1.18.2024 SBFCC Create Morre Eopt Beps 2.0

Briefing on the Ease of
Paying Taxes Act, CREATE

“MORE” Bill and BEPS 2.0
18 January 2024
January 18, 2024 #SGVforABetterPhilippines

Corporate Recovery and
Tax Incentives for Enterprises to Maximize
Opportunities for Reinvigorating the Economy
CREATE “MORE” Bill
18 January 2024
Page 3 January 18, 2024 #SGVforABetterPhilippines

About the Speaker
► Lawyer and Certified Public Accountant. Bachelor of Laws, cum laude and class salutatorian, Arellano
University School of Law. Bachelor of Science in Accountancy, cum laude, University of the Philippines
in the Visayas (Tacloban). Leading Professional Service Firms, Harvard Business School. Strategic
Management Program, National University of Singapore Business School
► Has more than 10 years of experience in providing tax advisory services and handling tax controversy
cases in the Philippines. Also experienced in handling due diligence, Philippines restructuring
engagements, investment/tax incentives planning, and cash repatriation/ redeployment
► Assists clients in the business process outsourcing, consumer products retail, electronics, hospitality,
information technology, life sciences, logistics, mining, real estate and telecommunications industries
► Assigned to EY United States’ International Tax Services from 2016 to 2018 to manage the
Philippines Tax Desk under the Asia Pacific Business Group of EY Global Tax Desk Network based in
New York
► Frequent facilitator for SGV’s training programs and tax seminars. SEC-accredited speaker on
Philippine Corporate Governance
► Member, Integrated Bar of the Philippines
► Member, Philippine Institute of Certified Public Accountants
► Member, Philippine-American Chamber of Commerce
► Member, Filipino-American Lawyers Association
Page 4 #SGVforABetterPhilippines
Corporate Recovery and
Tax Incentives for Enterprises to Maximize
Opportunities for Reinvigorating the Economy
CREATE “MORE” Bill
18 January 2024

Background
CREATE Act
April 11, 2021
Effectivity
Under Senate deliberation
Substitute Bill to HB 8968

(CREATE MORE Bill)
Nov. 21, 2023
Approval by the HoR Ways and
Means Committee
Page 6 20 October 2022 Taxation of Ecozone and Freeport Zone Enterprises #SGVforABetterPhilippines
Corporate tax adjustments
Under CREATE Under CREATE MORE

Income Tax Rates for DOMESTIC Corporations
Additional income tax rate
25% / 20% Corporations under Enhanced Deductions
20%
of the net taxable income
Total Assets** Taxable Income Tax Rate

of the net taxable income derived from
registered projects / activities
P100 Million and below P5 Million and below 20%
Otherwise 25%
**Excluding the value of land on which the particular business entity’s office,
plant and equipment are situated.
Corporate tax adjustments

Income Tax Rates for RESIDENT FOREIGN Corporations
Additional income tax rate
Corporations under Enhanced Deductions
25% 20%
of the net taxable income
of the net taxable income derived from
registered projects / activities
VAT refund claims
New provision
Classification
}
High-risk claim
Subject to audit or other verification
processes in accordance with the
BIR’s National Audit Program
Medium-risk claim
BIR shall establish an expedited

Low-risk claim refund lane (minimal documentary
requirements)
A simplified and streamlined tax refund

system for RBE shall be established
Risk classification criteria
New provision
Amount of VAT refund claim
Tax compliance history
Frequency of filing VAT refund claims
*Basis is not exclusive
Application for VAT refund
Submission of invoices/other documents prescribed by the CIR* in support of the VAT

refund application *deemed exhaustive and
shall be limited to those
prescribed by law
Grant of refund is proper Grant of refund is not proper Inaction by the CIR (lapse
BIR shall publish
of 90 days from date of
statistics on the filing the application)
volume, processing
time, and rate of Provide taxpayer at least
END 5 days to file and
approval of refund
substantiate a request *denial shall not be
claims, and other
for reconsideration* final unless taxpayer
relevant statistics has been provided the
opportunity to
request for a
In case of disallowance by COA during post- Full/partial denial reconsideration
audit, only the taxpayer shall be liable for
the disallowed amount
Any employee of the BIR who may be File an appeal with the
found to be grossly negligent in the grant CTA within 30 days from
of refund shall be subject to administrative receipt of denial or
liability after expiration of 90-day
period in case of inaction
Adjustments to Enhanced Deductions (ED) regime
Power Expense Under CREATE Under CREATE MORE
Effective Jan. 1, 2024, until Dec. 31, 2028

