TITLE XIII of the Tax Cod_e under CREATE Act

. Prior to the amendment of the Tax Code under CREATE Act Tax Incentives
· "'!ere grant~? t~ registered business enterprises by different gover~ment agencies ·
like .the. Phthppme Economic Zone Authority (PEZA), Board of Investments (BOI)
under ~tfferent sets of special laws such as the Special Economic Zone Act or PEZA
law and EO 226 or the Omnibus Investment Act.

Th~ CREATE law introduced a new title in the Tax Code, Title XIII entitled Tax
Incentives. This new title will consolidate and simplify the different tax incentives
granted by various Investment Promotion Agencies (IPA) like the BOI and PEZA.

The Secretary of Finance and S~cretary of Trade and Industry after

. consultations with the Commissioner of Internal Revenue, the Board of Investments
and other Pr.omofion Agencies, issued the Implementing Rules and Regulations
(IRR) for Title XII_I of the Tax Cod~, as amended.

SCOPE' AND COVERAG,E (Section 29.1) . · . .

, The Im lementing Rules- and Regulations (IRR) of Title XIII of the Tax
P vides that the IRR shall cover or apply to:
. Code, as ~m_end~d pro nt remotion agencies (IPAs) as defi ned in the Act or
1. All existing in~estme eit to the administration and grant of tax incentives
related laws w,t_h resp 'f
II exempted from the covera ge thereof; .
unless othe~1se spec, ,~act~ or activities including qualified expa~s1on
2. All newly reg~s!~red proJeo rt enterp.rises and domestic market enterprises,
projects 'O r act1v1t1~s of exfm ent Pri ority Plan (S IPP); .
under the Strateg 1~ lnves . t or activities currently registered with IPAs
3. Registe red enterpn~es, prf ~f
1 5the effectivity of the Act;
0
and· enjoying incen~1ve~ ~r o dm inistering tax incentives with respect to_ he
4. Other gove~nment agenc1~; t:x incentives and other registered enterpn
administration and grant
availing of tax .incen t·,ve s·' and

577
 5. Government-owned • and/or .cont.rolled corporations (GOCCs),
.g ov~rnment instrumentalities (Gls), government commissa_ri.~s, and sta~e
universities and colleges (SUCs.) that were granted t~x ~ubs1d1es under the
tax expe.nditure fund ·of the Annual General Appropnat1ons Act.

Section 291 of the Tax Code, as amended provides that the IPAs shall
maintain their fun~tions and powers as provided under th~ special laws_governing
them except tQ the extent modified by the provisions of this Code: notwithstanding
the provisions of this Section, the Department of Finance, the Bur~au of Internal
Revenue, anp the· Bureau of Customs shall retain their respective mandates,
powers and functions as provided for under the Ta_x Code and related laws.

INVESTMENT PROMOTION AGENCIES (IPAs)

[Section 293(h) of the Tax Code, as amended]

• IPAs refer to government entities ~reated by Jaw, executive_order, decree or other issuance,·;n charge
of promoting investments, granting and administering tax and n9n-tax incentives, and overseeing the
operations of the different economic zones and Freeport in accordance with the/r respective special
laws. These include the Board of Investments (BO~, Regional Boar9 of Investments Autonomous
· Region in Muslim Mindanao (RBOI-ARMMJ, ·Philippine Economic Zone Authority (PEZA), Bases
Conversion and Development Authority (BCOA), Subic Bay Metropolitan Authority (SBMA), Clark
Development Corporation (CDC), John Hay Managem_ ent Corporation (JHMC), Poro Point
Management ·Corporation (PPMCJ, Cagayan Economic Zone Authority (CEZA), Zamboanga City
Special Economic Zone Authority (ZCSEZA), Phividec Industrial Authority (PIA), Aurora Pacific
Economic Zone and Freeport Authority (APECO;, Authority of the Freeport Area of Bataan (AFA.O,,
Tourism Infrastructure and Enterprise Zone Authority ( TIEZA), and ALL OTHER SIMILAR EXISTING
AUTHORITIES or that may be created by la.w unless otherwi~e specifically exempted from the
coverage of this Code.

EXTENT OF AUTHORITY TO GRANT .TAX INCENTIVES (Secti_ on 292)

The Fiscal Incentives Review Board (FIRB) or the· IPA under a delegated
_authority from the FIRB, shall grant the appropriate tax incentives provided in this
title to be granted to registered business enterprises only to the extent of their
.approved registered project or-activity under the strategic investment priority plan
'· (SIPP).

REGISTERED BUSINESS ENTERPRISE ( RBE)

[Section 293(m) of.the Tax Code, as amended]

■ Refers to any individu~I, partnership, corporation, Philippine branch of a foreign

corporation, or other entity organized and existing under Philippine laws and registered
with an investment promotion agency excluding service enterpris~s such as those
engaged in customs broke_rage, trucking or forwarding services, janitorial services, security
services, insurance, bankirg, and other financial s.ervices, consumers' cooperatives, credit .
unions, consultan_ cy services, retail enterprises, restaurants, or such other similar seNioes, .
or
as may be determined by the FIRB, irrespective of location, whether inside outside the
zones, duly accredited or licensed by any of the investment promotion agencies and whose_
income delivered within the economic zones shall be subject to taxes under the national
internal revenue code of 1997, as amended.

578
 . Subject to the co . . .
respectively
· ' the foll owing
. nd1t1ons
t and Penod
. of ·
proJects or activities or Re ·. ypes of tax incent·ava1lment in Sections 295 a d 29
g1stered B . ives may be r n 6,
1. INCOME TAX . . us,ness E:nterprises (Rs1:ted to registered
. HOLIDAY (1TH) . .

. Income Tax Ho. .

of the Tax Code a hday (1TH) is tax incerifve .
cessation from . ih ' s amended by CREA°fE provide? under this new Title
~ ?'
Business Enterprise ~~e. It ts one of the fiscal inCf te
for certain perio~ ~:1:'ment. in com~ tax levie/it which .basically means
na!tonal government
The IRR for Title XI~ f BEs) that complies with the ~:t:?1ven to .Registered
that the Income T . o t~e Tax Code as amended b n 'tons required by law.
from a registered p~~ieHcothday (!~H) shall be limited t~ fh~~nAcToE law provides
. , or act1v1ty. me generated

PERIOD OF AVAILMENT .
The period of availment f
. amended are for both Export E
s~all. ?e
.
t .
1"1:H under Tit.le XIII of the Tax Code as
for four (4) to seven ; erpnses and ~omestic Market ET)terprises
pnont,es. The 1TH will be foll~je~ets ?epending. on location and indllstry
(SCIT) or Enhanced Deduction (ED) y e1the~ Special Corporate Income Tax
· - summarized as follows: .

INCENTI' 'E · Domestic Market

v, Ex ort Enter, rises Enter rises
1TH . 4 to 7 years . 4 to 7 years
SCIT 10 years** NA
ED
..E , . 10 ears** 5 ears .
xport ~nterpnses may, at their option, avail of the Enhanced Deductions or the
SCIT but m no case- shall both be granted simultaneously.

Subject to conditions; projects or activitie~ of RBEs located in ~reas

rec~~ering fro.m armed conflict or a major diSaster shall be entitled to two (2)
add1t1onal years of 1TH. The Tax C~de further also provides that an additional
three (3) years of 1TH shall be ·granted to a project ~r activity relocating from
the National Capital Region (NCR).
I
INVESTMENTS PRIOR TO EFFECTIVITY OF CREATE ACT
Registered business enterprises whose projects or activities were granted
only an 1TH. prior 16 the effectivity of this Act s~all be allowed to continue with
the 8vailment thereof for the remaining period of the 1TH as specified in the
terms and conditions of their registration: Provided, that for those that have
· been g(anted the 1TH but have not yet availed of the .incentiv~ upo.n the
effectivity of this Act, they r_naY ~se t~e 1TH for the penod specified m th
terms and conditions of their reg1stratton,

579
2. SPECIAL CORPORATE INCOME TAX (SCIT) rate for EXPORT
ENTERPRISE

After expiration of Income Tax Holiday, an Export Enterprise may avail

a tax rate equivalent to five percent (5%) effective July 1, 2020, ~a~ed on the
gross income earned IN LIEU of all national and local taxes. This 1s available
only after 1TH period.' Export enterprises may, at their option, avail of the
Enhanced Deductions or the SCIT but in no case shall both be granted
simultaneously.

