The Bureau of Internal Revenue (BIR) is finalizing the regulations on the substantial reduction of corporate income tax (CIT) provided under the Corporate Recovery and Incentives for Enterprises (CREATE) law.
(MANILA BULLETIN)
The salient points of the draft guidelines were discussed Tuesday, April 6 in an online seminar organized by revenue officials for select group of businessmen and their representatives.
The preliminary documents covered a wide range of issues including the lowering of CIT rate from 30 to 25 percent for large corporations, and 20 percent for small companies.
It also slashed the CIT for non-profit hospitals and schools from 10 to one percent.
It likewise cut down the percentage tax of businesses exempt from value-added tax (VAT) to one percent, from the original three percent.
The minimum CIT for both domestic and resident foreign corporations was lowered from two to one percent and at the same time granted incentives to other registered enterprises.
Business operators are eagerly waiting the final version of the implementing regulations, which are still unnumbered and subject to the review and signature of BIR Commissioner Caesar R. Dulay.
Revenue officials admitted difficulties in drafting the guidelines because of the tax law's unique feature.
CREATE, unlike other previous tax laws which were all prospective, has retroactive application starting on July 1, 2020, meaning businesses are still subject to pay the original and higher CIT rate for the first semester of the year.
President Duterte approved the measure as a way to attract foreign investments, generate jobs and help businesses recover from the coronavirus disease (COVID-19) pandemic.