Tax Alert No. 44 [CREATE MORE Act signed into law]

An Act Amending Sections 27, 28, 32, 34, 57, 106, 108, 109, 112, 135, 237, 237-A, 269, 292, 293, 294, 295, 296, 297, 300, 301, 308, 309, 310, And 311, And Adding New Sections 135-A, 295-A, 296-A, And 297-A of the National Internal Revenue Code of 1997, As Amended, and for other Purposes 

On November 8, 2024, President Ferdinand R. Marcos Jr. signed the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act into law (Republic Act No. 12066). The CREATE MORE Act aims to generate jobs and spur economic growth. It builds on the earlier CREATE Act by enhancing the tax regime and incentive framework to attract both domestic and international investments, particularly, in strategic industries. The CREATE MORE Act took effect on 28 November 2024.

Here are the salient features of the law:

• Registered business enterprises under the Enhanced Deduction Regime subject to the 20% corporate income tax rate
• Sales to export-oriented enterprises (70% export sales) Value-Added Tax (VAT) zero-rated if directly attributable to export activities
• Export sales as defined under Executive Order No. 226 generally omitted from enumeration of VAT zero-rated sales
• Sales to bonded manufacturing warehouses of export-oriented enterprises are VAT zero-rated
• Additional due process requirements in the processing of input VAT refund claims
• Mandatory issuance of electronic invoices (e-Invoices) for certain taxpayers
• Additional deduction for micro/small taxpayers and medium/large using e-Invoices
• The 5% Special Corporate Income Tax is in lieu of all taxes including local fees and charges
• Additional deductions for export and domestic market enterprises under the Enhanced Deduction Regime
• Local government units may impose local taxes on Registered Business Enterprises up to 2% of gross income

Please see attached for the details of the amendments on the National Internal Revenue Code of 1997 and their implications.

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