CREATE bill to lapse into law on March 27

MANILA, Philippines — The bill lowering the corporate income tax rate to lure more investments and to enable the pandemic-hit economy to recover would lapse into law this month if President Rodrigo Duterte does not act on it, Malacañang said Tuesday.

The proposed Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, a priority measure of the Duterte administration, was ratified by both chambers of Congress last February.

Under the Constitution, the president has 30 days to sign or veto a bill transmitted to his office. If he does not act on the measure within 30 days, the bill would lapse into law.

"It will lapse into law without action on the part of the President (on) March 27," presidential spokesman Harry Roque said at a press briefing.

The bill will cut the corporate income tax from 30% to 20% for domestic corporations with total assets of not more than P100 million excluding land and with a net taxable income of not more than P5 million. The corporate income tax for all other corporations will be lowered from 30% to 25%.

The measure will also reduce percentage tax from three percent to one percent for small businesses whose gross sales or receipts do not exceed the value added tax-exempt threshold of P3 million. Minimum corporate income tax will also be cut from 2% to 1%. The lower percentage and minimum corporate income taxes will take effect from July 1, 2021 to June 30, 2023.

The bill will also grant up to 17 years of incentives for exporters and for domestic market enterprises to be declared as "critical" by the National Economic and Development Authority. The fiscal perks include four to seven years of income tax holiday and ten years of special corporate income tax or enhanced deductions. Other domestic market enterprises may enjoy up to 12 years of incentives.

The CREATE bill will also permit the VAT-free sale and importation of COVID-19 medicines, vaccines, medical devices and personal protective equipment components until the end of 2023.