WHAT TAX INCENTIVES can investors unlock under CREATE MORE?
Tax Incentives Package under Title XIII of the Tax Code, as amended by RA No. 12066 (CREATE MORE Act)
| Available Fiscal Incentives | For Domestic Market Enterprise (DME) | For Registered Export Enterprise (REE) |
|---|---|---|
| Income Tax Holiday (ITH) | 4-7 years, depending on location and sectoral tiering | |
|
Special Corporate Income Tax (SCIT) (5% of gross income in lieu of all national and local taxes, fees, and charges) |
Not applicable |
Maximum of 17 years for IPA-approved projects or 27 years for FIRB-approved projects. In no case shall the EDR be granted simultaneously with the SCIT. |
| Enhanced Deductions Regime (EDR)1 For export and domestic market enterprises, enhanced deductions include depreciation allowance, labor expense, research and development expense, training expense, domestic inputs, power expense, reinvestment allowance, and enhanced net operating loss carry-over (NOLCO). |
Maximum of 17 years for IPA-approved projects or 27 years for FIRB-approved projects. The EDR may be granted immediately at the start of commercial operations. |
In no case shall the EDR be granted simultaneously with the SCIT. The SCIT or the EDR may be granted immediately at the start of commercial operations. |
| Duty exemption on importation2 Only applies to importation of capital equipment, raw materials, spare parts, and accessories directly attributable to the registered project or activity of RBEs, including goods used for administrative purposes. | Time-bound (for the entire registration period reckoned from date of registration) | Time-bound (for the entire registration period reckoned from date of registration) |
| VAT exemption on importation and VAT zero-rating on local purchases3 Only applies to goods and services directly attributable to the registered project or activity of an RBE or a registered high-value DME, including expenses incidental thereto. | Only available to high-value DMEs4 High-value DMEs refer to registered DMEs with an investment capital exceeding ₱15 billion and are engaged in sectors considered import-substituting or with export sales in the immediately preceding year of at least USD 100 million. |
Effectively perpetual (for the entire registration period as an RB) After the expiration of income tax-based incentives, the exporter shall be subject to the provisions of Sections 106, 108, and 109 for VAT purposes |
| Maximum of 2% RBE local tax (in lieu of all local taxes, fees, and charges under the Local Government Code of 1991) | During the period of availment of the ITH and EDR, subject to the enactment of a local ordinance | During the period of availment of the ITH and EDR, subject to the enactment of a local ordinance |
Power of the President to Grant Incentives:
a. Section 301 of Title XIII of the NIRC also provides that the President of the Philippines, in the interest of national economic development or upon the favorable recommendation of the FIRB, may modify the mix, period, or manner of availment of incentives or craft appropriate fiscal and nonfiscal support package for a highly desirable project or a specific industrial activity.
b. Highly desirable projects pertain to those with a comprehensive sustainable development plan and an investment capital of at least P50 billion, or its equivalent in US Dollars, OR those that will generate at least 10,000 jobs within three years from the issuance of the certificate of entitlement.
c. These projects may be granted an ITH not exceeding 10 years, followed by either the 5% SCIT or EDR or SCIT or EDR at the onset, provided that the total incentive period does not exceed 40 years.
d. The President may grant a non-fiscal support package limited to the utilization of government resources such as the use of land and budgetary support provision under the annual General Appropriations Act.
THE NEW TAX INCENTIVE MATRIX UNDER CREATE MORE
FOR REGISTERED DOMESTIC MARKET ENTERPRISE
| Approving authority | IPA-approved (₱15 billion and below) |
FIRB-approved (Exceeding ₱15 billion) |
||||
|---|---|---|---|---|---|---|
| Location/Industry Tiers | Tier I | Tier II | Tier III | Tier I | Tier II | Tier III |
| National Capital Region (NCR) | 4 ITH + 10 EDR OR 14 EDR |
5 ITH + 10 EDR OR 15 EDR |
6 ITH + 10 EDR OR 16 EDR |
4 ITH + 20 EDR OR 24 EDR |
5 ITH + 20 EDR OR 25 EDR |
6 ITH + 20 EDR OR 26 EDR |
| Metropolitan areas or areas contiguous and adjacent to NCR | 5 ITH + 10 EDR OR 15 EDR |
6 ITH + 10 EDR OR 16 EDR |
7 ITH + 10 EDR OR 17 EDR |
5 ITH + 20 EDR OR 25 EDR |
6 ITH + 20 EDR OR 26 EDR |
7 ITH + 20 EDR OR 27 EDR |
| All other areas | 6 ITH + 10 EDR OR 16 EDR |
7 ITH + 10 EDR OR 17 EDR |
7 ITH + 10 EDR OR 17 EDR |
6 ITH + 20 EDR OR 26 EDR |
7 ITH + 20 EDR OR 27 EDR |
7 ITH + 20 EDR OR 27 EDR |
FOR REGISTERED EXPORT ENTERPRISE
| Approving authority | IPA-approved (₱15 billion and below) |
FIRB-approved (Exceeding ₱15 billion) |
||||
|---|---|---|---|---|---|---|
| Location / Industry Tiers | Tier I | Tier II | Tier III | Tier I | Tier II | Tier III |
| National Capital Region (NCR) | 4 ITH + 10 SCIT/EDR OR 14 SCIT/EDR |
5 ITH + 10 SCIT/EDR OR 15 SCIT/EDR |
6 ITH + 10 SCIT/EDR OR 16 SCIT/EDR |
4 ITH + 20 SCIT/EDR OR 24 SCIT/EDR |
5 ITH + 20 SCIT/EDR OR 25 SCIT/EDR |
6 ITH + 20 SCIT/EDR OR 26 SCIT/EDR |
| Metropolitan areas or areas contiguous and adjacent to NCR | 5 ITH + 10 SCIT/EDR OR 15 SCIT/EDR |
6 ITH + 10 SCIT/EDR OR 16 SCIT/EDR |
7 ITH + 10 SCIT/EDR OR 17 SCIT/EDR |
5 ITH + 20 SCIT/EDR OR 25 SCIT/EDR |
6 ITH + 20 SCIT/EDR OR 26 SCIT/EDR |
7 ITH + 20 SCIT/EDR OR 27 SCIT/EDR |
| All other areas | 6 ITH + 10 SCIT/EDR OR 16 SCIT/EDR |
7 ITH + 10 SCIT/EDR OR 17 SCIT/EDR |
7 ITH + 10 SCIT/EDR OR 17 SCIT/EDR |
6 ITH + 20 SCIT/EDR OR 26 SCIT/EDR |
7 ITH + 20 SCIT/EDR OR 27 SCIT/EDR |
7 ITH + 20 SCIT/EDR OR 27 SCIT/EDR |
Source: Sections 296 and 296-A of the NIRC, as amended by the CREATE MORE Act
Available Enhanced Deductions under the CREATE MORE Act
| Type of expense | Deductions under the CREATE MORE |
|---|---|
| Depreciation allowance | +10% for buildings; +20% for machineries and equipment |
| Direct labor expense | +50% deduction |
| Research and development costs | +100% deduction |
| Training expense | +100% deduction |
| Domestic input purchased | +50% deduction |
| Power expense | +100% deduction |
| Reinvestment allowance to manufacturing and tourism industries | +50% deduction (Until 31 December 2034) |
| Expenses related to exhibitions, trade missions, or trade fairs | +50% deduction |
| Net operating loss carry-over (incurred during the first three years) | Carried over within the next five consecutive years immediately following the last year of ITH entitlement period of the project or immediately following the year of loss |
