FinTech industry, biz groups urge for quick enactment of Tax Incentive Law
The digital financial industry through the Fintech Alliance.PH together with 43 other private business groups in the Philippines express support for the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill and push for its quick enactment into law. In a joint statement, the groups urge Congress to prioritize the bill and enact it within the month of January 2021.
“Every day of delay comes at the risk of losing more jobs and hemorrhaging more investments”, the joint statement reiterates.
The bill passed in both houses of Congress in November, 2020 intends to boost businesses to market confidence by providing relief to those enterprises that are suffering from setbacks due to the COVID-19 pandemic.
Once enacted, the law will provide immediate reduction of the corporate income tax (CIT) rate from 30 down to 20 percent for small and medium enterprises with net taxable income not more than Php 5 million and from 30 to 25 percent for other corporations retroactively effective on July 1, 2020.
These would instantly bring the country’s CIT rate closer to the ASEAN average of 21.65 percent and give the companies more resources to retain their employees and cope with financial difficulties. The CIT cut will also attract investments as it changes the Philippines’ financial profile for the better.
“We are hopeful the proposal would give flexible authority to the Fiscal Incentives Review Board (FIRB) and the President in granting both fiscal and non-fiscal incentives making it an agile mechanism that can seize high-value investment opportunities”, said Lito Villanueva, FinTech Alliance chairman and RCBC executive vice president and chief innovation and inclusion officer.
The CREATE bill providing a transition of 10 years for current holders of incentives should ease some concerns about the tax regime change.
“We thank Congress for including proper safeguards against potential abuse of discretion or making it a political tool to grant favors to undeserving recipients. The Fintech industry is committed to working with all stakeholders in swiftly rebuilding our economy amidst this pandemic”, Villanueva added.
FinTech Alliance.ph is an industry trade organization composed of more than 50 companies in the digital finance space stimulating financial technology innovations toward inclusive digital economy. Its membership generates over 90 percent of digital financial transactions in the Philippines today.