On 29 November 2020, the Department of Finance announced that the Senate passed of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which was a redesigned version of corporate tax reform package. The CREATE Act as approved by the Senate is to be approved by the House without amendment and is expected to be signed into law by President Duterte before the end of the year. The key measures are given below:
- A reduction in the corporate tax rate from 30% to 25%, which will apply retroactively from 1 July 2020, with further reductions of 1% per year from 2023 until reaching a 20% rate from 2027. Additionally, an immediate reduction in the corporate tax rate to 20% is provided for micro small and medium enterprises (MSMEs), including domestic corporations with total assets, excluding land, of not more than PHP 100 million and net taxable income of PHP 5 million or less.
- On the long-overdue fiscal incentives reform, investment promotion agencies (IPAs) maintain their key functions and powers under their respective charters, but they will now be supervised by the Fiscal Incentives Review Board (FIRB). Approvals of incentives for investments with capital exceeding P1 billion pesos will be made on the FIRB level.
