DOF backs CREATE law amendments
At A Glance
- The Department of Finance (DOF) supports proposed amendments to the CREATE law to boost the Philippines' potential as a global investment hub.<br>Proposed amendments aim to enhance the country's tax incentive system and address issues affecting the investment climate.<br>Key reforms include establishing a streamlined tax refund system and implementing a risk-based classification of claims and audit framework.<br>The CREATE MORE bill expands the enhanced deduction regime, increasing deductions for power expenses and expenses related to trade fairs, exhibitions, and missions.<br>Transitory RBEs under the five percent GIE regime would be exempt from national and local taxes, including VAT and duty incentives.<br>The CREATE Act establishes a performance-based, time-bound, targeted, and transparent tax incentives regime.<br>The Fiscal Incentives Review Board (FIRB) oversees the grant and administration of incentives by investment promotion agencies (IPAs).
The Department of Finance’s (DOF) threw its support behind the proposed amendments to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law to harness the Philippines’ potential as a global investment hub.
In a statement on Wednesday, Oct. 25, Finance Secretary Benjamin E. Diokno said the proposed amendments to CREATE, or Republic Act No. 11534, will enhance the country’s tax incentive system.
Diokno also said it will clarify the rules and policies on the grant and administration of incentives to qualified enterprises, and address issues affecting the country’s investment climate.
The major areas of reform, as included in the CREATE to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill, cover the establishment of a streamlined tax refund system for registered business enterprises (RBEs) and institutionalization of risk-based classification of claims and audit framework.
This is to improve the timeliness, efficiency, and predictability of the value-added tax (VAT) refund process, the DOF explained.
To improve the country’s presence and market share in the foreign market, the CREATE MORE bill expands the enhanced deduction regime, the department added.
"This increases the deduction for power expenses from 150 percent to 200 percent, and 200 percent deduction on expenses relating to approved trade fairs, exhibitions, and missions," the DOF said.
Moreover, the bill proposes to clarify the transitory provision by expressly exempting transitory RBEs under the five percent gross income earned (GIE) regime from all national and local taxes, including VAT and duty incentives.
The CREATE Act establishes a performance-based, time-bound, targeted, and transparent tax incentives regime in the country.
Pursuant to the law, the Cabinet-level Fiscal Incentives Review Board (FIRB) is mandated to oversee the grant and administration of incentives of investment promotion agencies (IPAs).