What incentives are available?
1. INCOME TAX HOLIDAY (ITH)
(Incentives menu under the CREATE Law)
- ITH of 4 to 7 years, depending on the location and industry
- Relocation from NCR: additional ITH of 3 years
- Located in areas recovering from disaster/conflict: additional ITH of 2 years
2. SPECIAL CORPORATE INCOME TAX (SCIT)
5 percent SCIT for 10 years (only for export enterprises)
3. ENHANCED DEDUCTIONS REGIME (EDR)
A. Additional depreciation allowance of:
1. Ten percent (10%) for buildings; and
2. Twenty percent (20%) for machinery and equipment;
B. Additional deduction on labor expenses with a rate of fifty percent (50%);
C. Additional deduction on research and development expenses with a rate of one hundred percent (100%);
D. Additional deduction on training expenses with a rate of one hundred percent (100%);
E. Additional deduction on domestic input expense with a rate of fifty percent (50%).
F. Additional deduction on power expenses with a rate of one hundred percent (100%).
G. Additional deduction for reinvestment allowance to manufacturing and tourism industries with a rate of fifty percent (50%);
H. Additional deductions on expenses relating to exhibitions, trade missions, or trade fairs with a rate of fifty percent (50%); and
I. Enhanced Net Operating Loss Carry Over (NOLCO) which may be carried as a deduction within five (5) years immediately following the last year of Income Tax Holiday (ITH) entitlement or year of loss.
4. Duty exemption of up to 17 and 12 years for export and domestic enterprises from the date of registration, respectively, unless otherwise extended under the SIPP
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5. Value-added tax (VAT) exemption and zero-rating of registered export enterprises of up to 17 years from the date of registration, unless otherwise extended under the SIPP.
The direct and exclusive use for the registered project or activity was expanded to include packaging materials, services, including the provision of basic infrastructure and utilities.
Period of availment of incentives based on location and industry priorities:
(Industry tiers are determined in the SIPP)
(A) For exporter activities
(B) For domestic market activities
The President, upon the recommendation of the FIRB, may modify the mix, period or manner of availment of incentives for highly desirable project or specific industrial activity. Provided that the total period of ITH shall not exceed 8 years and the total period of incentives shall not exceed 40 years.
(C) For highly desirable projects or very specific industrial activities
- The President of the Philippines may, in the interest of national economic development and upon the recommendation of the Fiscal Incentives Review Board, modify the mix, period or manner of availment of incentives provided under the CREATE Law or craft the appropriate financial support package for a high desirable project or a specific industrial activity if it meets the following conditions:
- The project has a comprehensive sustainable development plan with clear inclusive business approaches, and high level of sophistication and innovation, and
- Minimum investment capital of fifty billion pesos (P50,000,000,000.00) or its equivalent in US dollars, or a minimum direct local employment generation of at least ten thousand (10,000) within three (3) years from the issuance of the certificate of entitlement.
- As stated under the CREATE Law, the grant of income tax holiday shall not exceed eight (8) years and the total period of incentive availment shall not exceed forty (40) years.
