Create Law by Emman Carl Rubin

Compiled and Presented by:
EMMAN CARL P. RUBIN

Group Supervisor
RDO No. 97 – Gingoog City
SALIENT
PROVISIONS
OF
CREATE LAW
Salient Provisions
Salient Provisions
Salient Provisions
Salient Provisions
ITEMS VETOED
(CANCELLED)
BY THE
PRESIDENT
Items vetoed by the President
EFFECTIVITY
• For those provisions that explicitly state
their effectivity date – You apply the
effectivity date as stated in the provisions
including those that have retroactive
application.
• For those provisions that did not explicitly

state the effectivity or application date –
the effectivity date is April 11, 2021 (15
days after its publication on March 27)
Implementing Rules and Regulations of
RA No. 11534 (CREATE Law)
Revenue Date of
Regulations Subject Matter Issue
(RR) No.
RR No. 2- Amends certain provisions of RR No. 2-98, as amended, to implement the amendments April 8,
2021 introduced by RA No. 11534 (Corporate Recovery and Tax Incentives for Enterprises Act or 2021
CREATE Act) to the NIRC of 1997, as amended, relative to the Final Tax on certain passive
income
(Published in Philippine Star and Malaya Business Insight on April 9, 2021)
RR No. 3- Prescribes the Rules and Regulations to implement Section 3 of RA No. 11534 (Corporate April 8,
2021 Recovery and Tax Incentives for Enterprises Act or CREATE Act), amending Section 20 of the 2021
NIRC of 1997
(Published in Philippine Star on April 9, 2021)
RR No. 4- Implements the provisions on Value-Added Tax (VAT) and Percentage Tax under RA No. 11534 April 8,
2021 (Corporate Recovery and Tax Incentives for Enterprises Act or CREATE Act), which further 2021
amended the NIRC of 1997, as amended, as implemented by RR No. 16-2005, as amended
(Published in Philippine Star on April 9, 2021)
RR No. 5- Implements the new Income Tax rates on the regular income of corporations, on certain April 8,
2021 passive incomes, including additional allowable deductions from Gross Income of persons 2021
engaged in business or practice of profession pursuant to RA No. 11534 (Corporate Recovery
and Tax Incentives for Enterprises Act or CREATE Act), which further amended the NIRC of
1997
(Published in Philippine Star and Malaya Business Insight on April 9, 2021)
RR No. 5-2021
RR No. 4-2021
RR No. 2-2021
Frequently
Asked
Questions
(FAQs)
F.A.Q.s
QUESTION RECOMMENDED ANSWER
Is CREATE Law only No. Although majority of the provisions
applicable for pertains to corporate tax amendments, other
Corporations (the “C” in provisions also talked about individuals and
CREATE stands for other non-corporate taxpayers particularly
Corporate) those non-VAT individual taxpayers who enjoys
3% percentage tax (now 1%).
Are owners of tricycles, No. The 1% percentage tax change is only

motorelas, jeepneys and applicable to those taxpayers covered
transport carrier under Section 116 of the Tax Code.
services can now pay
only 1% percentage tax?
The owners of Domestic Carriers and
Keepers of Garages are in Section 117 of
the Tax Code, hence not covered and shall
continue to pay 3% PT.
F.A.Q.s
The lower tax rate of 25 Quarterly declarations are not final because tax
percent is retroactive to is applied on annual income. Hence, the
July 1, 2020. Can we effective tax rate of 27.5 percent should be
apply the 25 percent tax applied on your taxable income in 2020.
rate on our income for
the last six months?
Is the minimum It’s not suspended, but it is temporarily
corporate income tax reduced from two to one percent retroactive to
(MCIT) suspended? July 1, 2020 up to June 30, 2023. It follows the
same manner of computation for the new
corporate income tax for 2020. So the effective
MCIT rate for calendar year 2020 is 1.5 percent.
F.A.Q.s
Is the 40 percent Yes it is, for big and small businesses and
optional standard individuals. However, individuals are still only
deduction (OSD) still allowed to use 40 percent OSD based on their sales
available? and if they use it, they cannot deduct direct costs,
unlike corporations.
Note that regulations implementing the OSD law

are deemed legislatively reenacted. Thus, you
cannot use OSD in your annual ITR if you have not
used OSD in your first quarterly tax return.
What is the new value- The CREATE law provided for the increase in the threshold of VAT
exemption for dwellings to P4.2 million. However, this was
added tax (VAT) among the provisions vetoed by the President. While the veto
exemption threshold for communication alluded that the VAT exemption shall remain at
house and lot or P2.5 million as it is the Tax Reform for Acceleration and Inclusion
(TRAIN) law, this however is inaccurate as the threshold under
dwellings under the TRAIN law went down to P2 million beginning 2021. Since the
CREATE? President can only veto but not pass laws, fresh legislation is
needed to increase the current threshold.
F.A.Q.s
How is the sunset You can enjoy your income tax holiday
period computed for (ITH) undisturbed, but you can only avail of
registered enterprises? the five percent GIT for the next 10 years
after the ITH. Or if you are already in the
five percent regime, you can enjoy ITH for
the next 10 years, technically from the
effectivity of CREATE.
Will registered In the CREATE law, so long as the activity of the
enterprises be allowed registered enterprise is in the strategic investment
to register again for priorities plan, they can reapply for incentives after
incentives after the the sunset period. This provision however has been
sunset period? vetoed by the President. These companies can only
register again if they are engaged in a new activity
that is entitled to incentives. This brings it back to
the declared policy of government that for
incentives, there is no forever.
F.A.Q.s
Specially in this This has not been touched on in CREATE but
pandemic, does CREATE if the earlier TRAIN law is to be followed, the
now allow purely government has until January 2023 (five years
electronic invoicing? from effectivity of TRAIN) to establish the
system that is needed to store and process
data. It can happen earlier but today, BIR
rules still require hard copies of all invoices,
receipts, books of accounts and accounting
records because the BIR is not yet prepared
to conduct digital audits, among other things.
Shall I amend the last 2 Yes. You should amend the 3rd and
quarters of 2020 in my
Percentage Tax returns
4th quarters of 2020 to validly claim
so that I can claim the tax the tax credits in 1st and 2nd
credit in 1st/2nd quarters quarters of 2021.
of 2021?
F.A.Q.s
Can forever exist? Walang forever mga bes. But merong
together.
THANK YOU
EMMAN CARL P. RUBIN, CPA

Group Supervisor
RDO No. 097 – Gingoog City

Create Law by Emman Carl Rubin

Uploaded by

Copyright:

Available Formats

Create Law by Emman Carl Rubin

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Create Law by Emman Carl Rubin

Uploaded by

Copyright:

Available Formats

Compiled and Presented by:

EMMAN CARL P. RUBIN

• For those provisions that did not explicitly

Are owners of tricycles, No. The 1% percentage tax change is only

Note that regulations implementing the OSD law

EMMAN CARL P. RUBIN, CPA

You might also like