The option to avail of either sciT -or Enhanced Deductions after 1TH
period shall be exercised by the RBE at the time of application for registration
of the project. Such option shall be.irrevocable for the entire d~ration of
entitlement to such incentives (IRR).

GROSS INCOME EARNED refers to grqss ~ales or gross revenues

. derived from the registered project or activity, net of sales discounts, sales
returns and allowances and m_ inus cost of sales or direct cost but before any
deduction is made-for administrative expenses or if1Cidental losses during a
given tax.able period.

FORMULA:
Gross Sales or Gross Revenues Pxxx
(From registered projects or activities only)
LESS:
Sales discounts
Sales returns and allowances (xxx)
Net Sales or Net Revenues Pxxx
LESS: Cost of Sales or Direct cost
Gross Income Earned
x SCIT rate 5%
Special Corporate Income Tax (SCIT) Pxxx

The IRR for Title XIII of the Tax Code as amended by CREATE Act
provides that the 5% Spe~_ial Corporate Income Tax (SCIT) in lieu of all national
and local taxes shall not include fees and ·charges as defined under Section
131(1) and (g) of the· Local Government Code of 1991. Existing rule on th
allocation of the 5% SCIT shall be observed.

F?r export enterprises governed by special laws which do n t provi

for allocat,on, the 5% SCIT based on the gross incom h II p id -nd
remitted as follows:
• Three· perc nt (3% ) to the Nation I Gov rnm nt· n
• Two pe_rcent (2%) which s~ II b dir ctly remitt ' by a re istered
enterprise to the Tr sur r office of the municip lity or city _ here
the enterprise is loca ted.

580
 Cl\f,A TE Lam-
. ~or purposes of
IRR provides that only th computing the S'¾ SC
. e following shall b~ co~:i~::ed on ~ross income, the
a. · Direct sala . . . · ed as direct costs:
b P nes ·wag
. roduction superv· ~s, or labor expenses
c. Raw material 1s1?n salaries .
d G d . s used in the
. _o? s in process ~anufacture of products
e. Finished goods . .
f. Supplies and fuels .. . . . . . .. .
g. Depreciation of . use? in production .
h activity properties related in the rendition of the registered
. . Rent and l:Jtility char es as . .
. a~d exclusively in th2 re d.;oc1ated with properties used directly
1. Financing char n 110~ of registered activity
fixed asset~ usi:~•ir;~! P,re~iously ~apit~lized, associated with
j. Service superv·is,·on . Y.~n exclusively in the registered activity
k . sa 1anes ·
. Direct materials and supplies used .

A qualified .expansion· or I ·r . · ·
under this Act (CREATE Law) e~~re Y new project ~r activity registered
incentives · d ·t · · . Y qualify · to avail of a new set of
· of this an I s pe~iod of ava!lment grante~ under Sections 294 and 296
S .Act, respectively, subject to the qualifications· set forth in the
~rateg1c lnv~stment ~riority Plan (SIPP) and performance review by the
Fiscal Incentives Review Board.

STRATEGIC INVESTMENT PRIORITY PLAN (SIPP)

• SIPP refers to the plan.prepared by the BO/, in coordination with the FIRB /PAs
and OGAs administerin{J tax incentives, and the private sector, which i;
approved by the President, and contains the priority projects or activities,
scope and coverage of ·location and industry tiers, recommendations for
non-fiscal suppprt and corresponding specific activities wherein
investments are to be encouraged, and other in(ormation, am:1fyses data,1

guidelines, or criteria ,as the BO/ may deem appropriate.

Existing registered projects or a~tivities ~ RIO~ to the effectivity of

this Act may qualify to register and a~a1I of.the 1~cent1ves granted under
this Act for the prescribed period, s~b!ect to the cntena and cond1t1ons set
forth in the Strategic Investment Pnonty Plan. . ,

P ROJ EC TS QR ACTIVITIES GRANTED 1TH AND ARE ENTITLED TO

THE % TAX ON GROSS INCOME ·
5
. . bu sin ess enterprises whose projects or activities
Reg1steret . to the effectivity of this Act and that are entitled
were gr~nted an IT ~no~ x on gross income earned incentive after the
to the five percent (S 1/o~ ~TH for the period specified in the terms and
1TH be allowed t~ use ~ .e f and the reafter, avai l of the five percent
conditions of their regi 5 l ra ,on , ·

581
 (5%) tax ori gross income earned incentive, subject to the 10-year limit
for both incentives under CREA TE Act. I

REGISTERED BUSINESS ENTERPRISES AVAILING OF THE FIVE

PERCENT (5%) TAX PRIOR TO CREATE ACT . .
• Part IV, Rule 18, Section 3 of the IRR pr~v,des that Registered
business enterprises currently availing of the fjve_ p_ercent (5%) tax on
gross inco·me earned granted prior to the ~ffect1v1ty of CREATE _Act
shall be allowed to continue availing the said tax incentive at the rate
of five percent (5%) for ten (10) yeqrs. ·

TAXATION OF NON-REGISTED PROJECT OR ACTIVITY

Sales, receipts and other income derived from non-registered
project or activity shall be subject to appropriate taxes imposed _under the
Tax -Code, as amended.

3. ENHANCED DEDUCTIONS (ED)

Registered busin.ess enterprises may be granted enhanced

deductions in addition to the allo\Yable ordinary and necessary
deductions under Section 34 of the Tax Co.de, as amended.

THE FOLLOWING MAY BE ALLOWED AS DEDUCTIONS:

a. Depreciation allowance of the assets acquired for the entity's production of
goods and services (qualified capital expenditure) additional ten percent (10%)
for buildings; and additional twenty percent (20%) for machineries ano
equipment; · ·
. b. Fifty percent (50%) additional de.duction on the labor expense incurred in.the
taxable year.
c. One hundred percent ( 100%) additicnar deduction on research and
development expense incurred in the taxable y'ear;
d. · One hundred percent (100%) additional deduction on training expense
incurred_in the tax_
able year;
e. Fifty percent _(50%) additional deduction on domestic input expense _incurred
in the taxable year;
f. Fifty percent (50%) additional deduction on power expense incurred in the
taxable year;
g. Deduction for reinvestment allowanc~ to manufacturing industry - when a
manufacturing registered business enterprise reinvests its undistributed profit
·or surplus in any of the projects or activities listed in the strategic investment
priority plan, the amount reinvested .to a maximum of fifty percent (50%) shall
be allowed as a deduction from its taxable income within a period of five (5)
years from the time of such reinvestment; and ·
·h. Enhanced net operati,:ig loss carry-over (NOLCO). -. the .net operating loss of
the registered project or activity during the first three (3) years from the s~art
of commercial operation which had not been previously offset as deduction
from gross income may be carrie_ d=koiver as deduction from gross income
within the next five .(5) consecutive taxable years immediately foflowing th8
year of such loss.

