Government stands to recover from P100 to P120 billion in foregone revenues  while coronavirus disease (COVID 19) vaccine importations will be granted exemptions on value added  tax  (VAT) and duties until 2025 under the proposed reform of corporate income tax and fiscal incentives measure expected to be ratified soon by Congress.

 Albay Rep. Joey Sarte Salceda, chairman of the House Committee on Ways and Means, made this disclosure as the bicameral conference committee on the proposed Corporate Reform and Tax Incentives Reform (CREATE)  Act is set to submit its recommendation for the consolidation of the House and Senate versions of the bill.

Salceda said the country’s business will finally move swiftly to recover from the effects of the pandemic as soon as Congress submits the consolidated version of the measure for approval by the president.

“It’s finished. Both panels are now ready to sign,”said  Albay Rep. Joey Sarte Salceda as he aired confidence that the bicameral conference committee on CREATE bill will submit its report within a few days.

Salceda said the House and Senate panels have agreed in an informal meeting to iron out the disagreements on the Senate and House versions of the proposed Package 2 of the Duterte government’s Comprehensive Tax Reform Program.

The lawmaker said approval of the measure will help expedite COVID-19 procurement, especially by the private sector.

“Vaccine rollout is the most important economic stimulus measure. We are happy to report that CREATE/CITIRA will also help get it done,” Salceda stated.

On the part of the House, the major items the Senate concurred with are: shorter incentives for domestic enterprises, stringent controls against illicit trade in certain ecozones, and longer incentives for all areas outside of NCR.

“Once the revenue estimates are out, I believe we will have saved likely P100-120 billion in foregone revenues compared to the initial Senate version,” the House panel chairman stated.

Salceda also stressed that he is “particularly proud of the incentives for countryside enterprises, and tax savings from incentives for domestic enterprises.”

“My greatest fear, on the revenue side, was how redundant tax incentives for domestic enterprises were,” the veteran administration solon said.

According to him at least US$18 billion in foreign direct investments (FDIs) were lost over the “past three years of uncertainty over the delays in passing” the measure.

“Now that it’s done, I expect the investment overhang to close. Investors can now stand on more solid footing,” Salceda said.

“As far as investment uncertainty over tax regime is concerned, that’s finished. The Secretariats are now preparing the final copy as we speak. We will sign this weekend, and ratify by Monday or Tuesday,” Salceda added.

According to Salceda, one key concession his panel was able to obtain from the Senate is that domestic enterprises will be able to avail of 5 years shorter special corporate income tax (SCIT) or enhanced deductions compared to the Senate version. Additionally, they have to have an investment capital of at least P500 million to qualify for the SCIT. 

As for critical domestic industries, they will be able to avail of incentives similar to those of export enterprises. The industries qualified as “critical” will be determined by the National Economic Development Authority, as “arbiter between fiscal health and industrial development,” as Salceda described.