By HENRY EMPEÑO | May 16, 2024

SUBIC BAY FREEPORT — More investor companies are expected to avail of tax incentives under Republic Act No. 11534, or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, as the government seeks to rationalize taxes and attract more investments.

This after the Subic Bay Metropolitan Authority (SBMA) and the Fiscal Incentives Review Board of the Department of Finance (DoF-FIRB) explained to business locators here the latest amendments to the CREATE Act, which was passed in 2021 to make the Philippines more competitive in the ASEAN market.

SBMA Chairman and Administrator Eduardo Jose L. Aliño said the May 15 briefing at the Subic Bay Exhibition and Convention Center gave information on the second package of the Comprehensive Tax Reform Program that aimed to reduces corporate income tax rates.

The forum provided a lively exchange of information between Subic Freeport locators engaged in general business, logistics, import/export, and trading and the FIRB team composed of Deputy Executive Director Michael Ricaza, and lawyers Brandon L. Berad, Lois Ruth Santiago, Mariz Nadora, and Jessa Mae Rapisora.

“The feedback we gathered from our locators will provide better insight to the agency on its operations relative to the CREATE Act,” Aliño pointed out.

CREATE Law effectively lowered corporate income taxes to 25% and 20% for small, medium, and micro enterprises. It was also meant as fiscal relief and recovery measure for Filipino businesses that suffered from the Covid-19 pandemic.

For foreign investors in Subic and other special economic zones in the country, the CREATE Law was also designed to plug tax leaks by rationalizing fiscal incentives and shifting the administration of such investments toward a performance-based, targeted, and time-bound system.

The SBMA in a statement explained the benefits of the CREATE Law to compliant companies, citing the Japanese firm Nidec Subic Philippines Corp. as an example.

Nidec Subic, which manufactures spindle motors at the Subic Techno Park here, passed the scrutiny of the FIRB’s Technical Committee and gained the unanimous approval of the inter-agency FIRB last year.

Now, the firm is entitled to income tax holidays for six years, special corporate income tax for 10 years, duty-exemption on importation for 16 years, value-added tax exemption on importation for 16 years, and VAT zero-rating on local purchase for 16 years, the SBMA added.

More tax perks for investors are expected to be in place, following the approval in March by the House of Representatives of House Bill 9794, otherwise known as the CREATE MORE (Maximize Opportunities for Reinvigorating the Economy) bill, which aims to make the country’s tax regime both compliant with the minimum global tax and competitive.

The bill proposes to make income tax rates 20 percent for domestic companies and resident foreign corporations under an enhanced deductions regime. 

PHOTOS: A member of the FIRB panel (top) explains the benefits of the CREATE Law to Subic investors (lower photos) who participated in the May 15 investors forum at the Subic Bay Exhibition and Convention Center.