582
 7 1
.
The option
«t IU:otl:i»es
to · .
c~An
·
LtUeF
after 1TH peri d avail of either SCIT · · .
applicaUon f o sh~II be exercised by ~ EnRhanced De~uctions
b · or registration f e BE at the time of
e irr~vocable for the entire dur or the . p~oject. Such option shall
. -, .. . . a ion of ~nt1tlement to such incentives
.PE~OE> OFAVAi'LMENT . . . .
Export Ent · ·
• Dome . erpnses -10 years .
. st1c Market Enterprises -5 ye·ars
PERIOD OF AVAILMENT
AND INDUSTRY PRIORIT~ INCENTIVES BASED ON LOCATION

The location of the re • t . . . ·

according to the level f d gis ered proJect or actIvIty shall be prioritized
. . 0 evelopment as follows: .
1. National. capital region; .
2 0
· Met~t Polit~n areas or areas contiguous and adjacent to the national
capI a I regIoi:,; and . .
3. All _other areas. The metropolitan areas shall be determined by the
national economic 9evelopment authority. · ·

The strategic . in_ve_s tment priority plan shall define the coverage of the
,TIERS-and provide the conditions for qualifying the activities:

Tier /"shall include activities that (1) have high potential for job creation; (2)
take place in sectors with market fqilures resulting in under provision ·of
basic goods and services; (3) generate value creation through innovation,
upgrading or moving up the value chain; (4) provide essential s_ upport
for sectors that are critical to industrial development; or (5) are emerging
~ • owing to potential comparative advantage. ·

· Tier II shall include activities that produce supplies, parts and components,
. ·a nd fntermediate services that are not locally produced but are critical to
industrial development and i.mport-substi_t~ting activities, i~cluding crud~
oil refining.
. '

Tier Ill activities shall' include (1) research _and develop~e_nt re~ulting in
demonstrably s·i gnificant · value-added, higher pro~uGt1v1ty_, . .,~proved
ffi · breakthroughs in science and health, and high paying Jobs; (2)
e u~ient~y' f new -knowledge and intellectual property ·registered and/or
genera I0n o · - t· f t t · d t· 1
r d · the Philippines, (3) commercIa 1I2a I0n o pa en s, m . us ria
ice~se in . hts and utility models -owned or co-owned by a registered .
des~gnS, c;;opyn~. e· (4 ) highly technical manufacturing; or (5) are critical
bus_mess enterpns . ' ~ mation of the economy and require substantial
to the structural trans,or .
, . catchup efforts.
.. . .. t of incentives based on the combination of _b~th'
· The penod of ~va_il_men d termined in the strategic investment priority
location and industry pnontIes, as e _
Plan, shall be as follows:

• I
583
 FOR EXPORTER$
Location/Industry tiers
National capital region
Metropolitan areas or areas
contiguous and adjacent to
the national capital region
All other areas
Tier II Tier Ill
Tier I
5 ITH+ 10 ED/SCIT 6 ITH + 10 ED/SOT
4 ITH + 10 ED/SCIT
7 ITH + 10 ED/SOT
5 ITH. + 10 ED/SCIT 6 ITH + 10 ED/SCIT
6 ITH + 10 ED/SCIT 7 ITH + 10 EDLSCIT 7 ITH + 10 ED/SCIT

FOR DOMESTIC MARKET ACTIVITIES·

Tier II Tier III
Location/Industry tiers Tier I
National capital region 4 ITH+ 5 ED 5 ITH+ 5 ED 6·ITH + 5 ED
Metropolitan areas or areas
contiguous and adjacent to 5 ITH+ 5 ED 6 ITH+ 5 ED 7 ITH+ 5 ED
the national capital region
All other areas 6 ITH+ 5 ED 7 ITH+ 5 ED 7 ITH+ 5 ED

PROJECTS OR ACTIVITIES LOCATED IN AREAS RECOVERlt:.JG FROM

ARMED CONFLICT OR A MAJOR DISASTER

In addition t.~ the incentives provided in the preceding Section, projects

or activities of registered business enterprises lpcated in areas recovering from
armed conflict or a major disaster shall be entitled to two (2) additional years of
·ITH, subject to the following:
a) Declaration of the President or his/her authorized representatives of the
existence of an armed conflict or a major disaster, including pandemic,
epidemic, super typhoon, or other analOQOUS circumstances; OJ
b) · The issuance ·of a presidential directive for the implementation of recovery
.programs of the affected area or areas.

PROJECTS OR ACTIVITIES RELOCATING FROM .THE NATIONAL CAPITAL

REGION.

A project' or activity registered prior to the effe~tivity of the Act or registered

under this Act that will completely relocate from NCR during the period of their
incentives, shall be entitled to three (3) additional years of 1TH to commence at
the completion of the relqcation of operations:
\

1 ·. A. For an existing project or .activity r,egistered under this Act, the additional
three (3) years of 1TH shall commence ~fter the expiration of the period
of .incentives granted under the Certificate of Registration issued to the
RBE.

B. For an existing project or activity under the transition period of this Act, the
additional three (3) years of 1TH shall commence after ttie expiration of the
transition period provided under the Tax Cod~, as amended by CREATE
·Act;

584
 The concerned IPA sh
r«t lllCcltiU)e5
.
- CT<.__EAn Lue-
its entitlement to the additional~ ISSr
11
a CETI to the concerned RBE as Proof of
Tax lncentiv~s (CET!) refers to;~: d3) Years o~ 1TH. Certificate of Entitlement to
form prescribed by the FIRB - u ocume~t ,~sued by the concerned IPA in a
entitlement for incentives. ' Pon apphcatron by the RBE, as proof of

Complete relocation shall _ .

th
outside of NCR including th t mean e total physical relocation of the facilities
roJ· ect or activity to the - e ransfer of t~e full operations of the registered
P new area of operation.

c
Proje_cts or. Activities registered PRiOR to the effectivity of REATE Act,
or under the incentive system provided herein that shall in the duration of their
incentives, co"!l_Pletely relocate from the national capital r~gion, shall be entitled to
three . 3 add1tJona/ ears of income tax holida , provided, that ttie additional
incentive shall commence at, the completion Of the relocation of operations. The
industry and locational prioritization specified herein shall be subject to review and
revision every three (3) years. in accordan~e with the strategic investment priority
plan, subject to the standards in section 300 hereof or in exception~! ?ircumstances
to attract substantial investment to respond to a situation or _crisis or to target
specific industries. .

4. CUSTOMS DUTY EXEMPTION

The importation of capital equipment, (q_w materials, spare parts,.;nj

. ma de by RBEs shall be exempt
accessories . .from
. custom · prov, e ,
· duties,
that the following conditions are complied with. . .

. . . elusive Use. The duty exemption shall only

A. The importation D1rt~ct a~~aEp~al equipment raw materials, spare parts,
apply to the impo~a ,on o d exclusively us~d in the registered project
or accessories directly an .
or activity by RBEs. .

. ent raw ma tena . Is , spare parts, or Eaccessories:

B The capital equ,pm ' abl needed by the RB ;
. . 1) are directly and re~sonl . Yand as· part of the direct cost of the
· d exclusive Y in
2) will be use . tivit of the RBE; and . .
registered proJect or ac mlnufactured domestically in suffi~1ent
. 3) are not produced or ble quality and at reasonable pnce~.
antity or of, compar~ ne ear from the issuanc~ of th_,s
_q~ - ·ded Thal for a period of o ~ II be used to satisfy this
Pr~v, th~ CAI/admission entry.~ ~he oTIwith copies of the
IR , - . The IPA shall furn1s da of the month. After
cond1t1on. I/admission entry ever~ 5t~he l~As shall secur~ from
issued CA_ f the o-ne year period, ·1 b'lity in cilmphance
the expiration o . t .· of Non-Local Ava, a ,
the Cert1fica e . .
the OT'· .·
with this cond1t1on.

585
 • T he approva l of th e IPA through the
C. P nor approva 1. . RBE ·
CAI/ad mission entry mu st be obta ined by th e pnor to the
importation of th e goods,

o. Sale, Transfer, or Dispos ition. Within the first five (5)f YtA
h
,._, ars from date
of im portation , th e RBE Sh all secure the approva 1 o . e co~ ce rn ed
IPA before the sale, transfer, or disposition of the ~ap1ta l equ ipme nt,
raw materials, spare parts, or acce ssories _w hich we re granted
custom 's duty exemption heretJn?er. Pr~v,ded T hat the s_ale,
transfer, or di_sposition of the capital -equipment , raw_ m aten~ls,
spare parts, or accessories within {5) years from date of 1mportat1on
shall require the payment of duties based on the net book va l_ u e of
the capital equipment, raw materials, spare pa rts, or accessories.
,.

