Senate President Zubiri Pledges to Amend CREATE Law Amid Investment Concerns

MANILA — Senate President Juan Miguel Zubiri has acknowledged shortcomings in the implementation of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, noting its adverse effects on attracting investments to the country. During a public hearing of the Economic Affairs panel on the proposed Bulacan Airport City Special Economic Zone and Freeport Authority (BACSEZFA), Zubiri admitted on Wednesday that certain provisions of Republic Act No. 11534, enacted by the previous Congress, had inadvertently hampered the nation’s investment appeal.

According to Philippines news Agency, a key oversight involved the powers granted to the Fiscal Incentives Review Board (FIRB), which led to confusion and deterred potential investors. This issue has resulted in numerous pending applications for ecozones, as the FIRB’s role in overseeing tax incentives and subsidies introduced complexities that were previously absent. Under the CREATE Act, the FIRB was tasked with ensuring the proper administration, approval, or disapproval of tax incentives, a shift from the earlier, more streamlined process that investors encountered when dealing with economic zones.

Reflecting on the situation, Zubiri highlighted the challenges faced by investors, particularly with investments exceeding PHP1 billion, under the current system. This has been a point of contention among foreign businessmen from countries such as Japan, Korea, and the United States, who have expressed their concerns directly to him.

In response to these challenges, Zubiri noted that the Senate Committee on Ways and Means is actively discussing amendments to the law through the proposed CREATE to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill. This bill aims to introduce reforms to establish a more efficient tax refund system for registered business enterprises, including a risk-based classification for claims and a streamlined VAT refund process.

Furthermore, the CREATE MORE bill seeks to enhance the country’s competitive edge in the global market by expanding the enhanced deduction regime. This includes increasing the deduction for power expenses from 150 percent to 200 percent and offering a 200 percent deduction on expenses related to participating in approved trade fairs, exhibitions, and missions. It also proposes clarifications to the transitory provisions to exempt registered business enterprises under the 5 percent gross income earned regime from all national and local taxes, including VAT and duty incentives.