House ratifies bill seeking to reform corporate income taxes, incentives
MANILA, Philippines — The House of Representatives ratified Wednesday the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which seeks to reform corporate income taxes and incentives in the country.
During its session, the lower chamber ratified the bicameral conference committee report on the disagreeing provisions of House Bill No. 4157 and Senate Bill No. 1357 or the two chambers’ respective versions of CREATE Act.
Under the measure, corporate income tax is lowered from 30 percent to 25 percent for large corporations, and from 30 percent to 20 for small and medium corporations (with net taxable income below P5 million and total assets below P100 million).
The measure likewise lowers taxes for small businesses exempt from VAT, with small businesses only paying one percent of gross sales instead of three percent from July 1, 2021 to June 30, 2023.
CREATE Act also lowers the minimum corporate income tax, typically charged against manufacturing corporations, from two percent to one percent from July 1, 2021 to June 30, 2023.
In terms of Covid-19-related provisions, the measure provides for VAT and duty-free importation of COVID-19 vaccines as well as VAT-free importation and sale of Covid-19 medicines and personal protective equipment up to December 2023.
Further, VAT exemption is also given for medicines for cancer, mental illness, tuberculosis, and kidney diseases.
Albay Rep. Joey Salceda, one of the principal authors of the measure in the House, said other features of the measure are as follows:
- Incentives for domestic enterprises
- Lower taxes on non-profit hospitals and educational institutions
- More incentives for relocations outside the National Capital Region
- More incentives for locating in disaster/conflict area
- Faster VAT refunds, no bottlenecks in cash flows
- Better taxpayer experience with creditable withholding tax
- Fair tax treatment for petroleum refiners
The Senate still needs to ratify the measure before it can be transmitted to the Office of the President for his action.
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