The sale, transfer, or disposition thereof shall be allow ed onl y under

the following circumstances: ·
a) If made to another enterprise availing custo ms duty
exemption on imported capital equipment, raw materials ,
spare parts, or accessories for its direct and exclusive use;
b) If made to another enterprise -not availing of duty exemption
on imported capital equipment, raw materfals, spare parts ,
or accessories, upon payment of ·any taxes and duties due
on the net book value of the capital equipment, ra w
materials, spare parts, or ·accessories to be sold; ·
, c) Exportation of capital equipment, raw materials , spare.
parts, acc·essories, source documents , or those required for
pollution abatement and control;
d) Proven technical obsolescence of the capita l equipment,
raw materials, spareparts- or accessories ; or
~) If donated to the Technical Education an d Ski lls
Development Authority (TESDA), sues , or the Department of
Education (DepEd) and Commission on Higher Education
(CHED)-accredited schools; provided, that the donation shall
be exempt from import duties and ta xes, including don or's
tax. After five (5) years from date of importation , the RBE shall
notify the concerned •IPA prior to the sal e transfer or
disposition of the capital equipment, raw m~terlals , spare
parts, or accessories. ·

E. Solidary _Liabil_ ity. If the RBE sells, tra nsfers, or disposes th ·

aforementioned imported items without prior approval of the cone rned
IPA, t~e _RBE and the vendee , transferee , or assigne shall b -
sollda nty !table to pay !wice the amount of the duty empti n th t
should ha~e been paid during its importation , without pr j udlce to
any penalties or sanctions the concern ed I A m y lmpos .

F • Utilization in Non-Register d Project or Ao'tivity . In th ev nt

th at the aforementioned import d items will b used for non~
reg istered project or activity of th e RBE at any tim within the first five
(5) years from date of importation , the RBE sha ll secure prio r . pprov t

586
 7~ JllC ,td-Ules __: C'RE, . - .
of the concerned IP
duties o·n im .A and pay the
, ~An L,:{,/ff
portat,on thereof amount corresponding to th
. . e exempt
For part-time ut·i· . · ·
IIzat1on in
amount correspo d' a non-registered . .
equipment, raw n mg. to the duties exem iroJect or activity, the
proportion to its U~~te;~als, spare parts or a~ces~~r" a ?ecific capital
report on the iza ion for the non-~e ist . t~s s all be paid in
th~. sgecific ca~:~~nqtuicporresponding.to t~e
utilized in a ment, raw materi I
e;ii:~~J~~~ ~x/ct\vity. A
mp 10n on
BIR non-registered. project or a / ~t' sp~re parts, or accessories
. c 1v1 y shall ~e submitted to the

Certificate of Authority t 0 1 .
mport (CAI) Admission Entry
. The .Certificate of Authorit tO
issued by the concerned IPA . Y _Import (CAI) or Admission Entry shall be
in a prescribed form.

Validity of CAifAdmission E~try

The CAI cir Admission Ent · ·

of one (1) year from the d t ~ itshn~n-transferable and shall be valid for a period
aeo e issuance, unles~ invalidated or revoked.

l_n the event that.the CAI rema~~ed unuJilized during its validity period, the
applicant sha~I ~urrender the Cert1f1cate to the concerned IPA within fft 1
(15) days from ,ts expiration. · een
,'

5, VALUE-ADDED TAX EXEMPTION

The VAT _exemption ·on importation and VAT zero rating on local
purchases shall only apply to goods and services directly and exclusively
used in the reg,istered project or activity of export enterprises, duringthe
period of registration of the s.aid registered project or activity with the
concerned IPA; Provided, T_ hat transactions falling under Section
106(A)(2)(a)(3), (4), and (5) and Section 108(81(1) and (5) other Code, as
amended, shall be subject to the twelve percent (12%) VAT pursuant to
Revenue Regulations -09-2021. Provided, further, that excess input taxes
attributable to . zero-rated sal~s by VAT-registered RBEs, may at the 'RBEs
option, be refunded or applie.d for a tax credi~, subject to the guidelines provided
under Revenue Reg½flations N,o. _ 1 3-2018, as amended. _

The direct and exclusive use in the registered project or activity refers
to raw materials, inventories, supplies, ~quipment,. goods, s~~vice~ and
other expenditures necessary for .t~e reg1stetrebd proJ~~dt ortactiv,ty without
which the registered project or act1v1ty c~nno e came ou . .
VAT f ~ on importation .ahd VAT zero-rating on local purc~ases
· exem,p It0 oods and services directly and exclusively used ,n the
shall only app y o g . . . .
registered project or acti\Jity ·

587
 . . attributable to zero-rated sales by VAT-registered
_Excess mp_ut taxEest rises (RBEs), may at their option, be refunded or
Registered Business n erp ,
applied for a tax credit.

6. OTHER INCENTIVES ON IMPORTATION OF COVID-19 VACCINES.

The· impo.rtation of COVID-19 vaccine~ by RBEs shall be' exe~pt from

import duties, taxes and other fees, subJect to th e approval or licenses
issued by the Department of Health (DOH) or the Food and Drug
Administration (FDA).
. .
For the tax incentives provided herein to apply, th~ COVID-19 vaccines
must not be intended for resale or other commercial use and shall be
distributed without any consideration from persons. to be va~cinated. RB.Es
availing duty and tax exemption must declare that the vaccines shall be for
the sole and exclusive use of such entities.

7. OTHER INCENTIVES ON IMPORTATION OF PETROLEUM PRODUCTS.

Persons who directlyimport petroleum products defined under Republic

Act No. 8479, otherwise · known as the Downstream Oil Industry
Deregulation Act of 1998, for resale in the Philippine Customs Territory
_and/or in free zones as defined under Republic Act No. 10863, otherwise
known as the Customs Modernization and Tariff Act (CMTA), shall not be
entitled to the foregoing tax and duty incentives, and shall be subject to
appropriate taxes imposed under the Tax Code, as amended. .

'Petroleum products' refers to products formed in the course of refining

crude petroleum through distillation, cracking, solvent refining and chemical
treatment coming out as. primarystocks from the refinery such as, but' not
limited to: LPG, naphtha, gasolines, solvE?nt, kerosenes, aviation fuels, diesel
oils, fuel oils, waxes and petrolatums, asphalt, bitumens, coke and refinery
sludges, or such refinery petroleum fractions which have not undergone
any process or treatment as to produce separate chemically-defined
compounds in a pure or commercially pure state and to which various
substances may have be·en· added to render them suitable for particular
uses: Provided, That the resultant product contains not less than fifty
percent (50%) by weight of such petroleum products.
I .

Notwithstanding any law to the contrary, the importation of petroleum

prod_ucts by a~y person,.including RBEs, shall be subject to the payment of
applicable duties. and taxes as provided under the CMTA and this Code,
1

respectively, upon importation i_nto the Philippine customs territory and/ or into ·
free zones as defined under the CMTA.

