The bicameral conference committee has already signed the proposed Corporate Recovery and Tax Incentives for Enterprises Bill or CREATE.
Under CREATE, the corporate income tax will be reduced from 30 percent and will be made 25 percent for large corporations and 20 percent for small and medium corporations with a net taxable income of less than P5 million and total assets of less than P100 million.
There will also be up to 17-year incentives for exporters while four to seven-year income tax holiday and 10-year special corporate income tax holiday for critical domestic enterprises.
Up to 12-year incentives, including four to seven-year income tax holidays and five-year special corporate income tax holidays will be given to businesses with an investment capital of at least P500 million or five years enhanced deductions.
When enacted into law, the measure will also lower the minimum corporate income tax from 2 percent to 1 percent from July 1, 2021, to June 30, 2023.
Non-profit educational institutions and hospitals will pay only 1 percent corporate income tax rate from the current 10 percent from July 1, 2021, to June 30, 2023.
It also includes a reduction in taxes for small businesses with sales of less than P3 million, from 3 percent tax on their gross sales and only 1 percent to be paid.
Bicam committee signs CREATE Bill
The CREATE bill also stipulates that businesses that move from Metro Manila to the provinces will be given an additional three-year income tax holiday.
Businesses that will be built in areas that are prone to disaster and violence will have an additional two-year income tax holiday.
From January 1, 2021, drugs for cancer, mental illness, tuberculosis, and kidney diseases are exempted from paying value-added tax or VAT.
Vaccines against COVID-19 will also be free of charge VAT and duty-free under CREATE bill.
Drugs imported and sold that are used against COVID-19 and personal protective equipment or PPE are also free of VAT until December 2023.
According to House Committee on Ways and Means Chairman Joey Salceda, its purpose is to improve the business in the country.
He also said that many investors will be encouraged to set up business in the Philippines because of CREATE bill.