(Unless extended by the President by another 5 years)
+50% +100%
This is limited to power utilized Additional deduction on power
for the registered project or expenses incurred during ITH
activity. availment – Creditable against
income tax due during the ED
availment
Reinvestment Allowance Under CREATE Under CREATE MORE
Manufacturing
Manufacturing
+ Tourism RBEs
Maximum
50%
of reinvested profit
(within five years from time of reinvestment)
Reinvestment in any of the projects or activities

listed in the Strategic Investment Priorities Plan
(SIPP)
New provision
Trade Fairs, Exhibitions or Trade Missions

Expense
+100%
Include expenses incurred in
promoting the export of goods or the
provision of services to foreign
markets
Net Operating Loss Carry-Over Under CREATE Under CREATE MORE

(NOLCO)
Carried over within the next consecutive
5 years
Incurred during first three (3) years from
SCO
following the last

following the year of the ITH
year of such entitlement
loss period
Summary of Enhanced Deductions (ED) regime
Type of expense Under CREATE Under CREATE MORE
Depreciation +10% buildings, +20% machineries & +10% buildings, +20% machineries &
allowance equipment equipment
Direct labor expense +50% deduction +50% deduction
R&D costs +100% deduction +100% deduction
Training expense +100% deduction +100% deduction
Domestic inputs
+50% deduction +50% deduction
purchased
+100% deduction
Power Expense +50% deduction (Jan. 1, 2024 until Dec. 31, 2028 unless extended
by the President by another 5 years)
Reinvestment
allowance to Maximum 50% of reinvested profit Manufacturing + tourism industry
manufacturing (within five years from time of reinvestment)
industry
Trade fairs,
+100% deduction
exhibitions or trade -
missions expense
Incurred during first three years; Incurred during first three years;
carried over within the next five consecutive
NOLCO carried over within the next five years following last year of ITH entitlement
consecutive years following year of loss period
RBE Local Tax (RBELT)
New provision
RBELT
of gross sales IN LIEU of all local taxes

during period of ITH / ED regime availment
Unless: Shall continue to be imposed in lieu of

all local taxes imposed by the LGU after
A. Exempt under other laws the expiry of ED / SCIT
B. RBE is under SCIT
Customs Incentives
Incentives CREATE MORE
Customs Duty Exemption

for Importation of Capital
Equipment, Raw Materials, D&E
Spare Parts and
Accessories
An IPA may authorize the importation
pending issuance of the COR, subject to the
Directly posting of performance bond or bank
attributable guarantee equivalent to the duties waived on
the importation
As long as the project/activity
is registered with the IPA
Customs Incentives
Customs Duty Exemption

for Importation of Capital Sale/transfer within 5 years
Equipment, Raw Materials,
Sale or transfer is allowed under the following:
Spare Parts and
Accessories
1
To enterprise availing of customs
3
Donated to TESDA, SUCs or DepEd
duty exemption and CHED-Accredited Schools
2 Exportation
Customs Incentives
Customs Duty
Exemption for Capital Sale/transfer within 5 years
Equipment, Raw
There shall be taxes and duties assessed based on the NBV*:
Materials, Spare Parts
1
and Accessories
To enterprise not availing of duty

exemption
2
*NBV = Historical cost less
accumulated depreciation,
as appearing in the RBE’s
books or FS, and determined
Proven technical in accordance with Accepted
obsolescence Accounting Standards and
approved by the BIR
VAT exemption on importation and VAT zero-rating on local purchases
VAT Exemption on
importation and VAT zero-
rating on local purchases
D&E
Directly
attributable
As long as the project/activity
is registered with the IPA
VAT exemption on importation and VAT zero-rating on local purchases
Sales VAT Treatment

DMEs with investment capital of at
least $500M or its equivalent in
DME to DME 12% Philippine peso and are import-

substituting or cater to non-
residents may avail of 0% VAT on
local purchase and VAT exemption
on importation upon approval by
the FIRB during the availment
period.
To non-reg.
REE* 12%
*Except non-reg. REEs as defined in
Section 296
VAT-reg. seller VAT Zero-Rated

to REE (Provided directly attributable, regardless
of location)
Sale of REE to another REE
VAT-registered seller under: VAT Treatment
Income Tax VAT Zero-Rated

