[Ask The Tax Whiz] A comprehensive overview of the CREATE MORE Act

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The Philippine Tax Whiz explains the salient features of Republic Act 12066, otherwise known as the CREATE MORE Act

Upon the implementation of the CREATE MORE Act, what are the key rates to consider that will affect the businesses availing its tax incentives?

The Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Act or CREATE MORE Act reduces the corporate income tax rate for Registered Business Enterprises (RBEs) under the Enhanced Deduction Regime (EDR) from 25% to 20%. Additionally, there are additional deductions that can now be availed by the export enterprises and domestic market enterprises. The additional deductions implemented under the CREATE MORE Act are as follows:

Furthermore, the CREATE MORE Act imposes a 2% RBE Local Tax based on gross income in lieu of all local taxes for RBEs availing during Income Tax Holiday (ITH) or Enhanced Deductions Regime (EDR). However, it is important to note that the RBE Local tax shall not be imposed on RBEs availing the Special Corporate Income Tax (SCIT). 

If I am a Registered Business Enterprise (RBE) owner, is there a period to consider if I were to avail the incentives?

According to the Section 296 of the CREATE MORE Act (Republic Act 12066), both the SCIT and the EDR have extended their incentives for up to a maximum of 17 and 27 years as approved by Investment Promotion Agencies (IPAs) and the Fiscal Incentives Review Board (FIRB), respectively.

The Act also provides the option to choose between the SCIT of 5% or the EDR right from the start of their commercial operations instead of availing it after the Income Tax Holiday (ITH) period. 

If I am a Registered Export Enterprises (REE) owner, are there non-income tax incentives I can avail with the CREATE MORE Act? 

The Act states that the REE shall enjoy non-income tax incentives such as (1) duty exemption on importation of capital equipment, raw materials, spare parts, or accessories; (2) VAT exemption on importation; and (3) VAT zero-rating on local purchases. It can only be enjoyed if the export enterprises have at least 70% export sales, and imported goods or local goods and services are “directly attributed” to its registered activity.

As a foreign investor considering business opportunities in the Philippines, are the application processes easier than before?

Yes, the CREATE MORE Act implemented an RBE Taxpayer Service for tax incentives application, with 20 processing days, as an improvement to Ease of Doing Business. Moreover, the law enhances VAT refund processing by introducing an electronic system aimed at minimizing refund delays. Additionally, the Department of Finance (DOF) will establish a separate VAT refund center within the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC).

The content provided in this article above is for general purposes only. If you want to know how these regulations affect your business, CONSULT ACG or email us at consult@acg.ph.