Provided, That within the period provided in the Code or CMTA, as th e

case may ~e, the importer can file claims for the refund of duties and taxes .
under Section 900 o~ the CMTA, and Sections 106 (A)(2), 109(u) and 112
of th e Code, respectively, for direct export of the petroleum products such

588
 Tur, lr /'n.,.L ' .
. . -c 'LAAAUW&f - CR[,A7E L
as sale to intern t· ~
a 10.nal ca rners
tra d -e und.er Secti · or sea vessels .. .
products, a nd/or oti"- 135 of the Code or indirenf aged in international
laws. er tax-exempt sales d ec export of petroleum
un er the CMT A and other special

.Provided, furthe· r Th . . .
b' t · , at the 1
su Jee to t~e _appropriate .rules omporters who. subsequently export fuel,
a refund of duties and taxe f th.e fuel marking program, may apply for
s, as applicable under the CMTA.
Refund claims of VAT an . . . . . _. . . .
filed at the BIR for verification d excise tax_referred to in this Section shall be
nd
be forwarded to the BOC f a evaluation. Once approved, the claim shall
certmcate, as applicable. or cash payment or issuance of a tax credit

In cases where there is payment of duties the provisions on duty

drawback under the CMTA shall apply. · '

Crude oi_l ~hat is intended to be refined at a local refinery, including the /

volumes. that are lost and not converted to petroleum products when the
crude 011 actually undergoes the refining process, shall be exempt from
payment of applicable duties and taxes upon importation:

Provided, that applicable duties and taxes on petroleum products shall be

payable only upon lifting of the petroleum products produced from the
imported crude oil, subject to rules and regulations that may be prescribed
by the Bureau of Customs and the Bureau of internal Revenue, to ensure
that crude oil shall not be lifted from the refinery without payment of
appropriate duties and taxes.

Provided, further, that in case_ of withdrawal of the petroleum pro~ucts

d ced from the imported crude ofl, for introduction into the customs territory,
~~loa u licable duties, taxes and other charges s~all be paid to the ~ureau before
pp f . tody subiect to the prior requirement of authority to release
release ram cus J

imported good~ (ATRIG ).

