Republic Act No.

12066
Corporate Recovery and Tax Incentives for Enterprises to Maximize
Opportunities for Reinvigorating the Economy (CREATE MORE Act)
Signed into law: 11 November 2024

Changes under the CREATE MORE Act are highlighted in green text.

Income tax-based incentives Incentives of RBEs High-Value DMEs

HV High-value Domestic
 Income Tax Holiday (ITH) Incentives REE DME
DME Market Enterprises
(HVDME)
 Special Corporate ITH    Export Sales
Income Tax (SCIT) ≥ USD 100M
SCIT   

5%
Tax on the gross OR
income earned of EDR   
Investment Capital
export enterprises, in > PhP15B
Customs Duty
lieu of all national and    and
Exemption
local taxes, local fees Engaged in
and charges Import Substituting
VAT exemption
  
on importation
 Enhanced Deductions Regime (EDR) RBE Local Tax
VAT
(RBELT)
20%
Tax on the taxable zero-rating
income of RBEs   
on local
under EDR purchases

The LGUs may impose an RBE

Period of availment local tax at the rate of not
more than 2% of RBE’s gross
income during the ITH and
Approved by IPAs Approved by FIRB EDR which shall be in lieu of
all local taxes, local fees,
Options (investment capital (investment capital and charges
not exceeding PhP15B) exceeding PhP15B)

REE DME REE DME/HVDME

Work-from-home
ITH 4-7 years ITH 4-7 years
+
ITH 4-7 years
+
ITH 4-7 years arrangement
Option 1 + +
SCIT / EDR SCIT / EDR
EDR 10 years EDR 20 years
10 years 20 years

SCIT / EDR EDR SCIT / EDR EDR

Option 2
14-17 years 14-17 years 24-27 years 24-27 years
RBEs in Ecozones
and Freeports can adopt
+2 years for projects located in areas recovering from armed conflict or a major disaster not more than 50% work-
+3 years for projects that shall completely relocate from the NCR from-home arrangement.

Sunset provisions Transitory provisions:

RBEs registered under the CREATE Act
Transitory
Current Incentives
Period Exemption from national and local taxes, including

A. Granted with Finish remaining 1 local fees and charges, if under the SCIT regime

ITH only ITH period

2
B. Granted with ITH Availment of additional
and 5% GIT after ITH 5% GIT until enhanced deductions
December
These provisions shall apply No refund
C. Currently availing 31, 2034 prospectively to projects or or credit
of 5% GIT activities granted under the
CREATE act.
shall be
granted
3 20% RCIT, if under EDR

to RBEs.

Additional activity Not more than 2% RBELT, if

under ITH or EDR
for Tier III 4
5
Critical to the structural transformation of
the economy and require substantial catch- Conditions for the availment
up efforts, including but not limited to cyber- of indirect tax incentives
security, artificial intelligence, and data-
center facilities.

1 | CREATE MORE Act

Republic Act No. 12066
Changes under the CREATE MORE Act are highlighted in green text.

Enhanced deductions
Type of expense Deductions under the CREATE MORE

Depreciation allowance +10% for buildings ; +20% for machineries and equipment

Direct labor expense +50% deduction

R&D costs +100% deduction

Training expense +100% deduction

Domestic input purchased +50% deduction

Power expense +100% deduction

Reinvestment allowance to manufacturing and

+50% deduction (Until Dec. 31, 2034)
tourism industries

Exhibitions, Trade Missions or Trade Fairs +50% deduction

carried over within the next five consecutive years immediately following the last year
NOLCO (incurred during the first 3 years)
of ITH entitlement

Indirect tax incentives

VAT exemption VAT zero-rating

Customs duty exemption
on importation on local purchases
Incidental to and reasonably necessary for the registered activity including
but not limited to:
Directly attributable
 Janitorial  Financial  Marketing &  Administrative Operations
 Security  Consultancy Promotion (HR, Legal, Accounting)

0% VAT / VAT-exempt transactions Sunset provision on indirect taxes

 Sale of goods or services* to an export- December 31, 2034
oriented enterprise
 Importation of goods* by
export-oriented enterprise (exempt)
 Customs duty  VAT zero rating
At least exemption on local
** of the export-oriented enterprise’s total
70%
 VAT zero rating on purchases
annual production should be export sales
local purchases  VAT exemption
 VAT exemption on on importation
 Sales to bonded manufacturing importation
warehouses of export-oriented enterprises (Sections 106, 108 and 109 applicable
to export-oriented enterprises only )

