SGV - CREATE Bill Dec 14 2020

Corporate Recovery & Tax
Incentives for Enterprises

Act (CREATE)
14 December 2020
The SGV Purpose

Nurture leaders and enable businesses for a better Philippines. #SGVforABetterPhilippines
ABOUT THE SPEAKER
• Atty. Fabian Delos Santos is the Firm’s Head of Tax Services. He is also a Global Compliance
Reporting (GCR), Private Client Services (PCS) and Business Tax Services (BTS) Partner of SGV
& Co.
• He is a CPA Lawyer and has been in the tax practice for more than 30 years.
• He provides tax, corporate and business advisory services to numerous clients and successfully
structured transactions of companies in diverse industries.
• He led the tax practice in the various SGV Branch Offices in Davao, Cebu, General Santos,
Fabian K Delos Santos Cagayan de Oro, etc.
Partner, Head of Tax Services
• Fabian graduated from New Era University with a degree of BS Business Administration major
Landline
+63 2 891 0307 loc. 8219
in Accountancy and placed 6th in the 1989 CPA Board Exam. He completed his Bachelor of Laws
from San Beda College Manila.
Mobile
+63 920 961 8324
+63 917 894 8219 • He completed Leading Professional Service Firms Program in Harvard Business School,
Cambridge Massachusetts.
Email
Fabian.k.delos.santos@ph.ey.com
Page 2 #SGVforABetterPhilippines
Tax Reform Package 2
TRAIN 2 TRABAHO CITIRA CREATE
March 2018: September 2018: September 2019: May 2020:

Filed in HR Passed by HR (3rd Reading) Passed by HR (3rd Reading) DOF submitted proposed
amendments in line with
COVID-19
Nov. 26, 2020:

Senate passed version (SB
No. 1357)
Transmitted to the HR
Page 3 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Salient features of CREATE Bill
I. Adjustments in corporate tax and

other taxes
II. Rationalization of fiscal incentives

Proposed
adjustments in
corporate tax

Corporate tax adjustments
Tax Code CREATE

Rate of income tax on corporations
EFFECTIVE 1 July 2020

TOTAL TAXABLE INCOME TAX RATE
Domestic corporations*: ASSETS*
30% of the net taxable income P5 Million and below 20%
P100 Million
and below Above P5 Million 25%
More than
P100 Million
Regardless of amount 25%
* Excluding the value of land on which the particular business entity’s office,
plant and equipment are situated
*For fiscal year:
• Taxable income shall be computed without regard to the specific
date when specific sales, purchases and other transactions occur.
• Income and expenses for the fiscal year shall be deemed to have
been earned and spent equally for each month of the period.
*shall include ONE PERSON CORPORATIONS

Corporate tax adjustments
Tax Code CREATE

Rate of income tax on corporations
Effective 1 July 2020:
Resident foreign corporations: Resident foreign corporations:

30% of the taxable income 25% of the taxable income
Non-resident foreign corporations: Non-resident foreign corporations:

30% of the gross income 25% of the gross income

Interest arbitrage
Tax Code CREATE

Deductions from gross income: Interest expense
Allowable deduction for interest expense

shall be reduced by 33% of the interest income Interest expense
CIT rate
reduction rate
subjected to final tax
20%
If Interest Income
Tax is adjusted in
25%
the future, the
rate shall be
adjusted
accordingly.

Minimum Corporate Income Tax
Tax Code CREATE

Beginning on the 4th taxable year immediately following
the year in which such corporation commenced its business operations
2% of the gross income 1 July 2020 – 30 June 2023

1%
*applies to domestic and resident foreign corporations
*applicable only when the MCIT is greater than the tax due for the taxable year.

Income tax on ROHQ
Tax Code CREATE

Income tax on regional operating headquarters
Effective 31 December 2021

10% of the taxable income Regular corporate income tax

Final Taxes on Foreign Corporations
Tax Code CREATE

Final taxes on foreign corporations
Interest income from

a depository bank
under the expanded
foreign currency
7.5% 15%
deposit system (FCDS)
Capital gains from

sale of shares of stock 5% < P100k 15%
not traded in the stock
exchange
10% on excess
of P100k

