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The urgent need to pass Create

Tax reform is part of the main agenda of the Duterte administration. So it was a welcome development when Republic Act 10963, or the “Tax Reform for Acceleration and Inclusion Act” (Train), took effect on Jan. 1, 2018 to mainly address and amend the antiquated personal income tax brackets of individual taxpayers, and to introduce significant amendments to the National Internal Revenue Code (“Tax Code”).

Taxpayers have also been waiting for the corporate income tax (CIT) rate to be lowered. So it was such a relief when the Senate approved last November Senate Bill 1357, or the “Corporate Recovery and Tax Incentives for Enterprises Act” (Create). But much to their — and our — disappointment, Create was not only not passed into law last year, it was also not yet adopted by the House of Representatives. As we understand it, a bicameral committee will need to be convened to harmonize the amendments introduced by Create and House Bill 4157, or the “Corporate Income Tax and Incentives Rationalization Act” (Citira).

The House approved Citira on third and final reading on Sept.13, 2019, before the Covid-19 pandemic started. It has not considered granting economic or tax relief to taxpayers who have suffered economically because of the pandemic.

There is no doubt there is an urgent need for the final bill to be approved, and the most expeditious way is for the House to approve and ratify Create for these reasons:

– The immediate lowering of the CIT of domestic corporations from 30 percent to 25 percent — or 20 percent for businesses with assets of not more than P100 million or taxable income of not more than P5 million — effective July 1, 2020, as proposed by Create, would certainly benefit taxpayers who were adversely hit by the pandemic. The staggered reduction of the CIT rate over a 10-year period, as proposed by HB 4157, is no longer helpful or relevant.

– The CIT would be decreased from 30 percent to 25 percent on the taxable income for resident foreign corporations and on the gross income for nonresident foreign corporations.

– Lowering the CIT will also help make our country, which has one of the highest CIT rates in the region, more competitive, thus sending a good signal to investors.

Create has proposals that would definitely help our taxpayers who incurred economic losses from Covid-19, such as:

– Reducing the minimum CIT from 2 percent to 1 percent effective July 1, 2020 until June 30, 2023.

– Reducing the “other percentage tax” for persons exempt from value-added tax (VAT) from 3 percent to 1 percent in the aforementioned period.

– Exempting from the 12-percent VAT Covid-19-related capital equipment, raw materials for personal protective equipment, medical supplies, drugs and equipment, and vaccines.

– Reducing the income tax of nonprofit hospitals and proprietary educational institutions from 10 percent to 1 percent during the aforementioned period to allow them to sustain their operations.

Create already considered the need for an adequate transition for those presently subject to 5-percent gross income tax by providing a longer period of 10 years; HB 4157 only provided five.

Again, there is no doubt our country and taxpayers urgently need the amendments proposed by Create.  Thus, we call upon our legislators to pass it in the most expeditious way.

Euney Marie J. Mata-Perez is a CPA-lawyer and managing partner of Mata-Perez, Tamayo & Francisco (MTF Counsel). She is a corporate, M&A and tax lawyer, as well as president of the Asia-Oceana Tax Consultants’ Association. 

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant.  If you have any question or comment regarding this article, email the author at or visit

The urgent need to pass Create

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Salcedo Village, Makati City 1227 Philippines

Telefax: +632 831-1297

Telephone: +632 808-5375 • +632 815-0069



Euney Marie J. Mata-Perez

Mark Anthony P. Tamayo

Gerardo Maximo V. Francisco