Finance secretary Carlos Dominguez III has assured micro, small and medium enterprises (MSMEs) that the government’s plan for economic recovery covers an array of programs meant to help them get back on their feet.
Dominguez said two bills pending in the Congress—one on immediately slashing the corporate income tax (CIT) rate and another designed to free the banking system from bad loans and other non-performing assets (NPAs)—will benefit big firms as well as MSMEs hit by the pandemic.
The proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) will lower the CIT from the current 30 per cent to 25 per cent, which means tax breaks for 99 per cent of business enterprises, which are the MSMEs, Dominguez said. He added that the passage of the bill will align the corporate tax rate with the ASEAN average, and will make the Philippines the only government to provide tax breaks to MSMEs.
Under the current system, about 3,000 big companies enjoy incentives that let them pay discounted tax rates of between 6.0 and 13 per cent of net income only. Small enterprises that make up 99 per cent of local businesses and employ the majority of Filipino workers pay the regular CIT of 30 per cent, which is the highest in the region.