CREATE Law Infographic

CREATE
LAW
RA NO. 11534
CORPORATE
RECOVERY AND
TAX INCENTIVES
FOR ENTERPRISES
www.accountaholicsph.com
DOMESTIC
CORPORATIONS
Before
30%
CREATE Law
Regular
Corporate Starting July 1, 2020*
Income • 25% or
Tax (RCIT) • 20%, subject to below conditions:
- Net Taxable Income of not

more than P5M; and
- Total asets of not more than
P100M (excluding land on
which the business entity’s
office, plant and equipment
are situated)
*Note: Taxable income deemed earned

equally for each month of the year
DOMESTIC
CORPORATIONS
2%
Before
2%
Minimum
Corporate
Income CREATE Law
Tax (MCIT)
1%
July 01, 2020 to June 30, 2023
DOMESTIC Before
CORPORATIONS
• Additional deduction for labor
training expense:
- None
• Non-deductibleinterest expense:
- 33% of interest income

subjected to final tax
CREATE Law
Deductions • Additional 50% deduction for

from Gross labor training expense, subject
Income to below conditions:
- not to exceed 10% of direct

labor wage;
- covered by apprenticeship
agreement; and
- supported by DepEd, TESDA
or CHED certification
• Non-deductible interest expense:

DOMESTIC
CORPORATIONS
2%
Before
10%
Improperly
Accumulated
Earnings
Tax (IAET) CREATE Law
Repealed
July 01, 2020 to June 30, 2023
DOMESTIC
CORPORATIONS
2%
Before
10%
of net taxable income
Proprietary
Educational
Institutions
and CREATE Law
Hospitals
1%
July 01, 2020 to June 30, 2023
DOMESTIC
CORPORATIONS
Before
• Dividends from NRFC
- 30% RCIT
Intercorporate CREATE Law

Dividends
• Dividends from NRFC - exempt
from income tax subject to below
conditions:
- reinvestment in the
domestic corporation
- 20% or more ownership; and
- 2 years or more holding
period
RESIDENT FOREIGN
CORPORATIONS
Before
30%
Regular
Corporate
Income CREATE Law
Tax (RCIT) Starting July 1, 2020*
25%
*Note: Taxable income
deemed earned equally for each
month of the year
RESIDENT FOREIGN
CORPORATIONS
2%
Before
2%
Minimum
Corporate
Income CREATE Law
Tax (MCIT)
1%
July 01, 2020 to June 30, 2023
RESIDENT FOREIGN Before
CORPORATIONS
• Additional deduction for labor
training expense:
- None
• Non-deductibleinterest expense:

CREATE Law
Deductions • Additional 50% deduction for

from Gross labor training expense, subject
Income to below conditions:
- not to exceed 10% of direct

labor wage;
- covered by apprenticeship
agreement; and
- supported by DepEd, TESDA
or CHED certification
• Non-deductible interest expense:

RESIDENT FOREIGN
CORPORATIONS
2%
Before
10%
ROHQs
CREATE Law
10%
of net taxable income - 2021
25%
starting January 2022
RESIDENT FOREIGN
CORPORATIONS
2%
Before
• 10% of gross interest income

from residents;
• exempt for income from
OBUs non-residents;
• exempt from other taxes
CREATE Law
Subject to RCIT and other taxes
RESIDENT FOREIGN
CORPORATIONS
Before
7.5%
interest on FCDU deposits
5% / 10%
CGT on unlisted shares
Final Tax
on Pasive
Income
CREATE Law
15%
interest on FCDU deposits
15%
NON-RESIDENT FOREIGN
CORPORATIONS
Before
30%
on gross income
Regular
Corporate
Income CREATE Law
Tax (RCIT)
Starting January 1, 2021
25%
on gross income
CORPORATIONS
Before
5% / 10%
Final Tax
on Pasive
Income CREATE Law
15%
CORPORATIONS
Before
• Required tax credit in the domicile
country:
- 15%
Intercorporate
Dividends
CREATE Law
• Required tax credit in the domicile

country:
- 10% starting July 1, 2020
VALUE ADDED TAX
Before
• Exempt provided it appears at

regular intervals
Sale,
importation, CREATE Law
printing or
• Requirement to appear at regular
publication intervals is removed
of books, any
• Digital or electronic format
newspaper, included in the exemption
magazine • Journal, or any educational
reading material covered by the
UNESCO agreement included in
the exemption
VALUE ADDED TAX
Sale or importation Before

of capital equipment,
its spare parts and 12%
raw materials, Value Added Tax
necessary to
produce PPEs and
drugs, including CREATE Law
those for use in
clinical trials, drugs,
vaccines and VAT Exempt
January 1, 2021 to December 31, 2023
medical devices for
the treatment of
COVID-19
VALUE ADDED TAX
Before
Sale or
importation of VAT Exempt
prescription January 1, 2023
drugs and
medicines for
cancer, mental CREATE Law
illness,
tuberculosis, VAT Exempt
and kidney January 1, 2021
diseases
PERCENTAGE TAX
2%
Before
3%
Persons
Exempt
from VAT
CREATE Law
1%
July 01, 2020 to June 30, 2023

CREATE Law Infographic

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CREATE

- Net Taxable Income of not

*Note: Taxable income deemed earned

- 33% of interest income

Deductions • Additional 50% deduction for

- not to exceed 10% of direct

• Non-deductible interest expense:

- 20% of interest income

Intercorporate CREATE Law

- 33% of interest income

Deductions • Additional 50% deduction for

- not to exceed 10% of direct

• Non-deductible interest expense:

- 20% of interest income

• 10% of gross interest income

• exempt for income from

• exempt from other taxes

Subject to RCIT and other taxes

• Required tax credit in the domicile

- 10% starting July 1, 2020

• Exempt provided it appears at

Sale or importation Before

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