THE PHILIPPINES’ equities and fixed-income exchanges have urged Congress to swiftly pass the proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) to make the country an attractive investment hub in the region and the domestic capital market a viable venue for raising funds.
The Philippine Stock Exchange, Inc. (PSE) and
the Philippine Dealing System Holdings Corp. (PDS) have expressed their strong
support for CREATE, which they described as “a landmark bill in a series of
reform measures undertaken by this administration.”
“We respectfully urge both houses of Congress
to prioritize the immediate passage of the CREATE bill so that the country can
fully reap the benefits of this reform bill without delay,” said PSE and PDS in
a joint statement signed by PSE president Jose Pardo, PDS chairman Cezar
Consing; and Ramon Monzon, the president-CEO of both the PSE and PDS.
The immediate lowering of the corporate
income (CIT) tax to 25 percent for large businesses and foreign corporations,
and to 20 percent for micro, small and medium enterprises with net taxable
income of P5 million and below and total assets of not more than P100 million
(excluding land), will leave more funds in the hands of publicly listed
companies either for business expansion or distribution to stockholders, the
PSE and PDS said.
“The investment of said tax savings in other
business undertakings or investment vehicles can set off a chain of positive
economic consequences such as employment generation, higher spending, and
increased domestic business activity as a result of the multiplier effect,”
they said.
Immediately reducing the CIT and enhancing
the flexibility of the country’s fiscal incentives system to bring in
investments that will generate the most benefits for the Filipino people will also
make the Philippines competitive among its peers in the Association of
Southeast Asian Nations (ASEAN) region. The Philippines’ current CIT rate of 30
percent is the highest in ASEAN.
Aside from the CREATE bill, the PSE and PDS
also expressed their support for the expansion of the list of transactions
qualifying as tax-free exchanges in Section 40(C)(2) of the National Internal
Revenue Code (NIRC).
They also backed the removal of the
requirement to obtain prior confirmation or tax ruling from the Bureau of
Internal Revenue for the purpose of availing of this benefit in Section
40(C)(2) of the Tax Code.
They said such reforms will streamline the
process of reorganization typically conducted by companies preparatory to going
public. “This is a very welcome development and a move that has long been
clamored for by the market,” the PDS and PSE said.
Along with CREATE and the removal of the
Initial Public Offering tax in Republic Act No. 11494 or the Bayanihan to
Recover as One Act, these reforms on tax-free exchanges will spur business
creation in the Philippines, incentivize capital-raising activities in the
Philippine capital market, and overall, accelerate the country’s recovery from
economic losses brought about by the Covid-19 pandemic, according to PSE and
PDS. (Mindanao Examiner)
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