CREATE ACT RULES UNVEILED

Finance Secretary Carlos Dominguez III and Trade and Industry Secretary Ramon Lopez have signed the implementing rules and regulations (IRR) of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, more than two weeks ahead of the July 10, 2021 deadline set under this law.

Micro, small and medium enterprises (MSMEs) will be the biggest beneficiaries of CREATE with the corporate income tax (CIT) rate reduction.

The signing of the IRR is also seen by the Department of Trade and Industry (DTI) to attract more investors to grow their businesses and “make it happen in the Philippines," in reference to the DTI's new investment production campaign dubbed "Make It Happen in the Philippines."

Dominguez and Lopez thanked stakeholders from the private sector and other government agencies such as the investment promotion agencies (IPAs) for their inputs on the IRR during the multiple rounds of consultations held over the past two months.

"The approval of the IRR covering Title XIII of the Act following multiple consultations with the various stakeholders and way ahead of schedule highlight the Duterte administration's commitment to come up with an effective, efficient, and fiscally- responsible incentive system, which, hopefully, will set the standard in the region. We should stop instigating a 'race to the bottom' in tax regimes that only compromises the capacity of the state to provide for the public,” Dominguez said.

“The inputs provided by stakeholders have helped us improve the IRR and provide clarity on the implementation of the new Title XIII on tax incentives in the Tax Code. With the release of the IRR, we expect our IPAs to go full steam ahead on attracting investments that will enhance investments in the country, create quality jobs, and improve the lives of Filipinos,” Lopez said.

The CREATE Act is the largest fiscal stimulus package for businesses in the country’s history, providing private enterprises more than P1 trillion worth of tax relief over the next 10 years with a significant cut on the tax rate for corporations.

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.

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