SUBIC BAY FREEPORT — Investor companies located in this free port zone are expected to benefit from more tax perks as the government seeks to rationalize taxes and attract more investments under Republic Act No. 11534, or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
Subic Bay Metropolitan Authority (SBMA) Chairman and Administrator Eduardo Jose L. Aliño said the Fiscal Incentives Review Board of the Department of Finance (DoF-FIRB) conducted a forum with his office on Wednesday to explain the latest CREATE Act amendments to Subic firms.
“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.
Aliño said the May 15 briefing by the FIRB gave information on the second package of the Comprehensive Tax Reform Program that aimed to reduces corporate income tax rates and make the Philippines more competitive in the ASEAN market.
The briefing resulted in a lively exchange of information between the FIRB team and representatives of Subic companies engaged in general business, logistics, import/export, and trading, the SBMA said.
CREATE Law was designed to lower 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 meant 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 said the CREATE Law will provide more benefits to compliant companies, citing the Japanese firm Nidec Subic Philippines Corp. as an example.
It said that Nidec, 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% for domestic companies and resident foreign corporations under an enhanced deductions regime.