PEZA, DOF, and BOI conducted an online webinar on CREATE law for export-industry stakeholders and locators

PEZA, DOF, and BOI conducted an online webinar on CREATE law for export-industry stakeholders and locators 
 

08 June 2021 (Tuesday)
 

Pasay City – In line with the recent signing of the Republic Act No. 11534 also known as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act into law, the Philippine Economic Zone Authority (PEZA) conducted an online webinar for export-industry stakeholders and ecozone locators which was held last 27 May 2021, through Microsoft Teams and YouTube.
 

With more than a thousand viewers from PEZA’s Official YouTube Page, the CREATE Online Dialogue was virtually attended by three respected resource speakers namely the Strategic Economics and Results Group (SERG) Assistant Secretary of the Department of Finance (DOF), Juvy C. Danofrata, the Department of Trade and Industry (DTI) Undersecretary and Board of Investments (BOI) Managing Head Dr. Ceferino S. Rudolfo, and the BOI Director for the Investments Policy and Planning Service Sandra Marie S. Recolizado.

Recognizing the need to change the national tax system specifically to the reduction of the corporate income tax (CIT), PEZA Director General Plaza said, “We have constantly lobbied with our legislators and fought until the end for the interest of our registered business enterprises who are efficiency-seekers and global market-driven.”

Plaza also added, “CREATE, just like other laws, is not perfect, but we can correct and enhance the implementation in its implementing rules and regulations (IRR).”

CREATE Law and its IRR

DOF Asec. & FIRB Head of Secretariat Danofrata stated that, “Under the CREATE Law, additional income tax holiday (ITH) of 3 years will be granted to registered enterprises and its activities that shall relocate from National Capital Region (NCR) and additional ITH of 2 years for registered enterprises located in areas recovering from disaster or conflict.”

Meanwhile, for the period of availment of incentives, Danofrata noted that it shall depend on two factors: First is where the activity or industry is located and second, in which category and activity it belongs to (or the tiers).

She explained, “For export enterprises, areas outside NCR and metropolitan areas have the maximum period of 17 years and for domestic market enterprise, maximum of 12 years.”

Further, DOF Danofrata mentioned that the functions of the FIRB have further been enhanced under the CREATE Law with roles such as systematically collecting and storing all tax incentives and benefit data, as well as evaluating and assessing the processes, outcomes and impacts of incentives to granted firms, conduct periodic performance review and maintain a masterlist of registered products and services for export or domestic consumption.

She also said, “Under the CREATE Law, there will be a publication annually of the data on amount of tax incentives and payments and other relative information and the FIRB is mandated to submit an impact evaluation results to the Office of the President and the Congress on an annual basis.”

Salient Features of IPP 2020 and SIPP

DTI Undersecretary and BOI Managing Head Dr. Rudolfo explained, “The FIRB resolves that Memorandum No. 50 referring to the 2020 IPP as approved by the President Rodrigo Duterte on November 18, 2020, which took effect on December 6, 2020, and its general policies and specific guidelines to implement that the IPP shall serve as the transitional SIPP pending the issuance of the newly formulated SIPP under the CREATE.”

Rudolfo also noted the issuance of SIPP will be towards the end of this year or early part of 2022. Projects or activities that will qualify under the transitional SIPP (2020 IPP) at the minimum will be registered under Tier I.

Further, Rudolfo expounded on the relevance of 2020 IPP to PEZA and to its stakeholders explaining that, “With the FIRB resolution, PEZA’s stakeholders can take the listing of preferred activities under the 2020 IPP and locators who fall within the priorities under the 2020 IPP can continue to register its projects.”

The 2020 IPP is also aligned with PEZA threshold on the production and manufacture of export products stating that at least 50% of production shall be exported for domestic companies and at least 70% for foreign companies.

A one overriding objective

PEZA Deputy Director General for Operations Harriet O. Abordo noted that certain issues in implementations [IRR] are anticipated since the IRR are now more restrictive on the coverage of tax and duty-free importations of capital equipment, raw materials, supply, and VAT-zero rating which is applied to a more restrictive scope of goods and services.

Nonethelss, Abordo remains on the brighter side highlighting that, “Now that the CREATE is here, we have to move forward, thereby, it is very imperative for us to make this work. Afterall, we have one overriding objective: To generate investments so we can create jobs for our countrymen and looking forward that one day, no Filipino will go hungry and our OFWs can finally return to a more vibrant economy in the Philippines.”

PEZA is enthusiastic and positive to a fruitful and lively collaboration with the FIRB and the BOI in terms of SIPP to effectively implement CREATE in economic zones.