MANILA— The country's finance and trade chiefs have signed the Implementing Rules and Regulations (IRR) of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act ahead of the July 10 deadline, the Department of Finance said Friday.
The CREATE law, which aims to reduce corporate income taxes, was signed into law by President Rodrigo Duterte in March.
Finance Secretary Carlos Dominguez III and Trade Secretary Ramon Lopez signed the IRR on June 21, the DOF said in a statement.
Micro, small and medium enterprises or MSMEs are the "biggest beneficiaries" of CREATE, which will cut corporate income tax of domestic corporations with a taxable income of P5 million and below to 20 percent from 30 percent, the DOF said.
Corporate income tax of big corporations with assets above P100 million will be reduced to 25 percent from 30 percent, the agency said.
The IRR also clarified some provisions such as the scope of deduction, the DOF said.
“These provisions in the IRR are all intended to ensure that the law is properly implemented following the core principles of granting incentives based on the significant contribution of business enterprises to the economy,” Dominguez said.
"We should stop instigating a 'race to the bottom' in tax regimes that only compromises the capacity of the state to provide for the public,” he added.
The law will help encourage more foreign investments and in turn, generate "quality jobs" and improve the lives of Filipinos, Lopez said.
The DOF said the CREATE Act is the "largest fiscal stimulus package" for businesses in the country's history, which would provide over P1 trillion worth of tax relief over the next 10 years.
The majority of businesses in the country have implemented cost-cutting measures, retrenchment and some permanently folded due to the negative impact of the COVID-19 pandemic.
The IRR takes effect immediately following the publication in a newspaper of general circulation, the agency said.