BUSINESS GROUPS are seeking more stimulus programs directed at large companies, including expanded eligibility for the Net Operating Loss Carry Over (NOLCO), and backed immediate passage of legislation reducing the corporate income tax.
They expressed support in statements Monday for the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), the current form of the CITIRA bill, which cuts the corporate income tax (CIT) to 25% from 30% by July. The earlier proposal, CITIRA, would cut CIT to 20% gradually over a decade.
The Philippine Chamber of Commerce and Industry (PCCI) said that the extension of NOLCO to five years from three will help companies reduce their tax payments for a longer period. The benefit, under the proposal, applies only to “non-large taxpayers,” it noted.
NOLCO allows companies to deduct operating losses recognized in one period from taxable income in future periods, effectively reducing their tax due.
“In view of the community quarantines resulting in substantial losses across all industries and sectors, we request that the (NOLCO privilege) be extended to all firms, regardless of size, to protect current employment,” the country’s largest business group said.
While the PCCI supports the four to nine-year maximum transition period for businesses under the old incentives regime, the Makati Business Club (MBC) is asking for additional time. MBC is asking for an additional five years from the two to seven proposed in CITIRA, as well as a 10-year period for new investors. MBC said this would enable the Philippine Economic Zone Authority (PEZA) to attract foreign investment as other countries improve their incentive offerings.
“PEZA is one of the most successful investment generators of the country and we should enable it to be a leader in attracting relocators.”
MBC said CREATE will help attract companies looking to diversify their global locations after the pandemic, but said the Financial Incentives Review Board (FIRB) must be given the flexibility to vet “very large” investments. “Proponents of very large investments are more willing and able to negotiate, and the government can and should give them special attention,” MBC said.
Businesses support the granting of “tailor-fit” incentives unique to the needs of foreign businesses.
“The damage COVID-19 and the corresponding lockdown… has seriously damaged the economy. The business sector needs the package of reforms introduced under CREATE to help businesses recover, ensure their resilience and create more sustainable economic opportunities,” PCCI said. — Jenina P. Ibañez