DOF pushes FIST, CREATE laws to prep economy for strong post-COVID recovery

The Department of Finance (DOF) worked closely with lawmakers in 2021 to ensure the enactment into law of several economic reform measures designed to aid the economy’s rapid recovery this year from the pandemic.

Spearheaded by its Domestic Finance Group (DFG), the DOF provided ample technical support to legislators to speed up the congressional approval of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which was signed into law as Republic Act (RA) No. 11534 on March 26 last year.

CREATE generated immense corporate income tax (CIT) savings for businesses with the substantial reduction in the CIT rate from 30 percent to 20 percent for micro, small and medium enterprises, and to 25 percent for all other companies.

A flexible, highly targeted, performance-based, time-bound, and transparent fiscal incentives system was put in place under CREATE and was institutionalized through the creation of the Secretariat of the Fiscal Incentives Review Board (FIRB).

The DFG also actively took part in the completion of CREATE’s implementing rules and regulations (IRR) by drafting the provisions pertaining to the law’s grant of fiscal incentives, which was signed on June 21, 2021, OIC-Assistant Secretary Valery Brion said in her report to Finance Secretary Carlos Dominguez III.

She said the DFG also led the DOF’s push for the passage of the Financial Institutions Strategic Transfer (FIST) bill, which was signed into law as RA 11523 on Feb. 16, 2021.

The law allows credit-granting institutions to offload non-performing assets (NPAs) by selling these to FIST corporations, which are similar to the special purpose vehicles created in the early 2000s that bought the bad loans of banks adversely affected by the 1997 Asian financial crisis.

Besides actively supporting these measures in Congress, the DFG also defended the DOF’s position on more than 300 bills with serious fiscal impact on the economy, Brion said.

Brion said the DFG also assisted revenue agencies in drafting their respective reports on the National Tax Allotment (NTA), formerly the Internal Revenue Allotment (IRA), which substantially increased the share in the proceeds from national taxes of all local government units (LGUs) beginning 2022.

Through the DFG, the DOF also assisted in the crafting of communication plans of the Inter-Governmental Relations Board (IGRB), composed of representatives from the national government and the Bangsamoro government. The effort contributed to the passage into law in October 2021 of the measure extending the transition period of the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) until 2025.