The National Economic and Development Authority is optimistic that the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, signed by the president on March 27, will provide one of the country’s largest stimulus measures for the benefit of micro, small and medium enterprises (MSMEs).
“The impact of CREATE is two-fold. First, it provides immediate relief to our MSMEs with a 5 or 10 percentage point reduction in the regular corporate income tax (CIT) rate. Second, it brings our corporate tax rate closer to our Asean peers and enhances our fiscal incentives system to help attract more foreign direct investments (FDIs), which will help generate more jobs and accelerate our recovery,” acting Socioeconomic Planning Secretary Karl Kendrick Chua said in a statement yesterday.
The CREATE law aims to make the corporate income tax system performance-based, targeted, time-bound, and transparent.
The key provisions of the law include the reduction of the regular CIT by 10 percentage points, or from 30 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; the reduction of the regular CIT by 5 percentage points, or from 30 to 25 percent, for all other domestic corporations as well as foreign corporations currently paying the regular rate; and stronger governance in the grant and review of tax incentives through the oversight function of the Fiscal Incentives Review Board , ensuring accountability and transparency.*