performance-based.
“With the CREATE Law becoming effective this April 11, the intention is to provide at least the most basic incentive… under CREATE — provided they qualify — to sectors under IPP,” Mr. Lopez said.
“The 2020 IPP will serve as the Transition SIPP (Strategic Investments Priority Plan) until end-December 2021 or when the new SIPP is approved.”
The 2020 IPP covers essential goods and services addressing the pandemic; industrial and agro-processing manufacturing; agriculture, fishery and forestry; strategic services like creative industries and telecommunications; health care; and infrastructure, among others.
Under CREATE, industries identified by the government would be able to enjoy income tax holidays for four to seven years, then special corporate income tax for 10 years.