President Ferdinand R. Marcos Jr.’s economic czar is taking major steps to further improve the investment climate in the country by addressing the concerns of both local and foreign investors.
Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA) Secretary Frederick Go said his office is pushing for provisions to be included in the Corporate Recovery and Tax Incentives for Enterprises Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill, that aim to provide confidence among investors by ensuring predictability and firm implementation of policies that will protect their investments.
Speaking at the Economic and Ease of Doing Business briefing organized by the Anti-Red Tape Authority (ARTA) at the Manila Hotel Wednesday, Go enumerated the top three priorities on his “to-do list.”
“Number one, the IPAs’ (investment promotion agencies) authorities. We want to restore the powers of the investment promotion agencies… We want to give the IPAs back their power over their own locators in their respective zones,” Go said.
He said restoring the autonomy of IPAs over their own locators will enable them to protect companies from regulatory inconsistencies and ambiguities, as well as excessive bureaucracy and red tape.
“This will reduce processing time for incentive applications and revert us back to the pre-CREATE regime,” Go noted.
Signed in 2021, the CREATE Law established the Fiscal Incentives Review Board (FIRB), an interagency body that evaluates and grants tax incentives for big-ticket projects of above PHP1 billion.
For projects with capital investments of PHP1 billion and below, the approval is delegated to IPAs.
Go also recommended a longer sunset provision of 12 years for registered business enterprises (RBEs) before the enactment of the CREATE bill into law.
Under CREATE, a sunset period is imposed on non-income tax holiday (ITH) perks for existing RBEs. Those in the export zones and freeport can enjoy these incentives until the sunset period ends; those RBEs enjoying a 5 percent gross income tax rate, solely or after the expiration of the ITH, were given a 10-year sunset period from the effectivity of the CREATE; and those registered with the Board of Investments were given duty exemption for five years from the date of registration.
“I think the main objective of CREATE is to harmonize the income tax incentives that investors can enjoy that are subject to a sunset provision. But in ecozones all over the world, the practice is, when it comes to VAT (value-added tax) and duties, that is exempt as long as you’re registered business enterprises in an ecozone,” Go told reporters on the sidelines of the event.
“But for the VAT and duties, I think the global practice is to have no sunset clause, as long as you are a registered business enterprise in good standing in the ecozone,” he added.
He also said he is batting for simplifying VAT-related rules by working with Congress to address the ambiguity for the coverage of the VAT zero-rating incentives.
Go wanted to simplify the process for VAT refund process by limiting required documents and reasons for denial to those specified by the law, as well as allowing claimants the opportunity to request for reconsideration before a final decision is made.
He also expressed his support to initiatives repealing outdated and overlapping laws that create confusion among investors.
“It burdens the public. It burdens enterprises. Sometimes everybody’s confused which one are we supposed to follow, because they overlap or they conflict… Which law do you follow?” Go said.
“Our goals are to improve the ease of doing business, to reduce the costs of doing business, and to find solutions to the bureaucratic challenges to create a conducive and enabling environment for both domestic and foreign enterprises,” he said. (PNA)
