CREATE ACT (PER REPUBLIC ACT NO. 11534)

Corporate Recovery And Tax Incentives for Enterprises Act

The Philippine President Rodrigo R. Duterte has signed into law the Republic Act No. 11534, otherwise known as the “Corporate Recovery and Tax Incentives for Enterprises” or CREATE Act, on March 26, 2021.

The CREATE Act is the second package of the Comprehensive Tax Reform Program that reduces Income Tax rates from 30% to 25% for corporate taxpayers in general, and to 20% for other corporate taxpayers, subject to certain qualifications, effective July 1, 2020.

Also, it provides other tax relief measures that will help businesses recover from the effects of the COVID-19 pandemic as well as measures that will rationalize the grant of fiscal incentives to targeted investors.

The CREATE Act took effect on April 11, 2021, fifteen (15) days after its complete publication on March 26, 2021, in the Official Gazette or in a newspaper of general circulation.

SALIENT FEATURES OF CREATE ACT

1. Effective July 1, 2020, corporate Income Tax rate is reduced from 30% to 20% for domestic corporations with net taxable income not exceeding P5 Million and with total assets not exceeding P100 Million. All other domestic corporations and resident foreign corporations will be subject to 25% Income Tax.