THE PROPOSED Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), as approved by the Bicameral Conference Committee, will grant incentives to exporters and “critical” domestic enterprises for up to 17 years.

During Monday’s session, Senate Majority Leader Juan Miguel F. Zubiri said the bicameral panel officially approved the measure that reconciled the disagreeing provisions of Senate Bill No. 1357 and House Bill No. 4157.

The House of Representatives and the Senate are expected to ratify the report today.

“The incentives scheme for registered enterprises under the Senate version would also be retained, save for some changes in the incentives to be granted for both exporters and ‘critical’ domestic market enterprises, and for general domestic market enterprises,” Senator Pia S. Cayetano said in a statement.

Under the measure, four to seven years of income tax holiday (ITH) and 10 years of special corporate income tax (SCIT) will be granted to exporters and “critical” domestic enterprises identified by the National Economic and Development Authority (NEDA).

Other domestic enterprises with investment capital of at least P500 million may enjoy four to seven years of ITH and 5 years of SCIT, and 5 years of enhanced deductions.

The measure also immediately lowers the corporate income tax (CIT) to 25% from the current rate of 30%.

CREATE is expected to attract P12 trillion worth of local and foreign investments in the next decade, Albay Rep. Jose Ma. Clemente S. Salceda said in a statement on Monday.

“This will also result in around 1.8 million jobs over the next 10 years. Combined with economic amendments to the Constitution to maximize impact, we can produce some 8.4 million jobs,” he said.

The Department of Finance earlier reported that Senate Bill No. 1357 is estimated to cost the government P250 billion in foregone revenues, which Mr. Salceda said was reduced in the bicameral version.

“The final bicameral version was able to shave off P22 billion from the original revenue loss under the Senate version,” Mr. Salceda.

Moreover, the bicameral panel agreed to retain the Senate proposal to lower the CIT further to 20% for micro, small, and medium enterprises with net taxable income below P5 million and total assets below P100 million.

The bill also retained the P1-billion investment threshold for projects that will need to secure approval from the Fiscal Incentives Review Board (FIRB). Investment projects below P1 billion will only be evaluated by investment promotion agencies.

Enterprises that will fully relocate outside Metro Manila will be entitled to additional three years of ITH, while those that will locate in conflict- or disaster-stricken areas will have two additional years of ITH.

The CREATE bill also will lower the minimum CIT to 1%, effective July 1, 2021 to June 30, 2023, after which it will revert to its original rate of 2%. Nonprofit proprietary educational institutions and hospitals will pay 1% CIT in the same period, instead of 10%.

Moreover, Congress opted to exempt from value-added tax (VAT) medicines for cancer, mental illness, tuberculosis, and kidney diseases starting Jan. 1, 2021.

Importation of vaccines for the coronavirus disease 2019 (COVID-19) will also be free from VAT and customs duty. The importation and sale of COVID-19 medicines, personal protective equipment components will be also be VAT-free until December 2023.

CREATE is the new version of the Corporate Income Tax and Incentives Rationalization Act (CITIRA), which was revised to address the economic impact of the pandemic.

“The passage of CREATE will guide our economic recovery, following the contraction of our gross domestic product last year by 9.5%, the worst on record since the post-World War II era,” Ms. Cayetano said. — Charmaine A. Tadalan