Salceda: CREATE bill will help PH boost innovation

Call center agents of a business process outsourcing firm (AFP FILE PHOTO)

MANILA, Philippines — House Ways and Means Chair Joey Sarte Salceda on Saturday said the passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which now sits at the table of President Rodrigo Duterte, would help the Philippines recover from its slumping innovation performance.

Global advisory firm Tholons, on Wednesday, released its annual global innovation rankings and it showed that the Philippines and capital city Manila have slid down in its competitiveness as a preferred site for business processing outsourcing companies.

Salceda said the country’s slump in global rankings may not yet be a cause for alarm but it could spiral out of control if not mitigated resulting in the stagnant growth of the BPO (business process outsourcing) industry in the Philippines.

“BPOs are still growing dramatically in the Philippines. CREATE will provide an even stronger boost, particularly for innovation. Under CREATE’s enhanced deductions, research and development expenses are eligible for double deductions, or another 100% from taxable income,” said Salceda.

Tholons Global Innovation Index 2021 saw the Philippines drop from its 5th spot in 2020 to 18th in the Top 50 Digital Nations while Manila stumbled from its 2nd spot and got down to 8th in the Top 100 Super Cities category.

Under the CREATE Act, corporate income tax will be slashed from 30 percent to 25% for large companies and 20% for small businesses.

Salceda, however, said that the Bureau of Internal Revenue should be precise with the corporations on which deductions are allowed.

“However, the Bureau of Internal Revenue has to be very clear about the guidelines on what is creditable, so that there is no room for discretion or debate. If the rules are clear, the investment on R&D (research and development) will also be strong and predictable,” said Salceda, the Albay 2nd District Representative.

“We will be conducting hearings to provide inputs on the CREATE implementing rules and regulations. I expect the guidelines for R&D to be very clear.”

The proposed act will prioritize research and development in terms of incentives as this would result in “demonstrably significant value-added, higher productivity, improved efficiency, breakthroughs in science and health, and high-paying jobs; generation of new knowledge and intellectual property registered and/or licensed in the Philippines; commercialization of patents, industrial designs, copyrights, and utility models owned or co-owned by a registered business enterprise.”

/MUF