THE Department of Trade and Industry is projecting the creation of 1.4-2 million jobs as a result of the tax breaks and incentives for investment introduced by the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill.
Congress recently ratified the bill which proposes to reduce the corporate income tax rate to 25% from 30%. The rate falls to 20% for companies with net taxable income of P5 million or lower and total assets less than P100 million.
“The passing of CREATE will firm up the tax and incentive reforms that will make the investment climate significantly more attractive than the current tax and incentive regime,” Trade Secretary Ramon M. Lopez said in a statement Monday.
“Based on our estimate and those from (Representative Jose Ma. Clemente S. Salceda), CREATE can bring in over P200 billion in new investment that can generate 1.4-2 million incremental jobs.”
Mr. Lopez in a mobile message to reporters said that the P200 billion estimate was a result of discussions with investors and an assessment of investment leads, noting that the typical investment-to-job ratio is P100,000 for each job.
While the Finance department has estimated the creation of 1.4 million new jobs over a decade under the previous version of CREATE, which was known as the Tax Reform for Attracting Better and High-Quality Opportunities bill, Mr. Lopez said that the timeline for job creation under CREATE “may be shorter.”
Some industry associations said in November that the loss of fiscal incentives under CREATE could endanger the Philippines’ attractiveness as an investment destination and drive unemployment higher. CREATE streamlines the tax incentive system to make it more time-bound and performance-based.
Action for Economic Reforms also flagged some provisions of CREATE, warning that the exemption of holders of franchises granted by Congress from scrutiny by the Fiscal Incentives Review Board could be prone to abuse.
Investment projects below P1 billion are to be evaluated by investment promotion agencies.
The CREATE bill is with President Rodrigo R. Duterte for signing. — Jenina P. Ibañez