Corporate Recovery and Tax Incentives for Enterprises Act or CREATE

Case Overview and Summary

Summary of Republic Act No. 11534 (Corporate Recovery and Tax Incentives for Enterprises Act or CREATE)

Short Title and Policy Declaration (Sections 1-2)
- The Act is known as the "Corporate Recovery and Tax Incentives for Enterprises Act" or "CREATE".
- It declares the policy of developing the national economy towards global competitiveness by implementing tax policies that attract investments, enhance productivity, generate employment, promote inclusive growth, and maintain fiscal prudence.

Amendments to the National Internal Revenue Code (Sections 3-16)
- Amends various sections of the National Internal Revenue Code of 1997 related to:
• Submission of reports and tax information by the Commissioner of Internal Revenue (Sections 3, 11)
• Definition of "corporation" and taxation of non-resident aliens (Sections 4-5)
• Reduction of corporate income tax rates for domestic corporations, proprietary educational institutions, hospitals, and government-owned or controlled corporations (Sections 6-7)
• Taxation of foreign corporations, including regional operating headquarters (Section 8)
• Repeal of the improperly accumulated earnings tax (Section 9)
• Deductions from gross income, including additional deductions for labor training expenses, interest expense, and reinvestment allowance (Section 10)
• Tax-free exchange of property for stock in corporate reorganizations (Section 10)
• Exemption of certain transactions from value-added tax (VAT), including sale of real properties, books, and certain medicines (Section 12)
• Reduction of tax rate for persons exempt from VAT (Section 13)
• Authority of the Commissioner to compromise, abate, refund or credit taxes (Section 14)
• Congressional oversight committee (Section 15)

New Title XIII on Tax Incentives (Section 16)
• Covers Investment Promotion Agencies and registered business enterprises (Section 291)
• Defines key terms related to tax incentives (Section 293)
• Outlines tax incentives, including income tax holiday, special corporate income tax rate, enhanced deductions, duty exemption, and VAT exemption/zero-rating (Section 294)
• Sets conditions and period for availing incentives based on location, industry tier, and investment capital (Sections 295-296)
• Expands functions and composition of the Fiscal Incentives Review Board (Sections 297-299)
• Requires formulation of a Strategic Investment Priority Plan to determine priority projects/activities (Sections 300-303)
• Specifies qualifications for registered business enterprises to avail incentives (Section 304)
• Mandates filing of tax returns, submission of reports, monitoring and evaluation of incentives (Sections 305-307)
• Imposes penalties for non-compliance with filing and reporting requirements (Section 308)
• Prohibits registered activities outside designated zones/freeports (Section 309)
• Requires establishment of one-stop action centers (Section 310)
• Provides rules for investments prior to the law's effectivity (Section 311)

Repealing, Amendatory, and Miscellaneous Provisions (Sections 17-22)
• Repeals and amends various provisions of existing laws related to tax incentives, Investment Promotion Agencies, and the Fiscal Incentives Review Board.
• Includes a separability clause, appropriation, and directive for implementing rules and regulations.