House Appropriations Committee chairperson Joey Salceda (File photo courtesy of House Press and Public Affairs Bureau)
MANILA – The House of Representatives will not adopt the Senate version of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill, a House leader said on Thursday.
In a statement, House Appropriations Committee chairperson Joey Salceda said the House contingent will seek to resolve the differences in principle between the chambers' versions of the CREATE MORE bill in an upcoming bicameral conference committee meeting.
The CREATE More bill is one of the measures approved as “top priority” by the Legislative-Executive Development Advisory Council.
It aims to improve the current regulations by enhancing the tax and administrative incentives available to companies and clarifying rules on implementing value added tax (VAT) incentives.
One major reason for rejecting the Senate version, according to Salceda, is that it did not clearly establish whether the "cross-border doctrine" remains the law of the land.
Salceda said the House version defined the separate customs territories, which include the ecozones and freeport zones.
He said the Senate aimed to do away with separate customs territories altogether by repealing them from the special ecozone laws that established them, and deleting the House’s definition of separate customs territories.
"However, the Senate eventually just removed the repeal of such special laws, without adopting the House position of setting a primary and overarching doctrine on the question. If we adopt the Senate version as is, we’re back to the confusing status quo," he said.
Salceda added the Senate version effectively allows tariff and VAT-free, but "supposedly bonded", importation of petroleum for international carriers.
"We vehemently object to this. Such products will not be fuel marked when imported –so the Senate proposal will confuse law enforcement as to the provenance of unmarked fuel," he said.
Salceda cited previous House hearings that the customs-bonded warehouse system enabled as much as PHP357 billion in revenue losses in 2010-2019, when the system was still allowed.
"We cannot agree to something we have already found in our own investigations to be a policy that creates and allows smuggling," he said.
RBELT proposal
Meanwhile, Salceda highlighted concerns raised by the manufacturing sector regarding the Registered Business Enterprise Local Tax (RBELT) proposal, adding that they want current rates already set by local government units (LGUs) to apply in case they are lower than the proposed 2 percent rate in the CREATE MORE bill.
"We see the merit in this, since the RBELT aims to streamline tax collection, not increase rates. Manufacturing tends to be sensitive to taxes based on gross receipts because they have very low, single-digit margins," he said.
Salceda said the manufacturing sector also wants the bill to be "very explicit" in empowering LGUs to adjust those rates downward if they wish to, and that is a matter naturally reserved to LGUs under their fiscal autonomy," he said.
Salceda said the House is studying if there are "other logical inconsistencies or ambiguities" that cannot be left to the implementing rules and regulations (IRR).
"Usually, when we pass tax reforms, they tend to be towards December of the year. Hence, there is pressure to complete the reform before the new fiscal year starts. We still have a full month of session, not to mention, four months before this fiscal year ends. CREATE MORE is supposed to remedy ambiguities in CREATE. The cure will not be rushed," he said.
The House leader said he will closely work with Malacañang, particularly recognizing the importance of feedback from the Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA).
"We always treat comments from the OSAPIEA with the highest consideration and priority. But, on these key issues, the House contingent will be steadfast," he said. (PNA)