Holiday (ITH) (Provided directly attributable, regardless
of location)
5% Gross
Income Earned VAT Exempt
(GIE)
Indirect tax incentives available to unregistered REE
New provision
Unregistered
export enterprise
EXPORT
Export enterprise not registered
with an IPA but accredited by
the Export Marketing Bureau
DIRECT EXPORT upon certification as exporter
70% Subject to VAT exemption on
INDIRECT EXPORT
importation and VAT zero-rating
on local purchases
Information Technology-Business Process Outsourcing (IT-BPM) –
alternative work arrangement
New provision
RBEs in the IT-BPO sector, compliant with on-site work

requirements set by the respective IPA may be
allowed to conduct business
under alternative work
arrangements
Transitory provisions for existing registered activities

A. Granted with ITH only Finish remaining ITH period
} }
B. Granted with ITH and + VAT exemption on importation / VAT
5% GIT after ITH zero-rating on local purchases for 12 years
5% GIT for 10 years
No tax refund/credit shall be granted to
C. Currently availing of qualified RBEs
5% GIT
Duty / VAT exemption on importation / VAT

D. RBEs inside
zero-rating on local purchases for the
ecozones/freeport
duration of the period of registration
REEs outside Duty exemption on importation / VAT zero-

ecozones/freeport rating on local purchases for the remaining
transitory period
Other provisions: Extent of authority to grant tax incentives

The Fiscal Incentives Review The Investment Promotion
Board, or the Investment Agencies or the Fiscal Incentives
Promotion Agencies, under a Review Board, as the case may
delegated authority from FIRB be, shall grant the appropriate
shall grant the appropriate tax tax incentives…
incentives…
Any matter pending with the
FIRB particularly applications
for registrations, requests for
reconsideration and/or appeal,
shall be immediately referred
back to the concerned IPA for
proper and immediate
Source: DOF website
resolution.
Page 27 20 December
07 October 2022
2021 Taxation of Ecozone and Freeport Zone Enterprises #SGVforABetterPhilippines
Other provisions
Expanded Functions of the FIRB
To recommend, upon the directive of the

President, the grant of tax and non-tax
incentives to registered enterprises in a highly
desirable project or a specific industrial
activity pursuant to Section 301, and to
RBE Taxpayer Service
DMEs with investment capital of at least
$500M or its equivalent in Philippine peso and • A separate service or unit within the BIR for
that are import-substituting or cater to non- RBEs shall be created
residents.
• The CIR shall prescribe the manner and
place of filing of returns and payments of
taxes through said service or unit
Other provisions
Implementing Rules and Regulations
Publication in the Promulgation of the

Official Gazette Effectivity necessary rules and
or in a newspaper regulations by the
of the act
of general 15 days after its within 90 days from the Secretary of
circulation complete publication effectivity of the act Finance
Margaux A. Advincula
Tax Advocacy and Controversy Partner, Global
Compliance and Reporting (GCR), SGV & Co.
CREATE “MORE”
Q&A
Hentje Leo L. Leaño Deonah L. Marco-Go
International Tax Partner, Global Compliance
Partner, Global Compliance and Reporting (GCR),
and Reporting (GCR), SGV & Co.
SGV & Co.

18 January 2024

Republic Act (RA) No. 11976
Ease of Paying Taxes Act
(EoPT)
18 January 2024
#SGVforABetterPhilippines
Speaker Profile
► He is a Certified Public Accountant (CPA). He graduated cum laude from the Institute of Accounts
Business and Finance (IABF) of Far Eastern University (FEU) and was also cited as one of FEU’s Most
Outstanding Senior Students. He completed the Management Development Program (MDP) at the Asian
Institute of Management (AIM).
► He has extensive experience in tax function outsourcing, tax health check/tax compliance services and
business tax advisory of companies in various industries
► He is the Ernst and Young (EY) Asia-Pacific (APAC) GCR Learning and Development (L&D) Leader.
► In addition to his assignment at the SGV Makati office, he is the GCR Partner assigned in our SGV offices
in Clark and Baguio. In July 2015, he received the SGV Special Award and was cited for his involvement
Hentje Leo L. Leaño in multifarious activities and for his leadership tempered by a winning attitude and sustained by a
Partner, Global Compliance and pragmatic sense of balance.
Reporting (GCR), SGV & Co.
► He received multiple recognitions from the Philippine Institute of Certified Public Accountants (PICPA) ---
PICPA Young Achiever in Public Practice in November 2014, Special Achievement for Professional
Development Award in November 2020, and Outstanding PICPA Member in November 2022.
► He was recognized as one of the FEU’s Outstanding Alumni during the 2023 Green and Gold Awards.
► He is a regular lecturer of EY Regional Trainings and in SGV’s Tax Basics Seminar (Tax BaSe) and has
consistently played an active role in organizing SGV’s tax seminar offerings to clients, business and
foreign chambers and professional organizations.
LinkedIn QR Code
Republic Act (RA) No. 11976
Ease of Paying Taxes Act
(EoPT)
18 January 2024
Timeline
The Ease of Paying Taxes (EOPT) Act (Republic Act No. 11976)
JAN JAN JAN
5
2024
7
2024
22 2024
Signed into law by the Publication in the