Foreign Sourced Dividends
Foreign sourced dividends received by domestic corporation shall be EXEMPT subject to

the following conditions:
1. The domestic corporation holds directly at least 20% of the outstanding shares of the
foreign corporation and has held the shareholdings for 2 years at the time of dividend
distribution;
2. Funds are reinvested in the business operations of the domestic corporation in the
Philippines;
3. Reinvested within the next taxable year from the time the dividends were received; and
4. Reinvestment shall be limited to funding the working capital requirements, capital

expenditures, dividend payments, investment in domestic subsidiaries and
infrastructure projects.
Imposition of improperly accumulated earnings tax (IAET)
Tax Code CREATE

Income tax rate
10% of the improperly accumulated REPEALED

taxable income

Proprietary / Private Educational Institutions and Hospitals
Tax Code CREATE

Income tax rate
10% of the taxable income 1 July 2020 – 30 June 2023

1%

Labor Training Expenses
 Additional deduction of ½ of the value of labor training expenses incurred for skills
development of enterprise-based trainees enrolled in public senior high schools,
public higher education institutions or public technical and vocational institutions
covered by an Apprenticeship Agreement under the Labor Code.
 Enterprise shall secure proper certification from DepEd, TESDA, or CHED for
enterprise-based training of students from public educational institutions.
 Deduction must not exceed 10% of direct labor wage
Section 40(C)(2)
Non-recognition of gain or VAT exempt on the sale or

exchanges of property used for
loss business for shares of stocks
Prior BIR confirmation or tax ruling shall not

be required for purpose of availing the tax
exemption

Section 40(C)(2)
Reorganization
►Merger or Consolidation
►Further Control
►Recapitalization
►Reincorporation

Section 40(C)(2)
1 The transferee is a corporation
2 The transferee exchanges its shares of stock for property/ies of the transferor
The transfer is made by a person, acting alone or together with others,

3 not exceeding four
The transferor/s, collectively, gains or maintains 51% of the total voting power of all classes
4 of stock of the transferee corporation after the transfer of property

VAT Exempt Transactions
Sale of Real Properties

Not primarily held for sale or held for lease in the ordinary course of trade
or business
Utilized for low-cost and socialized housing*
Residential lot - P2,500,000 and below
House and lot and other residential dwellings - P4,200,000 and below
BEGINNING 1 JANUARY 2024 AND every 3 years thereafter, the amount stated shall be adjusted to its present value
* Socialized Subdivision Project – ranges from Php480,000 to Php580,000 depending on the area
Socialized Condominium Project - ranges from Php600,000 to Php750,000 depending on the location and area

Sale or Importation of Prescription Drugs and Medicines
Diabetes, high cholesterol, and

hypertension beginning January
2020
within sixty (60)

Cancer, mental illness, days from the
tuberculosis, and kidney diseases effectivity of this
beginning 1 January 2021 Act

Sale or Importation of the following beginning 1 January 2021 to 31 December 2023
Capital equipment, its spare parts and • DTI Certification that such equipment, spare parts
raw materials, necessary for the or raw materials for importation are:
production of personal protective • Not locally available or insufficient in quantity; or
equipment components for COVID-19 • Not in accordance with the quality or
prevention specification required
All drugs, vaccines and medical devices

specifically prescribed and directly used for • DOH shall issue a list of prescription drugs and
the treatment of COVID-19 and drugs for
medical devices covered by this provision within
the treatment of COVID-19 approved by
60 days from the effectivity of this act, and every
FDA for use in clinical trials, including raw
3 months
materials directly necessary for the
production of such drugs
*Exemption claimed shall be subject to post audit by BIR and BOC as may be applicable

► Sale, importation, printing or publication of books, and any newspaper,

magazine, journal, review bulletin, or any such educational reading material
covered by the UNESCO agreement on the importation of educational,
scientific and cultural materials, including the digital or electronic format.

Other Percentage Taxes (OPT)
Tax Code CREATE

Other Percentage Tax
3% of the gross quarterly sales or 1 July 2020 - 30 June 2023

receipts
1%

Please feel free to reach us at:
Atty. Fabian K Delos Santos

Email Fabian.k.delos.santos@ph.ey.com
Mobile
+63 920 961 8324

Customs Audit Reminders
Customs Administrative Order (CAO) No. 01-2019
Post Clearance Audit and Prior Disclosure Program
Effectivity Public Approved by Published in the PCA and PDP

of the CMTA consultation Department of Manila Times Effectivity date
on CAO Finance (DOF)
16 June 2016 6 October 2017 9 January 2019 16 January 2019 15 February 2019
Objectives Implements Sections Prescribes the Provides policies and

