Special InTAX: March 2025 Issue 1 | Volume 1

Fiscal Incentives Review Board

The Fiscal Incentives Review Board (FIRB) issued FIRB Advisory No. 001-2025 dated 20 February 2025, circularizing the Implementing Rules and Regulations (IRR) of Title XIII of Republic Act (RA) No. 8424, otherwise known as the “National Internal Revenue Code (NIRC) of 1997”, as amended by RA No. 12066 or the “Corporate Recovery and Tax Incentives For Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act” (Tax Code).

The salient provisions of the IRR are as follows:

Tax and Duty Incentives

• Registered Business Enterprises (RBEs) may be entitled to the following incentives provided under CREATE MORE:

1. Income Tax Holiday (ITH)
2. Special Corporate Income Tax (SCIT)
3. Enhanced Deductions Regime (EDR)
4. Customs and duty exemption on importation of capital equipment, raw materials, spare parts or accessories
5. Value-added tax (VAT) zero-rating and exemption
6. Other incentives on importation of petroleum products
7. Registered Business Enterprise Local Tax (RBELT)

Period of Availment of Incentives (based on location and industry tiers)

FOR REGISTERED EXPORT ENTERPRISES (REEs)

FOR REGISTERED DOMESTIC MARKET ENTERPRISES (DMEs)

Projects or activities granted with tax incentives under RA No. 11534 or the “Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act” upon the effectivity of CREATE MORE (CREATE RBEs)

• Prospective application of the following provisions under CREATE MORE:

1. Exemption from national and local taxes including local fees and charges for projects or activities availing of SCIT
2. Availment of additional enhanced deductions
3. Imposition of 20% income tax rate on taxable income of RBEs availing the EDR
4. Imposition of up to 2% RBELT to RBEs availing of ITH or EDR
5. Conditions for the availment of the duty and VAT exemption on importation and VAT zero-rating on local purchases

• No tax refund or credit of taxes previously paid, which are otherwise exempt or zero-rated under CREATE MORE, shall be granted to CREATE RBEs.
• CREATE RBEs granted VAT zero-rating on local purchases, VAT exemption on importation, and/or duty exemption on importation may continue to enjoy the said incentives until expiration of such.

Investments prior to the effectivity of the CREATE (Pre-CREATE RBEs)

• Investments prior to the effectivity of the CREATE – shall be subject to incentives granted in the Certificate of Registration and Tax Exemption of the concerned pre-RBE
• Projects or activities granted only an ITH – shall be allowed to continue with the availment thereof for the remaining period of the ITH as specified in the terms and conditions of their registration.
• Projects or activities granted an ITH and are entitled to the five percent (5%) tax on gross income earned – shall be allowed to use the ITH for the period specified in the terms and conditions of their registration and thereafter, avail of the 5% tax on gross income earned incentive, including all corresponding exemptions from national and local taxes, fees and charge until 31 December 2034
• RBEs currently availing of the 5% tax on gross income earned – shall be allowed to continue availing the said tax incentive at the rate of 5%, including all corresponding exemptions from national and local taxes, fees and charge until 31 December 2034
• VAT exemption on importation and VAT zero-rating on local purchases shall be allowed to continue availing of the said incentives until 31 December 2034

Prohibition on Registered Activities

• RBEs may institute a telecommuting program as defined under RA No. 11165 or “The Telecommuting Act” including work-from-home (WFH) arrangements which shall not cover more than 50% of the total workforce at any given time.  RBEs that fail to meet the 50% workforce requirement in cases of force majeure or fortuitous events as provided in the duly approved business continuity plan shall not be subject to penalty.  Non-compliance with the 50% threshold shall be subject to penalty equivalent to regular corporate income tax multiplied by the excess of the 50% threshold under WFH arrangements
• The 50% maximum threshold for the telecommuting program or WFH arrangements shall not apply to IPAs not administering an economic zone or freeport.  RBEs with Board of Investments (BOI) registration pursuant to FIRB Resolution Nos. 026-22 and 033-22 may continue to adopt up to 100% WFH arrangement for the duration of the remaining incentives
• The availment of fiscal incentives under Title XIII of the Tax Code shall preclude the availment of fiscal incentives under other special laws

The IRR was signed on 17 February 2025 and shall take effect on 20 February 2025 upon its publication in The Philippine STAR.

Here are the full text of the issuances: FIRB Advisory 001-2025 and CREATE More Act IRR.

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