On 13 February, 2024, the Department of Justice (DOJ), in its Opinion No. 09, series of 2024, announced that the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act) did not revoke the Board of Investments (BOI)’s authority to certify enterprises as pioneer or non-pioneer.
These entities will remain eligible for the local business tax exemption under the Local Government Code (LGC). However, the DOJ also clarified that it is only responsible for the classification of the enterprise, and the local business tax exemption facility is granted by the local government unit.
Before the CREATE Act, RBEs with the Board of Investments (BOI) enjoyed an exemption from local business taxes, which were classified as pioneer or non-pioneer enterprises per the “Omnibus Investments Code of 1987” and the “Local Government Code” (LGC).
On 8 April, 2021, the Philippines government enacted the CREATE Act. However, since its implementation, it has created uncertainty among registered business enterprises (RBEs) concerning the exemptions from local business taxes.
The CREATE Act reformed the corporate income tax and incentives framework. It revoked specific sections of the Omnibus Investments Code, which resulted in uncertainties regarding the status of local business tax exemptions.
