Finance Sec. Carlos “Sonny” Dominguez III.
CREATE law implementing rules welcomed
THE House of Representatives welcomed the signing of the implementing rules and regulations of the Corporate Recovery and Tax Incentives for Enterprises (CREATE).
The CREATE law will help the government gain more investments and boost economic recovery.
Earlier, Finance Secretary Carlos Dominguez III and Trade and Industry Secretary Ramon Lopez announced that they signed on June 21 the implementing rules and regulations (IRR) of the CREATE Act, more than two weeks ahead of the July 10, 2021 deadline set under this law.
The rules released cover Title XIII of the Tax Code, on Fiscal Incentives.
Authors of CREATE are confident that investors will gain more solid footing to make decisions about investing in the Philippines.
Under CREATE, the DTI and the investment promotion agencies will help the provinces sell their own narratives about attracting investment.
The law cuts the regular CIT rate by up to 10 percent, from 30 percent to 20 percent for domestic corporations with a taxable income of P5 million and below, and with total assets of not more than P100 million; and 25 percent for big corporations with assets of above P100 million.
The CREATE law also introduces an improved incentives package that is performance-based, time-bound, targeted, and transparent.
The reconstituted Fiscal Incentives Review Board (FIRB), chaired and co-chaired by Dominguez and Lopez, respectively, previously instructed the IPAs to identify at least two leading companies in each industry tier in the Strategic Investment Priority Plan (SIPP) and to determine what incentives should be offered to these potential investors to encourage them to set up shop in the Philippines.
With the issuance of the IRR covering the incentives section, the CREATE Law can be fully implemented given the previous Revenue Regulations (RRs) on the other tax provisions that were released by the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR).
The IRR clarifies several questions that were raised during the consultations that include, among others, the scope of the enhanced deductions, the items that are allowed to be considered as deductions to arrive at the gross income about the special rate, and the total length of the transition period for currently registered activities or projects.