Effectivity of the Act
President Official Gazette
Declaration of policy
Section 2 of RA No. 11976
To provide a healthy environment for the tax paying public that protects and
safeguards taxpayer rights and welfare, and assures the fair treatment of all
taxpayers
To modernize tax administration and improve its efficiency and effectiveness

by providing mechanism that encourage proper and easy compliance at the
least cost and resources possible
To update the taxation system, adopt best practices, and replace antiquated
procedures
To enact policies and procedures, which are appropriate to different types of

taxpayers
Classification of taxpayers
Annual Gross Sales

PhP 3M PhP 20M PhP 1B
Micro Small Medium Large
Micro and Small Taxpayers
Annual Gross Sales

 Reduced pages of Income Tax Return (ITR) from 4 to 2 pages

 Reduced surcharge of 10% (instead of 25%) for failure to file a tax return or neglecting to
file a correct return
 Reduced interest penalty from 12% to 6%
 Reduced fine of PhP 500 (instead of PhP 1,000) for failure to file certain information
returns
 50% reduction in compromise penalty for violations of invoicing requirements and
printing invoices
Vetoed Provision
Annual Gross Sales

Exempt from withholding taxes on their income payments VETOED
President’s Veto Message of RA 11976
The President has vetoed Section 8 of the EOPT Act exempting micro taxpayers from the obligation to
withhold taxes, to wit:
“The Department Of Finance shall review, at least once every three (3) years, regulations and processes for the withholding of
creditable tax under this Code, and direct the Bureau of Internal Revenue to amend rules and regulations for the same, should it
be found during the review that the existing rules, regulations, and processes for the withholding of creditable tax under this
Code adversely and materially impact the taxpayer: Provided, That micro taxpayers shall not be required to withhold taxes
under Subsection (e) Of this Section."
“The aim of the EOPT Act to support micro and small enterprises must be fulfilled without impairing
the government’s tax administration capacities which are crucial to a responsive, effective, and
sustainable implementation of fiscal policies.
We have to strike a balance between providing relief to taxpayers, on the one hand, and
maintaining administrative efficiency through the integrity of our tax collection and monitoring
mechanisms, on the other.”
Venue of Filing and Payment
Sections 6 to 13 of RA No. 11976
May be done either electronically or manually
May be done through any:
Authorized Agent Bank;
RDO through the Revenue Collection Officer; and
Authorized Tax Software Provider
25% surcharge is no longer imposed for filing and payment at the wrong venue
Removal of disallowing expenses due to non-withholding
Section 34 (K) of the National Internal Revenue Code of 1997, as amended,

is repealed, and the succeeding paragraph is renumbered accordingly.
Withholding of taxes is no longer an additional requirement for

deductibility of expenses from gross income
Timing of withholding taxes
Current Rules EOPT Act
Arises at the time

✓ Paid
✓ Payable
✓ Accrued
Whichever comes first Income has become PAYABLE
Claims for tax credit of any creditable income tax

withheld in a previous period - Can still be
creditable in the subsequent CY / FY
Provided, declared in the tax return where the

corresponding income is reported.
Taxes withheld at source
Current Rules EOPT Act
In case of excess income taxes paid DURING THE YEAR
✓ Apply for cash refund / issuance of tax credit ✓ Apply for cash refund / issuance of tax credit
certificate certificate
✓ Option to carry-over (Irrevocable) – Apply the ✓ Option to carry-over (Irrevocable) – Apply the
excess against the income tax due of succeeding excess against the income tax due of succeeding
quarters quarters
✓ In case TP cannot carry-over due to

dissolution/cessation of business:
Apply for refund of unutilized excess income tax

