MANILA, Philippines — The Department of Finance (DOF) will look into the items in the Congress-approved version of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which the nongovernment Action for Economic Reforms (AER) had been lobbying for presidential veto.
Specifically, the AER had warned about these “questionable” CREATE provisions: local oil refineries’ exemption from duties and taxes, plus inclusion of crude oil refining in the Strategic Investment Priorities Plan (SIPP); exemption of legislative franchises’ tax perks from the Fiscal Incentive Review Board’s (FIRB) and presidential scrutiny; as well as the higher value-added tax (VAT)-exemption cap on the housing sector.
“As far as I know, this bill has yet to be enrolled by the legislature and submitted to the Office of the President. We will study the final enrolled bill as well as the items [raised by AER],” Finance Secretary Carlos Dominguez III said.
While the DOF had spearheaded the push for CREATE’s passage as a means to recover from the pandemic-induced recession through its tax relief measures, Dominguez said the contentious items did not emanate from the agency.
“We proposed the measure, but as you know the legislature does not necessarily pass any proposal en toto,” Dominguez said.
The AER had said these so-called “insertions” in CREATE allegedly through the closed-door bicameral conference committee would benefit conglomerate San Miguel Corp. (SMC) the most, as its affiliate Petron Corp. remained the lone oil refinery in the country plus it also secured a franchise for its upcoming Bulacan airport project.
Last Tuesday, AER quoted Dominguez as saying that stand-alone petroleum refineries can no longer “compete with larger, integrated end-to-end refineries with petrochemical complexes.”
Last year, Dominguez said the string of oil refineries closing down here and abroad were not due to tax issues but their lack of competitiveness.
As such, AER said “providing tax breaks for oil refining may benefit Petron’s bottom line in the very short term, but it is a futile policy which ultimately contradicts the country’s strategic investment priorities.”