The Bicameral Conference Committee has approved the reconciled version of House Bill No. 4157 and Senate Bill 1357 of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act on 01 February 2021. Both Houses had respectively settled the disagreeing provisions of the act. The ratified final version is now ready for the signature of President Rodrigo Roa Duterte.
The CREATE Act allows exporters and domestic industries to avail themselves between four (4) to seven (7) years of income tax holiday (ITH) and ten (10) years of special corporate income tax (SCIT). They may later pay the 5% gross income earned (GIE) for ten years.
The proposal to lower the CIT further to 20% for micro, small, and medium enterprises with net taxable income below Php5 million and total assets below Php100 million was agreed to be retained by the Committee.
CREATE is the recalibrated version of the Corporate Income Tax and Incentives Reform Act (CITIRA). This revised act will help the Philippine economy to rise from the impacts of the COVID-19 pandemic and still keep the Philippines highly competitive in the ASEAN at the same time. It also ensures a more relevant response to critically-impacted businesses and forms part of the Bayanihan to Recover as One Act that allocates up to Php165 billion for assistance. -KJS