credit
► BIR shall decide on the application and refund the
excess taxes within 2 years from date of
dissolution/cessation
Invoicing requirements
For service entities, output VAT liability will shift from collection (gross receipts) basis to
accrual basis
Current Rules EoPT Act
Timing* Support Timing* Support
Upon
Sale of goods VAT invoice
sale/accrual
Upon
VAT invoice
sale/accrual*
Upon collection
Sale of services VAT OR
of payment
*of remittance of output VAT
Output tax paid from uncollected accounts may be deducted in subsequent periods, provided that:
1. the billed amounts remain unpaid after the due date for their payment; and
2. the output VAT should not have been claimed as a deduction against the taxpayer’s gross
income as an expense for income tax purposes
Output VAT on uncollected receivable
Lapse of agreed
12% Subsequent
Uncollected Receivable
period to pay recovery
Seller may deduct the output Added to output VAT during

VAT on uncollected receivable period of recovery
from next quarter’s output
VAT, provided:
► Fully paid the VAT on the transaction

► VAT component not claimed as
allowable deduction
Consequences of issuing erroneous VAT invoice
Section 21 (D) of RA No. 11976
Common mistakes in BIR registered invoices will not necessarily lead to the disallowance of input
taxes
If a VAT-registered person issues a VAT invoice to another VAT-registered person with lacking information, the issuer
shall be liable for non-compliance with the invoicing requirement. However, the VAT shall still be allowed to be used
as input tax credit provided the following information are properly indicated in the VAT invoice:
Name of Seller/Buyer Date of transaction
Business style of the Seller/Buyer Quantity
Business address of the Seller/Buyer Unit Cost
Statement that the seller is a VAT- Description of the goods or properties or

registered person follow by his TIN nature of the service
TIN of Buyer, if VAT registered and Amount of Sales

amount exceed PhP 1,000
Amount of VAT
Sample VAT Invoice
Section 21 (D) of RA No. 11976
Name and TIN of

purchaser/issuer Date of transaction
Business style/address
of the Seller/Buyer
Description of goods /
nature of services
Amount of Sales and VAT
VAT refund claims risk classification
Classification of Claims
High-risk claim Subject to audit or other verification

processes based on BIR’s National
Medium-risk claim Audit Program
Low-risk claim
Basis of Risk Classification
Amount of VAT refund claim

Tax compliance history
Frequency of filing VAT refund claims
*Basis is not exclusive
Removal of Annual Registration Fee
Removed the requirement to pay the

PhP500 Annual Registration Fee
Business taxpayers are exempt from filing BIR Form No. 0605 and paying the P500 ARF on or
before January 31 every year.
Those with existing BIR Certificate of Registration (COR) that includes the Registration Fee will
retain its validity. Taxpayers may choose to update/ replace their COR at their convenience.
This can be done at the Revenue District Office, where they are registered on or before December
31, 2024, by surrendering their old COR.
Other provisions
Section 33, 35 & 36 of RA No. 11976
PhP 500
+ Every three years**
ATP VAT
Invoice PhP
100
5 YEARS*
FREE of
Charge If the sales amount per transaction is below the
threshold, Seller will issue one invoice for the
aggregate sales amount of at least P500.00 at
the end of the day
Preservation of Books
Printing of Sales/ Threshold for Issuance of
of Accounts and Other
Accounting Records Commercial Invoices Sales/Commercial Invoices
*Reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of the filing of the return, for the taxable year
when the last entry was made in the books of accounts
**Using the Consumer Price Index (CPI)
Other provisions
Section 33, 35 & 36 of RA No. 11976
Preservation of Books Printing of Sales/ Threshold for Issuance of

of Accounts and Other Commercial Invoices Sales/Commercial Invoices
Accounting Records
PhP 500
5 years* Every three years**
Free of charge
If the sales amount per transaction is below the

threshold, Seller will issue one invoice for the
aggregate sales amount of at least P500 at the
end of the day
*Reckoned from the day following the deadline in filing a return, or if filed after the
deadline, from the date of the filing of the return, for the taxable year when the last
entry was made in the books of accounts
**Using the Consumer Price Index (CPI)
Other provisions
Section 47 & 48 of RA No. 11976
JAN JAN APRIL OCT
7
2024
22 2024
22 22
2024 2024
Publication in the Effectivity of the Act Implementing Rules & Transitory Period
Official Gazette Regulations
Promulgation of the Taxpayers are given 6 months

necessary rules and from the effectivity of the
regulations IRR to comply with VAT and
within 90 days from the Other Percentage Taxes
effectivity of the Act amendments
Hentje Leo L. Leaño
Partner, Global Compliance and Reporting (GCR), SGV & Co.
EoPT
Q&A
Margaux A. Advincula Deonah L. Marco-Go
Tax Advocacy and Controversy Partner, Global Compliance International Tax Partner, Global Compliance and
and Reporting (GCR), SGV & Co. Reporting (GCR), SGV & Co.

