National and Local Taxation

• RA 11534 - Corporate Recovery & Tax Incentives for Enterprises Act (CREATE)
• CREATE allows firms to reinvest more with income tax cuts.

  1. Non-profit and proprietary educational institutions and hospitals - 1%
• CREATE allows firms to reinvest more with income tax cuts.

  1. Regional Operating headquarters - 10% regular CIT effective Jan 2022
• CREATE allows firms to reinvest more with income tax cuts.

  1. Foreign Sourced dividends received by domestic corporation - Exempt, subject to reinvestment of earnings in the Ph
• CREATE allows firms to reinvest more with income tax cuts.

  1. Improperly Accumulated Earnings (IAET) - Repealed
• Various tax relief measure are provided under CREATE to stimulate the economy.

  1. VAT on the sale and importation of capital equipment and raw materials for PPE production - Exempt
• Various tax relief measure are provided under CREATE to stimulate the economy.

  1. VAT on the sale and importation of all prescription drugs, medical supplies, devices and equipment for Covid-19 - Exempt
• Various tax relief measure are provided under CREATE to stimulate the economy.

  1. VAT on the sale and importation or importation of vaccines for COVID-19 - Exempt
• Various tax relief measure are provided under CREATE to stimulate the economy.

  1. VAT one-books - Exempt
• Various tax relief measure are provided under CREATE to stimulate the economy.

  1. VAT on the sale and importation of prescription drugs on cancer, mental illness, tuberculosis, and kidney-related diseases - Exempt
• Fiscal Incentives rationalization: enhanced deductions

  Particular: Power Expense - 150%
• Fiscal Incentives rationalization: enhanced deductions

  Particular: Labor Expense - 150%
• Fiscal Incentives rationalization: enhanced deductions

  Particular: Training Expense - 200%
• Fiscal Incentives rationalization: enhanced deductions

  Particular: Research and Development - 200%
• Fiscal Incentives rationalization: enhanced deductions

  Particular: Domestic Input Expense - 150%
• Fiscal Incentives rationalization: enhanced deductions

  Particular: Reinvestment Allowance to the manufacturing industry - Up to 50% of the reinvested profit
• Fiscal Incentives rationalization: enhanced deductions

  Particular: Depreciation Allowance - 10% for building, 20% for machinery
• CREATE allows firms to reinvest more with income tax cuts.

  1. Domestic MSME Corporations with a taxable income of P5M and below and with total assets of not more than p100M - 20%
• CREATE allows firms to reinvest more with income tax cuts.

  1. Domestic Corporations which earn a taxable income above P5M - 25%
• CREATE allows firms to reinvest more with income tax cuts.

  1. Foreign Corporations subject to the regular rate (for nonresident foreign corporations: effective on Jan 1, 2021) - 25%
• CREATE allows firms to reinvest more with income tax cuts.

  1. Percentage tax for non-VAT Taxpayers (applicable from July 1, 2020 to June 30, 2023) - 1%
• CREATE allows firms to reinvest more with income tax cuts.

  1. Minimum corporate income tax (applicable from July 1, 2020 to June 30, 2023) - 1%
• KEY MESSAGES OF CREATE

  
  

  With CREATE, the economy will adapt and grow as more quality jobs will be preserve or created, while having little to low inflationary effect.
• KEY MESSAGES OF CREATE

  
  

  CREATE will help mitigate effects of the COVID-19 pandemic and improve the quality of lives of millions of Filipinos.
• KEY MESSAGES OF CREATE

  CREATE is the largest fiscal stimulus for firms in our recent history by providing 1 trillion pesos worth of tax relief over the next 10 years.
• KEY MESSAGES OF CREATE

  CREATE introduces and enhanced incentives packages that is performance-based, time-bound, targeted, and transparent.
• KEY MESSAGES OF CREATE

  CREATE expands the role of the FISCAL Incentives REVIEW BOARD (FIRB), an existing government body, to improve the governance of incentives.
• Corporate Recovery & Tax Incentives for Enterprises Act (CREATE)

  • The legislation was signed by President Duterte on March 16, 2021.
• Corporate Recovery & Tax Incentives for Enterprises Act (CREATE)

  • This monumental breakthrough in our governments biggest stimulus package for business with the present corporate income tax of 30% as the highest among ASEAN region.
• Corporate Recovery & Tax Incentives for Enterprises Act (CREATE)

  • This is a big factor to attract investors to come in the Philippines.
• Corporate Recovery & Tax Incentives for Enterprises Act (CREATE)

  • This is the 2nd package of the Comprehensive Tax Reform Program that reduces corporate Income tax rates.
• Corporate Recovery & Tax Incentives for Enterprises Act (CREATE)

  • The CREATE Act also provides other tax relief measures that will help businesses, particularly those organized as corporations (including One Person Corporations) recover from the effects of the pandemic as well as measures that will rationalize the grant of fiscal incentives to targeted investors.
• Corporate Recovery & Tax Incentives for Enterprises Act (CREATE)

  • This law provides retroactive application of its provisions to July 1, 2020
• Repeal of Improperly Accumulated Earnings Tax

  
  

  Improperly accumulated earnings (IAE) are the profits of a corporation that are permitted to accumulate instead of being distributed by a corporation to its shareholders for the purpose of avoiding the income tax with respect to its shareholders or the shareholders of another corporation. Previously, a tax of 10% is imposed on IAE. This has been repealed in the CREATE Act.
• Fiscal Incentive Reforms under CREATE Act

  
  

  CIT incentives under CREATE Act shall include:

  
  

  • Income Tax Holiday (ITH) granted for a period of 4 to 7 years, followed by the Special Corporate Income Tax Rate of 5% on gross income earned (GIE), in lieu of all national and local taxes, or enhanced deductions (ED) for 5 or 10 years (the incentive period varies depending on which area the registered project or activity will be located)
• Fiscal Incentive Reforms under CREATE Act

  
  

  Duty exemption on importation of capital equipment,

  raw materials, spare parts, or accessories
• Fiscal Incentive Reforms under CREATE Act

  
  

  VAT exemption on importation and VAT zero-rating on

  local purchase (partly vetoed by the President)
• Fiscal Incentive Reforms under CREATE Act

  • The Strategic Investment Priority Plan (SIPP) shall define the coverage of the tiers and provide the conditions for qualifying activities: