The Senate yesterday adopted and ratified the bicameral conference report on the disagreeing provisions of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill.
Sen. Pia Cayetano, Senate ways and means committee chair, said among the key features of CREATE is the reduction of the corporate income tax (CIT) rate from 30 percent to 20 percent for small and medium corporations with net taxable income of P5 million and below, and with total assets of not more than P100 million, excluding land.
CREATE will also lower CIT rate from 30 percent to 25 percent for all other corporations, lower percentage tax from 3 percent to 1 percent for small business whose gross sales or receipts do not exceed the value-added tax-exempt threshold of P3 million (effective July 1, 2021 to June 30, 2023).
It will also lower the minimum CIT from 2 percent to 1 percent effective July 1, 2021 to June 30, 2023.
On fiscal incentives, Cayetano said exporters and critical domestic market enterprises will be given 17 years of incentives (four to 7 years of income tax holiday or ITH plus 10 years of special corporate income tax or enhanced deductions) and up to 12 years of incentives (four to 7 years of ITH plus five years of special corporate income tax or enhanced deductions) for other domestic market enterprises, among others.
Under the bill, the importation of vaccines against the new coronavirus disease 2019 are exempt from import duties.
Enterprises have the option to choose between the special CIT of 5 percent or enhanced deductions after enjoying the ITH.
CREATE also gives higher incentives to enterprises located outside of metropolitan areas and grants additional incentives to enterprises that fully relocate outside of the National Capital Region and for those which will locate in areas that are recovering from disasters or armed conflict.