1000 to 1006 of the principles, purposes guidance in the
of the CAO CMTA and methodology of the application and
PCA system, record availment of the PDP
keeping requirement
and audit periods
Page 26
Update on Custom Issuances of Audit Notification Letters
Number of Audit Notification Letter Issued Statistics

1st wave 2nd wave 3rd wave 4th wave
January April June November
2019 2019 2019 2020
32 155 115 120

Over 100 Php2.3 B
Companies Collections
Availed As of
Processed PDP October
Super Oil
Automobiles Green and Consumer Pharmaceutical Rice Meat 2019
Products Companies Importers Importers
Lanes Gas
Industries Covered
Page 27
Post Clearance Audit Process
60 days 5 days 15 days 60 days 30 days

(+30 days)
120 days
(+30 days)
90 days - PDP
Page 28
Penalties and interests
The following penalties shall be imposed on any deficiency duties and taxes determined through a PCA.
2 Degrees of Culpability
Inadvertent error Negligence Fraud Interest

or simple
negligence
25% 125% 600% 20%

of the of the of the per annum
revenue loss revenue loss revenue loss shall be imposed on
and/or deficiency duties, taxes
and other charges plus
Imprisonment fine or penalty counted
from the date of final
assessment
Page 29
Thank You!
Page 30
About the speaker
• Atty. Cheryl Ong is the Firm’s Philippine Champion for Quantitative Services which is geared
towards helping investors maximize fiscal incentives. She is also a Private Client Services (PCS)
and Business Tax Services (BTS) Partner of SGV & Co.
• She has been assisting multinational clients for over 12 years in relation to different types of
Business Tax Services.
• She specializes in providing business tax advisory services to companies in various industries.
Her competencies also include assistance in handling tax audits, corporate restructuring, and
corporate registrations with government agencies, among others.
Cheryl Edeline C. Ong
Partner, Business Tax Services • Cheryl graduated from the University of San Carlos with a Bachelor of Science degree in
Accountancy, magna cum laude. She completed her Bachelor of Laws, cum laude, from the
Landline University of Cebu. She is a CPA-lawyer.
+63 2 891 0307 loc. 3014
Mobile • She holds a Certification in Executive Development Program from the Wharton School of
+63 998 962 1593
Business.
Email
Cheryl.Edeline.C.Ong@ph.ey.com

Proposed
rationalization of
fiscal incentives

Registrations with Investment Promotion Agencies (IPAs)
Currently, we have 13 IPAs to choose from for

incentives registration.
Under the CREATE Bill, the following are proposed to

have the power to approve/disapprove the grant of
incentives:
Investment Capital* Granting Authority
Fiscal Incentives Review Board

Above P1 Billion
(FIRB), chaired by DOF Secretary
P1 Billion and below Investment Promotion Agencies

Note: FIRB may increase the amount of threshold.
Application for tax incentives shall be deemed approved if not acted upon
within twenty (20) days from the date of submission of the application and
complete relevant supporting documents to the FIRB or IPA.
*Value of investment indicated in Philippine currency, excluding the value of land

and working capital, that shall be used to carry out a registered project or activity,
except that land shall be included as investment capital for registered real estate
development.
Source: DOF website

Domestic and Export Enterprises
Enterprise
Domestic Export
any enterprise other than
export enterprise
Direct
Strategic export
Industries
70%
Non-Strategic
Indirect
Industries export

Fiscal incentives
 Domestic Enterprise –
1
Strategic Industries
ITH SCIT  Export Enterprise
or
 Domestic Enterprise –
2 Strategic Industries or
Non-Strategic
Enhanced deductions* Industries
 Export Enterprise
*at the option of the registered enterprises

Industry Tier Prioritization
Industry prioritization (among others)

Tier I • Agriculture, fishing, forestry, agribusiness activities
• Energy
• Ecozone and freeport zone development
• Manufacturing of medical supplies, devices and equipment
• Construction of healthcare facilities and infrastructure
• Manufacturing and services industries that are emerging resulting from innovation,
upgrading or addressing gaps in the supply and value chain
• Mass housing, as well as infrastructure, transportation, utilities, logistics and support
services
Tier II • Activities that produce supplies, parts and components

• Intermediate services that are not locally produced but are critical to industrial development
• Import-substituting activities operating under highly-contestable markets
Tier III • Research and development

• Commercialization of patents, industrial designs, copyrights and utility models
• Highly technical manufacturing, agriculture, fishing, forestry/agri-business and other
activities and services
• Research and development in the process of production of goods and services

Qualifications on industry and location
Industry Tier
Location
I II III
NCR and other metropolitan areas*
A (14) B1 (15) B2 (16)
Areas outside of and contiguous to NCR

and areas outside of and contiguous or B1 (15) B2 (16) C (17)
adjacent to Metropolitan Areas
Areas outside of NCR and outside of
metropolitan areas, and all other areas B2 (16) C (17) C (17)
that are not less developed
Less developed areas** C (17) C (17) C (17)
* Metropolitan areas refer to Metro Manila, Metro Cebu, Metro Davao or those LGUs which are later qualified or grouped as such by NEDA or through
laws or executive issuance.
** Less Developed Areas refer to localities with a low per capita GDP, low level of investments, high rate of unemployment and/or underemployment,
low level of infrastructure development with limited accessibility to developed urban centers as determined by NEDA.

Categories of fiscal incentives
(I) (II)
ITH + SCIT incentives Enhanced
deduction
Category SCIT Total
ITH duration (Total
duration in duration in duration
in years
years* years in years)
A
4 10 14 14
(Basic)
B1
5 10 15 15
(Enhanced)
B2
6 10 16 16
(Advanced)
C
7 10 17 17
(Superior)
► A qualified expansion or entirely new project or activity registered may qualify to avail of a new set
of incentives and its period of availment, subject to the qualifications in the SIPP and performance
review by the FIRB.

Special Corporate Income Tax
► 5% shall be imposed on the gross income earned, in lieu of all national local taxes effective
1 July 2020.
► Allocation of 5% SCIT
► 3% - share of the national government
► 2% - share of the LGU which has jurisdiction over the place of the registered activity of the
registered business enterprise outside ecozones and freeports.
► If applicable, the shares of the LGUs and the IPAs under their governing special laws (e.g.
Authority of the Freeport Area of Bataan; Aurora Pacific Economic Zone and Freeport
Authority) shall be observed and shall not result in the diminution of their respective shares.

Enhanced Deductions
Deductions Enhanced under CREATE
Depreciation allowance
Additional 10% for buildings
This is only limited to assets that are directly
related to the production of goods and Additional 20% for machineries
services other than administrative and and equipment
support services.

Enhanced Deductions
Direct labor expense
This shall not include salaries, wages, 150% deduction

benefits and other personnel costs incurred
for managerial, administrative,
indirect labor and support services.

Enhanced Deductions
R&D costs
Limited to local expenditure incurred for 200% deduction

salaries of Filipino employees and
consumables and payments to local research
and development organizations.

Enhanced Deductions
Training expense
Provided, that it shall only apply to trainings, 200% deduction

as approved by the IPAs based on the SIPP,
given to the Filipino employees engaged directly
in the RBE’s production of goods and services.

Enhanced Deductions
Domestic inputs* purchased

150% deduction
This is limited to those directly related to and
actually used in the registered export project or
activity.

Enhanced Deductions
Power Expense 150% deduction

Enhanced Deductions
Reinvestment allowance to
manufacturing industry Maximum 50% of reinvested
profit
Reinvestment in any of the projects or (within five years from time of reinvestment)
activities listed in the SIPP

Enhanced Deductions
Incurred during first three (3)

NOLCO years
(carried over within the next five (5)
consecutive years)

Enhanced Deductions (Summary)
Type of expense Deduction under CREATE

Additional 10% for buildings
Depreciation allowance
Additional 20% for machineries and equipment
Direct labor expense 150% deduction
R&D costs 200% deduction
Training expense 200% deduction
Domestic inputs purchased 150% deduction
Power Expense 150% deduction
Reinvestment allowance to Maximum 50% of reinvested profit
manufacturing industry (within five years from time of reinvestment)
Incurred during first three years;
NOLCO carried over within the next five consecutive
years

Illustration - New RBEs
►Company A is an export enterprise engaged in a Tier I activity

and is located in a less developed area identified by NEDA.
►Company A falls under Category C.
►It may avail of any of the two options:
1. 7 years ITH plus 10 years of 5% SCIT; OR

2. 17 years of Enhanced Deduction

Transitory provisions for existing registered activities
Current incentives Transitory period
Granted with ITH only Remaining ITH period
For 10 years:
Granted with ITH and 5% GIT after ITH
(regardless of number of years enjoying GIT)  5% GIT
After the expiration of the transitory period, the export enterprises registered
prior to the effectivity of the CREATE shall have the option to reapply and avail
of the tax incentives under Section 294 (B) (i.e., SCIT ) and may still be
extended for a certain period not exceeding 10 years at any one time, subject to
the conditions and qualifications under the SIPP and performance review by the
FIRB.

Illustration – Transitory Provisions
Granted with ITH and 5% GIT
 Company A is an existing PEZA registered enterprise and is currently availing of

the 5% GIT.
 Assuming that the transitory provisions will be effective on 1 January 2021,

Company A will continue to enjoy 5% GIT from 1 January 2021 to 31 December
2030.
 Thereafter, it may reapply and avail of the 5% SCIT for 10 years and may still be
extended to a certain period not exceeding 10 years, at any one time, subject
to the conditions and qualifications under the SIPP and performance review
by the FIRB.

Customs incentives
Incentives CREATE
Customs incentives
Customs Duty Exemption for ► Directly and exclusively used in the registered activity
Capital Equipment, ► Part of the direct cost
Raw Materials, ► Not produced or manufactured domestically in sufficient quantity or
Spare Parts and Accessories of comparable quality and at reasonable prices
► IPA approval prior to the importation is secured
Utilization in non-registered project:

• With prior approval from the IPA - Payment of duties on the
imported items (for part-time utilization, payment is in proportion
to the utilization for non-registered project is required).

Customs incentives
Incentives CREATE
Customs incentives
Sale/transfer within 5 years:

• Sale or transfer is allowed under the following:
1. To enterprise availing of customs duty exemption
2. To enterprise not availing of duty exemption
3. Exportation
4. Proven technical obsolescence
5. Donated to TESDA, state universities and colleges or DepEd and CHED-Accredited Schools
• With prior approval from the IPA - Payment of duties on the imported items is required.
 For sale or transfer to enterprise not availing of duty exemption, the taxes and duties shall be based on the net
book value.
 Donation to TESDA among others is exempt from duties and taxes including donor’s tax.
• Without prior approval from the IPA - RBE, vendee, transferee or assignee shall be solidarily liable to pay twice the
amount of the duty exemption that should have been paid during its importation.
Sale/transfer after 5 years:

• Prior notice to the IPA is required. Payment of duties on imported goods shall be made in case of violation of any of
the registration terms and conditions.

VAT incentives
Incentives CREATE
VAT incentives
VAT Exemption on ► Directly and exclusively used in the registered activity by a

importation and VAT zero- registered enterprise located inside an ecozone or freeport
rating on local purchases

Performance Commitments
• RBEs whose performance commitments include job creation shall

maintain employment levels to the extent practicable.
• In the case of reduced employment, the RBEs must submit to their

respective IPAs and FIRB their justification.

Modified Set of Incentives
The President of the Philippines has the power to:
1. Modify the mix, period or manner of availment of incentives; or
2. Craft the appropriate financial support package for a highly desirable project or specific
industrial activity
 Financial support includes utilization of government resources such as land use, water appropriation, power
provision, budgetary support provision under the annual general appropriations act, and the like.
The grant of ITH shall not exceed 8 years and thereafter, 5% SCIT may be granted provided that
the total period of incentive availment shall not exceed 40 years.

Modified Set of Incentives
• In recommending, FIRB shall consider the following:
1. The project has a comprehensive sustainable development plan with clear inclusive business
approaches high level of sophistication and innovations; and
2. Minimum Investment Capital of Php 50 Billion or its equivalent in US dollars OR a minimum direct local
employment generation of at least 10,000 within 3 years from the issuance of the Certificate of
Entitlement. The threshold shall be subject to a periodic review by FIRB every 3 years.
• If the project fails to substantially meet the projected impact on the economy and agreed performance
target, the FIRB shall recommend to the president the cancellation of the tax incentive or financial
support package or the modified period or manner of availment of incentives, after due hearing and an
adequate opportunity to substantially comply with the agreed performance targets and outputs.

Qualifications of a registered business enterprise for tax incentives
a) Be engaged in a project or activity included in the SIPP

b) Meet the target performance metrics after the agreed time period
c) Install an adequate accounting system that shall identify the
investments, revenues, costs and profits or losses of each registered
project or activity undertaken by the enterprise separately from the
aggregate investments, revenues, costs and profits or losses of the
whole enterprise; or establish a separate corporation for each
registered project or activity if the investment promotion agency
should so require
d) Comply with the e-receipting and e-sales requirement in accordance
with Sections 237 and 237-a of the Tax Code, as amended
e) Submit annual reports of beneficial ownership of the organization
and related parties

Implementing Rules and Regulations
• The Secretary of Finance, upon the recommendation of the CIR, shall

promulgate the necessary rules and regulations for its effective
implementation within 90 days from its effectivity.
• Failure to promulgate the rules and regulations shall not prevent the
implementation of this Act upon its effectivity.

