The total tax expenditure consists of four variables: (1) value-added tax (VAT) relief on imports, (2) custom duties exemption, (3) excise tax relief on imports, and (4) corporate income tax (CIT) relief.
Estimated Tax Foregone per Tax Type, January to December 2023
| Tax Type | Amount |
| VAT Relief on Imports | 144,974,230,839.76 |
| Corporate Income Tax Relief | 94,659,309,029.18 |
| Customs Duty Relief | 49,517,173,672.06 |
| Excise Tax Relief on Imports | 2,843,044,566.88 |
| Total Tax Expenditure | 291,993,758,107.88 |
To gauge the effectiveness of the CREATE Act in meeting its policy objectives, RBEs with at least one project registered under the CREATE Act were classified as CREATE RBEs. Out of the 1,758 RBEs included in the FLD, 203 are RBEs under the CREATE Act.
Results of the preliminary cost-benefit analysis (CBA) on the taxes availed by these RBEs are summarized below:
Summary of the Results of the Preliminary Cost Benefit Analysis (CBA)
| Particulars | CREATE | PRE-CREATE | Total |
| Number of RBEs | 203 | 1,555 | 1,758 |
| Total Tax Expenditure | 38,329,127,893.25 | 253,664,630,214.63 | 291,993,758,107.88 |
| Total Tax Payments | 27,508,470,113.90 | 94,287,706,281.35 | 121,796,176,395.25 |
| Net Revenue Collection (Foregone) | (10,820,657,779.35) | (159,376,923,933.28) | (170,197,581,712.63) |
| Total Employment Generation | 25,736 | 120,193 | 145,929 |
| Total Number of Employees | 430,074 | 890,662 | 1,320,736 |
| Implicit Labor Subsidy | 1,489,319.55 | 2,110,477.57 | 2,000,930.30 |
| Labor Productivity | 1,821,924.25 | 3,369,057.63 | 2,865,261.18 |
| GVA to Tax Expenditure | 7.10 | 5.73 | 5.91 |
Significant disparities can be observed between the CREATE and pre-CREATE RBEs. Pre-CREATE RBEs generally posted a lower net revenue effect ratio but higher implicit labor subsidy and labor productivity, indicating that they may have already achieved economies of scale due to the longer period of operations and incentive duration.
Given the usual incentive duration and typical project life, three-year data is not expected to provide conclusive results for crafting potential policy actions. Given the crests and troughs of a regular business cycle, a three-year dataset is virtually incomplete and cannot definitively and objectively support the evaluation of the effectiveness of our existing tax incentive policies. Additionally, most CREATE projects are still in their early stages and have yet to start commercial operations, making their full economic impact and benefits inconclusive.
