Corporate Recovery & Tax Incentives for Enterprises Act Webinar

On April 12, 2021, RT&Co tax team organized a free public webinar on the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. Our Tax Partner, Atty. William Benson S. Gan (WSG) and our Tax Principal, Atty. Sheryl Ann Tizon-Lalucis (STL) welcomed over 900 participants from different clients and companies.

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The webinar started with the opening remarks given by our Managing Partner and Chief Operating Officer Protacio T. Tacandong. The discussion was divided into two parts, the first part led by WSG focused on the changes and amendments of the Tax Code, while the second half led by STL focused on incentives.

The Main topics and Key Amendments introduced by the CREATE Act covered in the webinar are as follows:

Corporate Income Tax

  • 25% -General Corporate Income Tax Rate
  • 20% -For domestic corporations with total assets not exceeding P100 Million and total net taxable income not exceeding P5 Million

Minimum Corporate Income Tax

  • 1% MCIT effective July 1, 2020, until June 30, 2023
  • After 3 years back to 2%

Improperly Accumulated Earnings Tax

  • Repealed upon effectivity of CREATE Act

Deductible Interest Expense

  • 20%

Percentage Tax

  • 1% effective July 1, 2020 until June 30,2023
  • After 3 years back to 3%

Proprietary Educational Institutions and Hospitals which are Non-Profit

  • 1% effective July 1, 2020, until June 30, 2023
  • After 3 years back to 10%

VAT exemptions

  • E-Books-Sale, importation, printing or publication of books, and any newspaper, magazine, journal, review bulletin on digital or electronic format
  • Medicines and PPEs
    • Sale or importation of medicines for cancer, mental illness, tuberculosis, and kidney diseases (Effectivity moved from 2023 to 2021.
    • Beginning January 1, 2021, to December 31, 2023, sale and importation of the following shall be VAT exempt:
      • Capital equipment, its spare parts, and raw materials, necessary for the production of PPEs
      • All drugs, vaccines, and medical devices specifically prescribed and directly used for the treatment of COVID-19
      • Drugs for the treatment of COVID-19 approved by the FDA for use in clinical trials

Tax Incentives

  • Income Tax Holiday (ITH)
  • Special Corporate Income Tax Rate (SCIT)
  • Enhanced Deductions (ED)
  • Duty Exemption on Importation of Capital Equipment, Raw Materials, Spare Parts, or Accessories; and
  • VAT Exemption on Importation and VAT Zero-Rating on Local Purchases

The thorough discussions were followed by a real-time Q&A addressed by the speakers, distribution of CREATE Act materials for the use of the participants, and in an effort to ensure that all attendees’ questions about the CREATE Act are catered, they also conducted a post-webinar Q&A via email.

The seminar was intended to give attendees a glimpse of the new law that will impact most of the companies as they file their income tax returns on April 15.

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