Metro Manila (CNN Philippines, October 12) — Senator Pia Cayetano said that the proposed Corporate Recovery and Tax Incentives for Enterprises Act will not affect existing special and mandatory laws that grant incentives to specific industries or activities.
During Monday’s plenary session, Senate Minority Leader Franklin Drilon questioned Cayetano, the sponsor of Senate Bill no. 1357, or CREATE bill, regarding its effect on other existing laws that grant incentives to industries or activities, like the Presidential Decree No. 705 which grants incentives to the wood industry.
The question was posed in line with the passage on third reading of House Bill No. 7507, the bill granting a franchise to San Miguel Corp. to build and operate an international airport in Bulacan.
Cayetano said Section 291 of the bill will cover all existing investment promotion agencies (IPAs) and similar authorities that may be created by law in the future.
She added that what was passed was a grant of a franchise and not a creation of such agency as stated by the law.
Meanwhile, Drilon also questioned the expanded function of the Foreign Investment Review Board (FIRB), who will have the sole authority in approving applications filed to investment promotion agencies that will only have recommendatory powers.
He also noted that the proposed measures states that the FIRB can delegate its power to IPAs or a technical working group, which Cayetano said will be guided by level or location of investment, type of activity, and fiscal risk as stated by the bill.
Another issue Drilon raised was on giving the FIRB the power to grant incentives and to review the same incentives it granted, as well as where the concerned entity should reach out if it wants to make an appeal regarding the denial made by the FIRB on its application for incentives.
Cayetano explained that the Finance secretary, who heads the FIRB, has the power to interpret tax incentives under CREATE, but if it is about other provisions of the National Internal Revenue Code, then it is the responsibility of the Bureau of Internal Revenue.
On the denial of application, she said for as long as its basis was the interpretation of the Finance secretary, then the concerned party should go to the Court of Tax Appeals to petition.
The CREATE bill will cut corporate income tax to 25 percent from the current 30 percent, which will be further reduced by 1 percentage point yearly from 2023 to 2027.