. . . ess enterprises, whose performance commitment

Registered bu~m - hall maintain their employment levels to the exten
include job genera~ion,
practicable, a nd in_
p - rformance co~m itm
t:~t
5
of reduced employment or when th
~~~job generation is n,ot met, the r.egi t red
b it to their respective IPA and th · FIRS
bu in s ente rprises must su m
th ir J 'lifi tion for the same.

9
TAXATION AFTER .EXPIRATION OF tHE PERIOD OF
AVAILMENT OF TAX INCENTIVES , .
All re istered business enterprises Shall pay all appl!cable taxes ~t the
reguIar ragtes· un der th e c ode and other laws
. . after the expiration of the penod of
in·centives of their registered prqjector act1v1ty.

. • ! •· • · .· · . Domestic Market
· . ..
- -:- . Expcirt Enterprises
' ~
. · Ent~rprises

1TH
(4 to ! ears)
DURING the
Period of
Availment
of Tax SCIT or ED
Incentives
. (10r rs)

AFTER Regular t_
a xes Regular taxes
EXP/RATION of provided under the provided under
Tax Incentives Tax Code, as the Tax Code , as
amende-d amended

TAXA.TION OF NON-REGISTERED PROJECT OR ACTIVl"fY.

Sales receipts and other income derived from non-registered project or

activity shall be subject to appropriate taxes imposed under the Ta x Code , as
amended.

STRATEGIC INVESTMENT PRIORITY PLAN SIPP

(Section 3~0)

The
• Board ·of Investments,
• in coordination with the FIRS I investment
promotion agencies, other government agencies administering tax incentives, and
the private sector, shall formulate the strategic inv_ estment priority plan to be
submitted to the president for approval, which may contain recomrn ndation . for
types ·of non-fiscal support needed to create high-skilled jobs to grow a lo I po I
of enterprises, particularly Micro, Small and Medium Enterprises (MSMEs), that
can supply to domestic and global value chains, to incr a e th sophisU ation of
products and services that are produced and/or sourced dom . tic lly, to expand
domestic supply and reduce deperidenc on Imports, nd to attract slgnffica~t
foreign capital or investment. The strategic inv : stment priority plan shaf.f b valid
for a period of three (3) years, subject to r view and amendmen every three (3)

590
 7«t l llee/itUI C 7.J 7-
years thereafter unless th
its review. ere Would be a sup
es -
.
I ~n LtUer
ervernng event that would necessitate
Strategic Invest
. I d ment Pr·10 ·
f1sca an non-fiscal su nty Plan (SIPP) . .
, a. create high-sk'II pdpo_rt needed to: - shall provide for the types of
18
· Jobst
micro, small and , o grow a local pool of ent . .
domestic .and globmlediurn enterprises (MSME ) f~pnses, particularly
b. increase th . a. value chains· s , at can supply to
d e soph1st1catio f '
:n /ordsourced domestica~I;· products and services that are produced
c. xpan _do~estic sup I a , , / .
d. attract significant forei~~ nd_tredu~e dependence on imports;
e. Promote export dive 'f' c~p1 al or investment· ana
rs1 icat1on and a
( a s th ese are consistent I ,
with th . cce e~ate ?ountryside development
, e tier and locational criteria of the SIPP
~rm~~n ·
. . The 801, in coordinati~n with th F .
incentives, shall formulate and r e IRB, IPAs ~md OGAs.administering tax
President. For this purpose th ecommend the SIPP for the approval of the
above-named agencies, and all e thBOI shall underta~e consultation with the
Thereafter, it shall submit a re o er re_levant ag.enc1es on the propo~ed SIPP.
th
Section 7 of Rule 4 of the IRR. port to e st eenrJg Committee referred to in

Contents
The SIPP shall contain . the following:
a. Priority projects or activities that are eligible or qualified to be
granted incentives.under the Act· l

b. Scope and cov~ra·g e of .location and industry tiers; .

c. Terms and cc;mditions on the grant of enhanced deductions;
d. Qualifications for expansion, or entirely new projects or activities, to
avail of incentives; .
e. Criteria and conditions for existing registered projects or activities prior
to· the effectivity of the Act to register and avail of the incentives under
the Act;
f. Conditions and qualifications for export-enterprises registered prior to
the effectivity of the Act to reapply and avail of SCIT after the expiration
of the transitory period under Section 311 ((;) of the Act;
g. Specific qualification req~irements or co·nditions ~or a particular sector ~r
industry and other limitations as set and determined by the B01 and m
coordination with the FIRB; and_ . 0 •
h. Export pf at least seventy percent (701/o) of products and services.

Criteria for Investment Priority Determination.

.
All sectors, tndustri s, projects or activiti es th -t .may be in~!ud~? in the
SIPP h . .d an evalu,3tion proc ss to determine the su1tab1hty and
. . ~ 11 un erg O - or the sector in promoting long.-term growth and
poten_t,al of the Industry nd the national interest. fn no case shall a sector,
. sta1nable developrn~~t, a . d d in the SIPP un less it is support d b a
rndu try, project or activity b inc1u e

591
f orma I eva Iua t .,on process or report •.Any of the following shall be considered in
the evaluation:
a. Whether the project or activity ,s covebre,. h
.
J
d b
Development Plan or its equivale~t, as pu IS e . Y e at1onaI
th PhT
b ~h N' '~pine

Economic and Development Authority, ~rnd 0th er pnonty government

programs;
b. Whether the project or activity meets any of the following:
i: substantial amount of investments; ·
ii. considerable generation .of employment, especially towards
less developedareas;
iii. considerable amount of net exports;
iv. use of modern, advance, or new A technology or existing
technology but not yet applied in the r-hilippines;
v. processes and innovations, including urban plan~ing and
development methods, that will lead towards the attainment of
the sustainable development goals, shallinclude, but not be
limited to, adoption of adequate environmental protection
systems and sustainability strategies;
vi. address missing links and other gaps in the supply or value
chain or otherwise moving up the value chain or product ladder;
vii. promote mark~t competitiveness or enhances the country's
competitiveness as an investment destination;
viii. enhance the capabilities of Filipino enterprises and professionals
to produce and offer increasingly sophisticated products and
services;
ix. contribute to Philippine food security and increased incomes in
the agriculture a·nd fisheries sector; or
x. promote regional and global operations in the country.

Valid,ity

The SIPP shall be submitted to the President for the approval and shall
be valid for three (3) years from its issuance; Provided, That the 801 shall
formulate and submit a neyv SIPP to the President not later than October 1 of
the third year of its effectivity; Provided further, That all such areas under
Memorandum Order No. 50, Approving the 2020 Investment Priorities Plan ,
signed by the President on 18 November 2020, which took effect on 6
December 2020, and its ~e~~ral Policies and Specific Guidelines to Implement
the 2020 Investment Pnont,es Plan shall be open for application until th e
publication of the SIPP under the Act.

Mandatory Laws

The 'SIPP shall include sectors or industries th at are mandated by

~peci~I . laws to be listed in the Jnvestment Priority Plan and/or gran ted
incentives.

592
steering Committee

The Steering Com ·u · .

d as the Chair mi ee shall b~ composed of the B01 Managing
Hea 'dent and the f:;son, th e authori_zed representatives of the Office of the
s
ih:s~IRB. . , aQd the Chairperson of the Technical Committee of

The Steering Comm·tt1 h . .

- h f S . ee s all review the report referred to in the 2nd
paragrap O ~ction 2 of this Rule and submit its recommendations to the
B01. After receipt of the recommendations of the Steering Committee the
B01 s_hall, upon review, recomme,nd the SIPP to the President for appr~val.

Amendments to the SIPP

. . Subje~t t~ publication requirements and the criteria for investment

pnonty determination, the 801 may, at any time, includ~ -additional areas in
the SIPP, alter any of the terms of the declaration of an investment area, and
temp9rarily suspend projects or activities therein if it considers tha t such project
or activity is no longer a priority within' the effectivity_of the SIPP; Provided, That
any amendment or suspension o'f the SIPP shall not prejudice the availment
of fiscal incentives already granted to RBEs.

The 801 shall review the current SIPP and shall consider recent
developments in the 'i ndustry using the criteria fo r investment · priority
determination and adopt reasonable and justifiable positions of the private
sector af\d other related government agencies.

The functions and powers of the FIRB created under Presidential Decree
No. 776 (Modifying ALL laws, Acts, Orders and Ordinances Granting Subsidies,
Exemptions from Taxes, Duties, Fees, Imposts and Other Charges under certain
exceptions and creating a Fiscal Incentive Board), as amended, were expanded
under ·s ection 297 of the Tax Code, as amended. ·

COMPOSITION OF FIRB (Section 298)

T~e Board shall be composed of the Secretary of Finance as
Chairperson, the Secretary of Trade and lnd~stry as Co-Chairperson, and th ree
(3) m~mbers consisting of: (1) the Executive Secretary of the Office of the
President; (2) the Secretary of Budget and Management; and (3) the NEDA
Director General.

POWERS AND FUNCTIONS OF THE CHAIRPERSON

The Chairperson of the Board shall have the followi~g pow~rs ~nd functions: .
a. Provide leadership and ensure the effective functioning _of the Board,
b. Call meetings, approve and set the agendarbladnd pdres1de over ~oa~i
meetings where all Board members are .ena e an encourage .

593
 . . . t • all discussions and resolutions on matters taken
actively part,c,pa e m
up by the Board; d r r f th fl
Exercise control over quality, quantity, an . ,mecmess ·tot e ow of
c. .mf orma t·,on among the secretariat , Technical omm1 ee, and the
Board·
. '. . . ·th guidelines on good governance·
d. Assist m ensuring compliance w1 . . ,
e. Ensure that the Board makes an informed decision through a sound
process that incorporates relevant facts and data; and
f. Exercise such other powers and duties as may be vested by the Board
pursuant to its functions and mandate.
'
In the absence 9f the Chairperson, the Chai~person ma~ delegate in ~riling
to the Co-Chair the· exercise of the· powers and duties vested_ in the
Chairperson, subject to such limitations and restrictions as the Chairperson
may impose.

Authority of the FIRB to Grant Tax Incentives

• The power to grant tax incentives is a function of the FIRB. Where the
investment capital is equal to one billion pesos (P1 ,000,000,000.00) or below,
the FIRB shall delegate the power to grant tax incentives to the concerned ·IPA.

The FIRS, upon the recommendation of the concerned IPA, shall

approve or disapprove the grant of tax incentlves to registered projects or