 Sales subject to 0% VAT under

special laws
* Directly attributable to the activity of the export-oriented enterprise Investments prior to the CREATE Act
**DTI’s Export Marketing Bureau shall determine compliance, otherwise, failure to meet the threshold will disqualify from
availment in the immediately succeeding year

Excise tax VAT and Excise tax refund process

Exempt Filing of refund Failure to file the Request

for Reconsideration within
application
Sold to international carriers of Philippine or 15 days shall render the
foreign registry directly importing petroleum decision final.
90 days
products on their use or consumption outside
the Philippines
If denied, can file for
CIR approves and
Request for Inaction by the CIR
grants refund
Refund Reconsideration

15 days
 Must be filed within 2 years after
the payment
CIR reverses its If denied, can file
Court of
 Return filed showing an overpayment decision and grants appeal to the CTA Inaction by the CIR
Tax Appeals
refund within 30 days
shall be considered a written claim
for refund

2 | CREATE MORE Act

Republic Act No. 12066
Changes under the CREATE MORE Act are highlighted in green text.

VAT Zero-rated transactions

DELETED
The following shall be subject to 12% VAT upon satisfaction of the conditions:
1. Establishment of Enhanced VAT refund system; and
2. Cash settlement of all pending VAT refund claims as of 31 December 2017 by 31 December 2019.

 Sale of raw materials or packaging materials to a nonresident buyer for delivery to a resident local export-oriented enterprise*
 Sale of raw materials or packaging materials goods to export-oriented enterprise whose export sales exceed 70% of total annual
production
 Those considered export sales under Executive Order No. 226, and other special laws
 Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are
subsequently exported*
 Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise
whose export sales exceed is at least 70% of total annual production
*paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP

Application for Transitory: existing

Application for extension
qualified expansion projects

Conditions Conditions
 Employ 10,000 direct local  Qualifications set forth in the SIPP
employees
 Performance review by the IPA
 Maintain the said number during
its registration
Entitlement
Entitlement  8 / 13 years of SCIT / EDR -
if approved by IPA / FIRB, Existing registered projects or
 No ITH shall be granted respectively activities prior to the effectivity of the
CREATE Act may qualify to register on
 Not exceeding 5 / 10 years –  Indirect tax incentives for REE or before December 31, 2024, subject
if approved by IPA or to criteria and conditions under SIPP
FIRB, respectively

Initial Point
Processing time RBE Taxpayer Services
of Contact (POC)

 Initial POC for foreign

20
working days
 Support end-to-end
tax compliance 
investment leads
Assist in obtaining
IPA
 Simplified filing and licenses and
payment processes permits, etc.
The IPA or FIRB shall issue a
decision on the applications
Maximum of 20 working days extension only once

Income tax amendments

Treaties 15% CWT*

Agreements entered into by the President Withholding of a tax on the items of income
with economies and administrative regions payable to persons residing in the Philippines
at the rate of not more than 15% shall be
credited against the income tax liability
*creditable withholding tax (CWT)

3 | CREATE MORE Act

 Republic Act No. 12066
Changes under the CREATE MORE Act are highlighted in green text.

E-invoicing and Electronic Sales Reporting System (ESRS)

Upon establishment of a system

capable of storing and processing the Incentives
required data, the BIR shall require
the following to issue electronic  Additional deduction from
invoices and report their sales data taxable income
through ESRS:

100% Micro/Small
Taxpayers E-invoices ESRS
50% Medium/Large
Large Group Gross Sales
 
taxpayers
total cost for setting up an ESRS can
Micro < P3M
Exporters   only be availed once
Small P3M - <P20M
Engaged in
 
e-commerce  Importation of ESRS is exempt
from import taxes Medium P20M - <P1B
Other taxpayers may voluntarily issue
electronic invoices and use ESRS. Large P1B and above

SGV & Co. Head Office SGV Tax Services

6760 Ayala Avenue,
Makati City,
1226 Metro Manila, Fabian K. Delos Santos
Philippines Tax Leader
(+632) 8894 8219
fabian.k.delos.santos@ph.ey.com
Tel: (+632) 8891 0307
Email: sgv.information@ph.ey.com
www.sgv.ph

Jules E. Riego
Business Tax Services (BTS) Leader
(+632) 8894 8117
jules.e.riego@ph.ey.com

Cheryl Edeline C. Ong

Tax Partner, Business Tax Services
(+632) 8962 1593
cheryl.edeline.c.ong@ph.ey.com

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