Next steps to consider
Identify strategic Consider priority Study optimization

locations aligned with industries to maximize of tax incentives
logistics and supply incentives (ITH+SCIT
chain integration vs. Enhanced
Deductions)

Questions?

Mobile
+63 920 961 8324
Atty. Cheryl Edeline C. Ong

Tax Partner
Email: Cheryl.Edeline.C.Ong@ph.ey.com
Mobile: +63 998 962 1593

Questions?

Mobile
+63 920 961 8324
Atty. Cheryl Edeline C. Ong

Tax Partner
Email: Cheryl.Edeline.C.Ong@ph.ey.com
Mobile: +63 998 962 1593

Thank you!

SGV | Assurance | Tax | Strategy and Transactions | Consulting
About SGV & Co.

SGV is the largest professional services firm in the Philippines. We provide
assurance, tax, strategy & transactions, and consulting services. In everything
we do, we nurture leaders and enable businesses for a better Philippines.
This Purpose is our aspirational reason for being that ignites positive change
and inclusive growth.
Our insights and quality services help empower businesses and the economy,
while simultaneously nurturing our people and strengthening our communities.
All this leads to building a better Philippines, and a better working world.
SGV & Co. is a member firm of Ernst & Young Global Limited.
EY refers to the global organization, and may refer to one or more, of the
member firms of Ernst & Young Global Limited, each of which is a separate legal
entity. Ernst & Young Global Limited, a UK company limited by guarantee,
does not provide services to clients.
For more information about our organization, please visit ey.com/ph.
© 2020 SyCip Gorres Velayo & Co.

All Rights Reserved.
APAC No. 10000684
This material has been prepared for general informational purposes only and is
not intended to be relied upon as accounting, tax or other professional advice.
Please refer to your advisors for specific advice.
ey.com/ph

SGV - CREATE Bill Dec 14 2020

Uploaded by

Copyright:

Available Formats

SGV - CREATE Bill Dec 14 2020

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

SGV - CREATE Bill Dec 14 2020

Uploaded by

Copyright:

Available Formats

Corporate Recovery & Tax

Incentives for Enterprises

The SGV Purpose

TRAIN 2 TRABAHO CITIRA CREATE

March 2018: September 2018: September 2019: May 2020:

Nov. 26, 2020:

Page 3 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

I. Adjustments in corporate tax and

II. Rationalization of fiscal incentives

Page 4 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Page 5 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Tax Code CREATE

EFFECTIVE 1 July 2020

Page 6 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Tax Code CREATE

Effective 1 July 2020:

Resident foreign corporations: Resident foreign corporations:

Non-resident foreign corporations: Non-resident foreign corporations:

Page 7 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Tax Code CREATE

Allowable deduction for interest expense

Page 8 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Tax Code CREATE

2% of the gross income 1 July 2020 – 30 June 2023

*applies to domestic and resident foreign corporations

Page 9 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Tax Code CREATE

Effective 31 December 2021

Page 10 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Tax Code CREATE

Interest income from

Capital gains from

Page 11 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Foreign sourced dividends received by domestic corporation shall be EXEMPT subject to

4. Reinvestment shall be limited to funding the working capital requirements, capital

Tax Code CREATE

10% of the improperly accumulated REPEALED

Page 13 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Tax Code CREATE

10% of the taxable income 1 July 2020 – 30 June 2023

Page 14 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

 Deduction must not exceed 10% of direct labor wage

Non-recognition of gain or VAT exempt on the sale or

Prior BIR confirmation or tax ruling shall not

Page 16 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Page 17 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

1 The transferee is a corporation

The transfer is made by a person, acting alone or together with others,

Page 18 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Sale of Real Properties

Utilized for low-cost and socialized housing*

Residential lot - P2,500,000 and below

Page 19 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Sale or Importation of Prescription Drugs and Medicines

Diabetes, high cholesterol, and

within sixty (60)

Page 20 SGV Webinar on CREATE Bill #SGVforABetterPhilippines

Sale or Importation of the following beginning 1 January 2021 to 31 December 2023

All drugs, vaccines and medical devices

Page 21 SGV Webinar on CREATE Bill #SGVforABetterPhilippines