activities with investment capital of more than one billion pesos
(P1 ,000,000,000.00).

Splitting of the total amount of investment capital by breaking up the

projects or activities into smaller projects or activities, for the purpose of
evading or circumventing the jurisdiction of the FIRS to approve , shall riot be
allowed. A finding that splitting of investment capital occurred authorizes the
·FIRB to tr~at _the s~parate application as a single project or activity.

· . _Splitting ?f investment capital pr~supposes singularity of a project

or act1vIty but wh,ch, by an act of the business entity, wa·s divided or broken
into several smaller investment capital amounts, or was divided into artificial
phases or sta,ges ha~ing smal~e~ investment capital amounts. The following
may be considered in determining whether splitting occurred:

1. The nature of the activity or project;

· 2. · The similarities of the projects' products or services·
1
3. The expected customers or clients·
4. The time interval between applications;
5. The proposed start of comm ercial operation of th projects; or
6. Other -analogous circumst nces.

594
 . Thte edxe'rdcise o~ FIRB's policy making powers shall be guided by the
following s ~n ar s: _
a. ~evel~p a· more responsive and globally-comp-etitive tax
mcentives regime that · isperformance-based .targeted time-
bou~d, and transparent; ' '
b. Provide-. assistance to attract preferred investments, sustain
economic growth, andcompetitiveness; ' ·-
c. Create more joqs, transfer technology, develop skills for the local
labor force; . · ·,
d. ·Promote fiscal responsibility in the administration of tax
incentives· ·
I •

e. Pro~ide ~ssfstance to promote exports of products and

services;
f. Promote the ·u se of domestic inputs, and development of ryral
areas; and · . · · · ·
g. Enable paralle.1 development for rural area~ arid areas
recovering from armed conflictand calamities.

Authority of the IPAs

The ,concerned IPA shatl_ have the exclusive. jurisdiction to register all
projects or activities, ·regardless of the amount of investment capital, subject to
compliance with the minimum standards under Part lll Rule 6, Section 2
1

(Qualifications for Registration).

Under a delegateq authority, the concerned IPA .has the authority ·to
.Approve or Disapprove the grant of tax incentives to registered projects or
activities with investment capital of one billion _pes<?s (P .1,000,000,000.00) and
below, subject to compliance with this Act and the minimum · standards
prescribed by these Rules .

.The registration of projects and grant of incentives covered by special

laws not repealed by CREATE Act shall GOntinue to be administered by the IPA
vested with such authority: Provided, That those laws •with specific incentives
provisions thereto shall continue to be granted with the incentives therein;
Provided further, That where such law grants entitlement of incentives under
Executive Order No. 226, otherwise kno~n as the Omnibus Investments Code ,
of 1987, as amended, the incentiv,es regim'e and the conditi0ris for the grant
· under the Code shall apply. ·

REGISTRATION OF BUSINESS ENTERPRISE

Qualified·Business Enterprise
· Subject to the qualification_s l:Jn~er the SIPP, everyproject or activity of
the following may qualify for reg1strat1on:
a. Export enterprises; and _
b. Domestic market ent~rprises.

595
 Qualifications for Registration

Every applicant, as far as applicable, must comply with t~_e following:

· a. Every project or activity in which it is e~gaged or pr~~os~s to engage
in is included in theSIPP and must satisfy the quallf1c~t1ons set forth
therein;
b. If the project or activity in which it is engaged or proposes to engage in is .
nationalized by the Constitution or by law, the ow~ership requirement
of the Constitution and/or such law has been complied with ;
c. If there is a· law requiring a minimum percentage of its directors to be
Philippine citizens, the same has been complied with. To determine
compliance with the citizenship requirement for members of the Board
of Directors , the basis shall .be the positions actually filled, exclusive of
vacancies, unless there is a specific rule to the contrary; and
d . . That the project or activity in which the applicant is engaged in is within
its corporate powers and is not otherwise prohibited by law.

Method of filing; Fees

AppHcation for registration shall be filed electronically through a system

prescribed by the FIRB, or_ through the system of an IPA: Provided, That the IPA
system is interoperable with and can be linked to. the . FIR_B system: Provided,
further, That in the event that the FIRS or IPA system is unavailable, such
application may be filed manually, accomplished in two (2) copies and sworn to
before a notary public, or in any manner prescribed by the concerned IPA. The
applicable fees shali be determined by the IPA concerned.

Certificate of Regi~_tration

The Certificate of Registration (COR) shall be issued by the concerned

IPAJThe COR shall state, among others: .

a. Name and business address of the RBE;

b. Tax Identification Number of the RBE;
. c. Unique control number;
d. Registered project or activity;
e. Tax incentives entitlement under agreed terms and conditions; and
f. Period of entitlement to tax incentives.

· Issuance of Certificate

Upon fulfillment of the foregoing conditions precedent,the Certificate of

Registration shall be issued and will entitle the business enterprise to the tax
incentives granted by the FIRS or the concerned IPA subject to the terms and
conditions imposed therein ,

596
 f;aa!i14tdi~•Ji3ai&i!3&13~ili•lttti~MAA~••w4-l@=ii4lall
fifing of l:\pplication
• l

All° a·pplications for tax inc~ntives shall be filed with the concerned !PA.
a
All applications shall be filed on per project basis and made upon the pre~cnbe~
forms under these Rules; Provided, that simplified forms shall be prescribed for
Micro and Small Enterprises:

Application for Certificate of Entitlement to Tax In centives (CETI)

Prior to the filing of ITR, the RBE shall apply for a CETI which shal_l be filed
electronically, together with the documentary requirements under th is Rule ,
through a system . prescribed by the FIRS, or th rough the system of an IPA:
Provided, Th.at the IPA system is interoperable with and can be linked to the FIR~
system. Provided, further, that in the event that th e FIRB or IPA ~ystem 15
unava ilable, such application may be filed man ually, accomplished m two (2)
copies and sworn to before a notary public or in any manner prescribed by the
concerned IPA. The applicable fees shall be determined by the IPA concerned.

Issuance of CETJ

Upon verification of the compliance with the term s and conditions of i s

registration and.payment of corresponding fee by the RBE, the CETI shall be issued
by the concerned IPA, in a prescribed-form, upon application by the RBE which
shall be attached to the ITR _filed with the BIR. The CETI shall state, among others:

a. Nam·e and busi ness address of the RBE;

b. Tax Identification Number of the RBE;
c. Unique control number;
d. Registered project or activity;
e. Name of IPA having jurisdiction over the registered enterp ri se ; and
f. Types and approved amounts of ,tax incentives for the taxable ·year, as
applicable. .

The issuance of the CETI shall be without prejudice to the RBE's full
compliance with its terms and conditions prior to ta x incent'ves availmen for
a particular taxable year.

Conditions for the Grant of Tax Incentives

The grant of tax incentives shall adhere,_to the following·:
a. The ~~ailment of in_c entives shall be su bject to th re uir ments and
fi;?1t1ons set forth in the SIPP and perform nee review by concerned
'
b. Compliance with_~he target performance metrics specified under th
terr:17~ and co~d1t1on.s of the registration of a registered project
act,v,t~t: Prot v,ded, thtat wh~n a.ny . of the agreed performa O _
comm, men s are no met, Just1f1catton shall be submitt d to t

597
 concerned IPA. The enjoym ent of tax Inc ntives may be cancel d
suspended, or withdrawn upon due notice; e ·
c. Compliance with thee-receipting and a-sa les req uirement .
accordance with Sections237 and 237(a) of the Code. Provide;
·That, this condition Is conting·e nt upon the operationalization of th~
BIR's a-receipt system; ·
d. Installation of an adequa.t e accounting system that shall identify the
investments, revenues, costs, and profits or losses of each
registered project or activity undertaken by the enterpri se separately
from the aggregate investments, revenues, costs, and profits or
losses of the whole enterprise; or establish a separate corporation
for each registered project or activity if the IPA should so require;
and
e. Submission of annual reports of beneficial ownership of the
o~ganization and related parties.

Monitoring Report

Within 90 days after the statutory deadline for filing the annual income
_ tax return for registered entities with investment capital of more than one
billion pesos (Pl,000,000,000.00) and, within 180 days after the statutory
deadline for filing the annual income tax return for registered entities with
investment capital of one billion pesos (Pf,000,000,000,00) and below, the
concerned IPA shall submit to the FIRS a report on the compliance of RBEs
with the terms and conditions imposed for registration and availment of tax
incentives.

Burden of Proof

In every case, the ·applicant shall have the burden of proving that every
project or activity is qualified for the tax incentives applied for.

POWER OF THE PRESIDENT TO GRANT INCENTIVES Sec. 301

Notwithstanding the provisions of Sections 295 and · 296, the President

may, in the interest of · national economic development and upon the
recom,mendation of the FIRS, modify .the ·mix, period or manner of availment of
incentives provided under this Code or craft the appropriate financial support
package for a highly desirable project or a specific industrial activity based on
defined development strategies creating high-valu,e jobs, building new industrie to
diversify economic activities, attracting significant foreign and domestic capital
investment, and the requirements of the activity or project, subject to maximum
incentive levels recommended by the FIRS: provided, that the gr nt of Income Tax
Holiday shall NOT exceed eight (8) years and th reafter, Special Corporate
Income tax rate of five percent (5%) may be grant d: provided, further, that the
total period of incentive avallm nt shaU not xceed forty (40) ye rs.

598 l
' 1
 Financial support includes utilization of government resources such
as land use, wpter appropriation, power provision, and budgetary support
under the annual general appropriations act.

Limitations to the Period of Incentives A ~ailment

The total period of incentive availment that may be granted by the
