Metro Manila (CNN Philippines, March 27) — Groups welcomed the signing into law of a measure that will cut corporate income taxes and provide better fiscal incentives for some industries.
However, they also disagreed with President Rodrigo Duterte’s decision to veto, and to not veto, some of its provisions.
The President on Friday signed the Corporate Recovery and Tax Incentives for Enterprises or CREATE Act, one of the administration’s priority measures and its second tax reform package. Among its features is the reduction of corporate taxes from 30%, the highest in the ASEAN region, to 25% for large corporations, and 20% for small and medium enterprises earning ₱5 million a year.
READ: CREATE-ing opportunities through better fiscal incentives, lower corp taxes
However, Duterte vetoed nine provision of the new law, saying “[w]e must keep this reform’s provisions reasonable and not redundant.”
In a statement, the Financial Executives Institute of the Philippines thanked Duterte for finally approving the law that “will not only give relief to our businesses from the pandemic but will in longer term improve the competitiveness of the country as an investment destination.”
The group, however, said it disagrees with the President’s decision to veto some items, but did not specify them. It also urged the Bureau of Internal Revenue to issue the implementing rules and regulations before the tax deadline in April.
Meanwhile, Action for Economic Reforms said while it agrees with most of the vetoed parts, it questions why the President skipped the provision exempting local petroleum refineries from paying taxes and duties on crude oil imports. Another section includes the crude oil refining industry in the Strategic Investment Priority Plan, which states activities qualified to receive incentives.
“However, it is glaring that one provision—that of protecting the local crude oil refinery, escaped the presidential veto when the very reasons for striking out other weak provisions apply to this specific firm,” AER said. “That is, the protection given to one local crude oil refinery is distortionary, uncompetitive, unfair, rigid, and redundant.”
This clearly shows the government is protecting a firm that is “objectively uncompetitive,” AER added, while also noting that while the administration has the will to remove weak provisions, “it succumbed to the powerful lobby of one particular oligarch.”
