The CREATE Law reforms tax incentives given by Investment Promotion Agencies by making incentives time-bound, project/activity-based, and performance-based. Registered Business Enterprises must invest in priority projects approved under the Strategic Investment Priority Plan to receive incentives from the Fiscal Incentives Review Board. The SIPP will be released in October 2021 and prioritize investments that create jobs, use new technologies, contribute to food security, and promote industrial development. Existing Registered Business Enterprises have a 10-year transition period to continue receiving the previous 5% tax on gross income before regular corporate taxes apply.

1. DRAFT ON THE CORPORATE
RECOVERY AND TAX INCENTIVES
FOR ENTERPRISES (CREATE) LAW
IMPLEMENTING RULES AND
REGULATIONS
HIGHLIGHTS ON THE PUBLIC CONSULTATION

2. With the approval of the CREATE Law
on March 26, 2021 which became
effective on April 11, 2021,
Tax Incentives given by different
Investment Promotion Agencies (IPAs)
such as the Subic Bay Metropolitan
Authority (SBMA) and Clark
Development Corporation (CDC) will
be reformed;

3.  The Tax Incentives will be given by the Fiscal
Incentives Review Board (FIRB) or the IPAs (under a
delegated authority fro FIRB) to Registered Business
Enterprises (RBEs) only to the extent of the approved
registered project or activity under the Strategic
Investment Priority Plan (SIPP);
 CREATE Law will make the incentives given to
enterprises a time-bound and project / activity /
performance-bound. Incentives are limited. Enterprises
must be investing in activities that are in the Priority
Plan to be able to be granted an incentive;

4. The List of Strategic Investment Priority Plan (SIPP) will be
released in October 2021 (tentatively). The activity or project
meets any of the following will be considered in the evaluation
for investment priority development:
 Substantial amount of investments;
 Considerable generation of employment;
 Considerable amount of net exports;
 Use of modern, advance or new technology or existing
technology but not yet applied in the Philippines;
 Processes and innovations, including urban planning and
development methods;
 Address missing link and other gaps in the supply or value
chain or otherwise moving up the value chain or product
ladder;

5.  Promote market competitiveness or enhances the
country’s competitiveness as an investment destination;
CONT:
 Enhance the capabilities of Filipino enterprises and
professionals to produce and offer increasingly sophisticated
products and services;
 Contribute to Philippine food security and increased in the
agriculture and fisheries sector;
 Promote regional and global operations in the country;
For the industry tiers, qualifications are as follows:
TIER 1
 high potential job creation;
 take place in sectors with market failures resulting in
under-provision of basic goods and services;

6. TIER 2
CONT:
 activities that produce supplies, parts and
components, and intermediate services that are not
locally produces but are critical to industrial
development and import-substituting activities, including
crude oil refining;
 value creation through innovation, upgrading or
moving up of the value chain;
 provide essential support for sectors that are critical to
industrial development;
 emerging owing to potential comparative advantage;

7.  research and development resulting in demonstrably
significant value-added, higher productivity, improved
efficiency, breakthroughs in science and health, and high-
paying jobs;
CONT:
TIER 3
 generation of new knowledge and intellectual property
registered and/or licensed in the Philippines;
 critical to the structural transformation of the economy
and require substantial catch-up efforts.
 commercialization of patents, industrial designs,
copyrights and utility models owned or co-owned by RBE;
 highly technical manufacturing;

8.  Only those enterprises granted with the incentives can
enjoy the exemption from local and national taxes;
WHAT IS IT NOW?
 For the existing Registered RBEs currently availing the
5% on Gross Income Earned (GIE), the RBEs shall be
allowed to continue to avail the said incentive for 10 (ten)
years from the effectivity of the CREATE Law (April 11,
2021). After the transitory period, all applicable taxes (as
Regular Corporate Income Tax) shall apply;
 A Registered Business Enterprise (RBE) has the option to
continue availing the incentives (under transitory period)
or surrender their Certificate and then apply under the
CREATE Law IRR;

9. WHAT IS IT NOW?
 Regarding the Value Added Tax (VAT is considered
national tax), the CREATE Law did not repeal the existing
law on the VAT (TRAIN Law) of transactions hence, the
existing law shall apply;

10. WHAT IS IT NOW?

11. SPECIAL CORPORATE
INCOME TAX
 5% based on the gross
income earned
 exempted from paying local
and national taxes (such as
customs taxes and duties, VAT)
 only the following are
considered as direct costs:
• Additional depreciation
allowance of the assets
acquired for the production of
goods and services;
• Additional deduction on
Labor expense;
• Additional deduction on
Research and Development
Expenses;
• Additional deduction on
training expense;
ENHANCED DEDUCTIONS
• Direct salaries, wages or labor
expenses;
• Production supervision salaries;
• Raw materials used in
manufacture of products;
• Goods in process;
• Finished goods;
• Supplies and fuels used in
production;
• Depreciation of property and
equipment (exclusively
used in the production of
the registered activity);
• Rent and utility charges
(exclusively used in the
production of the
registered activity);
• Service supervision salaries;
• Direct materials used
REGULAR CORPORATE
INCOME TAX
 25% of the net taxable
income (20% with conditions)
 NOT exempted from paying
local and national taxes (such as
customs taxes and duties, VAT)
 must follow the Tax Code's
ruling on substantiation,
allowable deductions and its
limits

12.  Additional infusion of capital means additional incentives
but depends on the activity/ies of the enterprise;
OTHER INFORMATION
 An enterprise can avail of incentives for each
project/activity;
 The President of the Philippines can grant incentives;
 If the application for incentive has been rejected, re-
application is possible as long as the reason of rejection has
been corrected;
 Restaurants are not part of the SIPP.

13. Thank you