President shall not exceed forty (40) years. The grant of 1TH shall not exceed
eight (8) years. For the remaining incentive period, a SCIT rate·of five percent (5%)
may be granted. · · .·

Conditions for the Grant

The FIRS shall determine whether the benefits that the government may
derive from such investment are clear and convincing and far outweigh the cost
of incentives that will be granted in determining whether a project or activity is
highly desirable.

The exercise by the President of his powers under this sectiof'1 shall be
based on a positive recommendation from the FIRS upon its determination
that the following conditions are satisfied:
1. The project has a comprehensive sustainable development ·plan with
clear iriclusivebusiness approaches, and high level of sophistication
and innovation; and
2. Minimum investment capital of -Fifty Billion °Pesos (PS0,000,000,000) or
its equivalent in United States ·dollars, or a minimum _tjirect local
empioyment generation of at least ten thousand (10,00,0) within three
(3) years from the issuance of the certificate of registration.

P~riodic review of thresholds .

The threshold shall be subject to a ·periodic review by the Fl RB every
three (3) years, taking into consideration international standards or other
econo"mic indicators.

Cancellation of incentives
If the project fails to substantially meet the projected impact on the
economy and agreed performance targ·ets, the FIRB shall .recommend to the
President the cancellation of the tax incentive or financial support package or the
modified period or ·manner of availrnent of incentives, · after due hearing and
an adequate opportunityto substantially comply ·with the agreed performance
.targets and outputs.
I

.Suspension of the power of the President to grant incentive,s

This power of the President, in as far as it commands additional public
sector expenditures in supp·o rt of investors, is suspended during fiscal years
when; an unmanageable fiscal deficit is declared by the President on the advice
of.the Development Budget Coordination Committee (DBCC) with a consequence
that even core budgetary obligations, such as, qut not limited to, mandatory
revenue allotments for LGUs and budget for the NEDA's core pubhc investments
program, cannot be f~llyfinanced. •

599
QUALIFICATIONS OF A REGISTERED,BUSIN~SS ENTERPRISE FOR TAX
INCENTIVES Sec! 304 .. . . ·. . ·.. • ~ 0
• ~ •

In the review and grant of t x inc ntiv , th bu in s

enterprise must: · .
a) Be engaged in a project or activity inclu ed in tt1 inv tm nt
priority plan;
b) Meet the target performance melrics aft r lh ti m riod ·
c) Install -an adeq uate accou nting syslem th t sh identi_fy th '
investments revenues costs and profits o lo ses of 6 ch r I t r d
proj ect or ~ctivity undertaken by the enterpri . 8 1 a~at ly from t e
aggregate investments, reven ues, costs and profits or loss . of th w~ol
enterp rise; or establish a separate corpor tion for each r gis_te~ed ProJect
or activity if the investment promotion agency shou ld ~ require, .
d) Comply with the e-receipting and e-sales r quirement 1n accordance with
sections 237 and 237(a) of this code; and . .
e) Submit annual reports of beneficial ownersh ip of the organ 1zat1on and
related parties.

All registered business enterprises and other registered entities whether

taxable or exe mpt, are required to file their ta x returns and pay their ta x liabilities,
on or before the deadline as provided under the National In tern al Reven ue Code
of1 997, as amended , using the Electronic Svstem for filing and payment of taxes
wi th the Bureau of Interna l Revenue: provided, that fo r purposes of complying with
their tax obligation s, cooperatives and other reg istered entities which do not have
access to the electronic facilities shall fi le with their respective reve nue district
qffices.

For registere d business enterpri ses and other reg istered enterprises
availing of tax incentives adry1inistered by tre investment promotion agencies and
other government agencies administerin g tax incentives, they shall fi le with their
respective investment promotion agenci es or other government agencies
administering tax i~centiv_es a complete annual ta x incentives report of thei r
income-based tax _incentives : vat exemptions and zero-ratin g, custom duty
exemptions, deductions, credits or exclusions from the income tax base and 1

exemptions from local taxes, as provided under section 294 of this act and in th .
ot
special laws. t h~ conce~ned i~vestment promotion agency or other govern ment
agency admm1ster!ng tax m_cent1ves , and respective laws, and a complete annual
· benefits report which _shall include dat~ su ch as, but not limited to . the pprov d
and actual am~unt _of 1nves~ments, app~oved and actual employment I v I nd job
creation including information on quality of jobs and hiring f for ign n local
workers, approved and actual _exp~rts and imports, domestic purch ses profits and
dividend payout, all taxes pat~, withheld and foregone within thi rty (3 c lender 0)
day~ from the statutory deadll_ne for filing o~ tax return s and payment of taxes:
prov1d~d, that_ a copy of _the report .shall be simultaneously ubmitted to
the fiscal
incentives review board in electronic form.

600
 . . T~e ~ inve~tme_n~ promotion agencies and other government agencies
adm1rnstenng tax 1~centIves shall, within sixty (60) calendar days from the end of
the statutory deadline _for filing of the relevant tax returns, submit to the Bureau of
Internal ~evenue, th_eir respective annual tax incentives reports based on the list
of the r~g,ster~d bus_mess enterprises and other registered enterprises which have
filed_ said tax mcen_t1ves report: provided, that the reportorial requirement under
sect~on 3 of rep~bllc act no. 10963 or the "Train Law" shall be covered by this
sectlOfl the details of the tax incentives reports, as provided in the preceding
paragraphs_, shall b~ provided in the implementing rules and regulati,ons of this act.
The foregoing provIsIons shall be without prejudice to the right of the Bureau of
Internal Revenue and the Bureau of Customs to assess and/or audit tax liabilities,
if any, within the prescribed period provided in the national internal revenue code
of 1997, as amended, and Republic Act No. 10863, otherwise_known as the
Customs Modernization and Tariff Act, as amended, respectively.

PROHIBITION ON REGISTERED ACTIVITIES , Sec. ·309

A qualified registered project or activity under an investment

promotion agency administering an economic zone or Freeport shall be
exclusively conducted or operated within the geographical boundaries of the
zone or Freeport being administered by the investment promotion agency in
which the project or activity is registered provided, that -a registered business
enterprise ma conduct or operate more than one qualified registered project
or activity within the same zone or Freeport under the same investment
promotion agency: provided, further, that any project or activity conducted or
performed outside the geographical boundaries of the zone or Freeport shall
not be entitled to the in·centives provided in this act, unless such project or
activity is conducted or operated under another investment promotion agency

INVESTMENTS . PRIOR TO THE EFFEC~J'IVl°TY OF - c~EATE LAW

SEC. 311 · . . · .

Regis.tered business enterprises with 'incentives granted prior to the effectivity

of CREATE Law shall be subject to the following rules: ·

1. Registered business enterprises whose projects or activities were granted

only an in.come tax holiday prior to the effectivity of this act shall be allowed
to continue with the availment of the income tax holiday for t_he remaining
period of the . income tax holiday as specified in the terms and conditions
of their registr<?tion: provided, that for those that have been granted the
income tax holiday but have not yet availed of the incentive upon the
effectivity of this act, they may use the income tax holiday for the · period
. specified in the terms and conditions of their registration;

· 2. . Registered business enterprises whose projects or activities were granted

an income tax holiday prior to the effectiv\ty of this act and that are entitled
to the five percent (5%) tax 011 gross income e~rned incentive after the
income tax holiday shall be allowed to avail of the five percent (5%) tax on
gross income earned incentive based on subsection and registered

601
 · . ·r g of the five percent (5%) tax on gro
~usiness enterprises curr~ntly ava1 mff f ·ty of this act shall be allo dss
income earned granted pnor to. the e_ ec ivi . ~e to
. . . th 'd tax I·ncentive at the rate of five percent (51/o) for
con t tnue avaI 1mg e saI
ten (10) years.

1
Exceptional circumstances • •
Exceptional circumstances include pandemi~, epidem_ic, war,_ armed
conflict, state of. national emergency, outbreak of d1~eases, _international or
regional financial crisis, major disaster such as volcanic eruption, earthquake
and super typhoon, or analogous circumstances.

Implementation of the temporary measures . , ,

Upon the approval of the FIRS, the concerned IPA shall implement
temporary measures to s.u pport the RSE's recovery from the exceptio.,nal
circumstance and strengthen the nation's capability for sim'i lar circumstances
in the future; Provided, That the temporary measures shall cover a specific time
period and orily be limited to the incentives duly approved by the concerned IPA
or the FIRS, as the case may be, under the. RBE's terms and conditions.
,

Temporary measures
The temporary measures shall, without diminution of incentives, cover all
RSEs that are affected by such exceptional circumstance and may include any of
the -following: . . ·
a. Suspension of the export requirement;
b. \Deferment of the income tax incentive availme_ n t period;
c. Movement of the start commercial operations with full entitlement to
i_nc~~tives under the terms and conditions of the registered project or
actIvIty;or ·
d. Adopti?'1 of any other measure as may_be re~sonable to recover from
such circumstances, subject to FIRS approval upon the rec d t· n
of the IPA. · ommen a 10

Period
Upon the approval of the FIRS the tempera · · ·
from the time of the declaration ~f such exce ry_ meas~re shall be effective
President, the relevant government a en~tional circumstance by the
Organization_, as the case may be, until the gsa Y, or the World Health
to exist, or corresponding to the duratron tha me has ended ~r has ceased
th
affected or disrupted, as applicable. . t e RBE operation has been

. Effect on the 'incentives of the affected RBE

. Th~ affected RBEs incentives or it 8 s . .
maintained consistent · with its t . period of ava1lment sh_
a lf be
implementation bf the temporary m erms. and conditions during the
easure.

602