Salient Provisions of CREATE

Salient Provisions of CREATE for Registered Enterprises
BENEFITS
1. Income Tax Holiday
2. Special Corporate Income Tax of 5%*
3. Enhanced Deductions*
- These are deductions that may be allowed in addition to regular deductible expenses:
A. Depreciation allowance of assets:

(1) Additional 10% for buildings
(2) Additional 20% for machineries and equipment
B. Additional labor expense deduction of 50%
C. Additional deduction on R&D expenses of 100%
D. Additional deduction on training expenses of 100%
E. Additional deduction on domestic input expense of 50%
F. Additional deduction on power expense of 50%
G. Only for manufacturing industry, reinvestment of undistributed profit or surplus up to 50%
of the reinvested amount, allowed within a period of 5 years
H. Enhanced Net Operating Loss Carry Over (NOLCO)
- Net operating loss during the first three years which have not been previously offset as
deduction may be carried over to the next five (5) consecutive taxable years
*The registered enterprise may elect either the 5% SCIT or Enhanced Deductions. It cannot
utilize both incentives simultaneously.
4. Duty Exemption
- Importation of capital equipment, raw materials, spare parts, and accessories shall be duty-
free
5. VAT
- VAT exemption on importation and zero-rating on local purchases
PERIODS OF AVAILMENT
1. Income Tax Holiday

– four (4) to seven (7) years
– dependent on location and industry priorities
– Tier descriptions:
A. Tier I
- Includes industries that
(1) have high potential for job creation;
(2) take place in sectors with market failures resulting to under provision of basic goods
and services;
(3) generate value creation through innovation, upgrading or moving up the value chain;
(4) provide essential support for sectors critical to industrial development; or,
(5) are emerging owing to potential comparative advantage.
B. Tier II
- includes activities that:
(1) produce parts and components;
(2) intermediate services that are not locally produced but critical to industrial
development and import-substituting activities
C. Tier III
- includes the following activities:
(1) research and development resulting in demonstrably significant, value-added, higher
productivity, improved efficiency, breakthroughs in science and health, and high paying
jobs;
(2) generation of new knowledge and intellectual property registered and/or licensed in
the Philippines
(3) commercialization of patents, industrial designs, copyrights, and utility models
owned or co-owned by a registered business enterprise;
(4) highly technical manufacturing; or
(5) those that are critical to the structural transformation of the economy and require
substantial catch-up efforts.
2. SCIT/Enhanced Deductions
- 10 years
- Cannot be utilized by the registered enterprise simultaneously.
Periods of Availment TIER I TIER II TIER III

NCR 4 ITH + 10 SCIT/ED 5 ITH + 10 SCIT/ED 6 ITH + 10 SCIT/ED
Metropolitan Areas 5 ITH + 10 SCIT/ED 6 ITH + 10 SCIT/ED 7 ITH + 10 SCIT/ED
and areas contiguous
or adjacent to NCR
All Other Areas 6 ITH + 10 SCIT/ED 7 ITH + 10 SCIT/ED 7 ITH + 10 SCIT/ED
Additional Incentives
1. Two (2) years additional ITH for registered enterprises who locates their business in areas
recovering from armed conflict or a major disaster
2. Three (3) years additional ITH for registered enterprises who relocate from NCR
Limitations to Availment
1. No renewal or extension is allowed
2. New incentives may only be granted to new projects and activities by the registered entity
EXPANSION OF THE FISCAL INCENTIVES REVIEW BOARD (FIRB)
The FIRB has the following expanded functions:

1. Policy making and oversight functions on the grant of tax incentives
2. Approve and disapprove the grant of tax incentives
3. Approve applications for tax subsidies for GOCCs, instrumentalities, commissaries, and SUCs
4. Formulate place-specific strategic investment plans during periods of recovery from calamities
and post-conflict situations
5. Cancel, suspend, or withdraw the enjoyment of fiscal incentives of concerned registered
enterprises
6. Cancel, suspend, or withdraw the enjoyment of tax subsidy of GOCCs, instrumentalities,
commissaries, and SUCs
7. Require reportorial requirements from Investment Promotion Agencies (IPA) and other
governmental agencies administering tax incentives
8. Regularly publish data pertaining to tax incentives
9. Obtain information, summon, inquire, and receive from GOCCs, instrumentalities, commissaries,
and SUCs documents records, books, or other data relevant to resolution of issues involving tax
subsidies
10. Submit reports to the Office of the President as part of the budget process
11. Decide on issues, after due hearing, concerning the approval, disapproval, cancellation,
suspension, withdrawal, or forfeiture of tax incentives or subsidies
12. Promulgate rules and regulations
13. Recommend grant of non-fiscal incentives
14. Adopt policies for development and expansion of domestic supply chain
15. Exercise all other powers necessary and incidental to attain the purposes of the law
TAX INCENTIVES MANAGEMENT AND TRANSPARENCY
1. Filing of tax returns shall be through the electronic filing system of the BIR
2. Registered enterprises shall file, within thirty (30) calendar days from the statutory deadline for
deadline for filing tax returns, with their respective IPAs or governmental agencies administering
tax incentives a complete annual tax incentives report, which shall include:
a. income-based tax incentives
b. VAT exemptions and zero-rating
c. Customs duty exemptions
d. Deductions, credits or exclusions from income tax base
e. Exemptions from local taxes
3. Penalties for noncompliance with the filing and reportorial requirements:
a. 1st violation – Fine of PhP100,000.00
b. 2nd violation – Fine of PhP500,000.00
c. 3rd violation – Cancelation of registration

Salient Provisions of CREATE

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Salient Provisions of CREATE

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Salient Provisions of CREATE for Registered Enterprises

1. Income Tax Holiday

2. Special Corporate Income Tax of 5%*

A. Depreciation allowance of assets:

1. Income Tax Holiday

Periods of Availment TIER I TIER II TIER III

EXPANSION OF THE FISCAL INCENTIVES REVIEW BOARD (FIRB)

The FIRB has the following expanded functions:

TAX INCENTIVES MANAGEMENT AND TRANSPARENCY

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