18 January 2024

Base Erosion and Profit Shifting 2.0
BEPS 2.0
18 January 2024

About the Speaker
► Deonah is a Certified Public Accountant and a Lawyer in the Philippines. She placed 17th in the 2001
Certified Public Accountant Licensure Examinations. She obtained her Bachelor of Science degree in
Accountancy, honorable mention, from the De La Salle University and her Juris Doctor from the Ateneo de
Manila University School of Law.
► Deonah specializes in transfer pricing. She handles transfer pricing documentation engagements for local
and multinational companies. She assists clients in handling transfer pricing audits conducted by the local tax
authorities. She also assists client in filing bilateral advance pricing arrangement with the local tax
authorities.
► Deonah has been involved in various transfer pricing engagements for companies engaged in different
industries, such as Information Technology, Business Process Outsourcing, Pharmaceutical, Manufacturing
Deonah L. Marco-Go (i.e. fast-moving consumer goods, food, household and personal care products), Semiconductor, Steel,
International Tax Partner, Global
Agriculture and Automotive Industries.
Compliance and Reporting (GCR),
SGV & Co.
► Aside from her experience in transfer pricing, Deonah also assists clients in handling tax audits and securing
rulings from the BIR. She also handles tax planning and corporate restructuring engagements.
► Deonah is a tax partner at SGV & Co., a member practice of Ernst & Young Global Limited. She has been with
the firm for more than 18 years. Deonah is a member of the Philippine Institute of Certified Public
Accountants and the Integrated Bar of the Philippines
► Deonah has written and published several articles on transfer pricing. She has also conducted transfer pricing
seminars and trainings to clients.
LinkedIn QR Code
Base Erosion and Profit Shifting (BEPS) 2.0 Pillar Two
Why is it relevant?
Part of the OECD/G20 project to curb base

erosion and profit shifting (BEPS)
activities and unhealthy corporate income
tax rate competition among jurisdictions
On 23 May 2023, the International

Accounting and Standards Board (IASB)
issued Amendments to IAS 12 to account
for the impact of Pillar Two Model Rules
On 8 November 2023, Philippines joined the

“OECD/G20 Inclusive Framework on the BEPS Project”
and the “Outcome Statement on the Two-Pillar
Solution to Address the Tax Challenges Arising from
the Digitalisation of the Economy” dated 11 July 2023
Page 65 18 January 2024 BEPS 2.0 Pillar Two : A brief overview #SGVforABetterPhilippines
Who are in-scope for Pillar Two?
▪ large multinational enterprise ▪ with annual consolidated group ▪ in at least 2 out of 4 fiscal years
groups (MNEs) with offshore revenue of at least €750m
operations
15
%
▪ arising in no-tax or low tax ▪ Coordinated tax system (common
jurisdictions (ETR < 15%) where approach) acting consistently
▪ pay a top-up tax on excess profits they operate. towards an intended outcome
How to compute the jurisdictional ETR and Top-up Tax amount?
Net GloBE income Adjusted covered taxes

calculated on jurisdictional basis calculated on jurisdictional basis
Jurisdictional ETR =
Adjusted Covered Taxes
Net GloBE Income
x
Top-up tax percentage = Excess profit =
15 % − jurisdictional ETR
Net GloBE Income — Substance-based Income Exclusion
(15% Minimum Rate — Jurisdictional ETR)
Jurisdictional Top-Up Tax amount
Where is the Top-up Tax paid?
Sample group structure where:
1. QDMTT 2. IIR (A) 3. IIR (B) 4. UTPR
Qualified Domestic Income Inclusion Income Inclusion Undertaxed Payments Rule

Minimum Top-up Tax Rule (UTPR)
Rule
UPE UPE UPE UPE

Korea Korea USA Korea
IPE
IPE IPE IPE
Korea
Low-Taxed Low-Taxed Low-Taxed

CE of MNE CE of MNE Low-Taxed CE of MNE Other CE of
CE CE CE MNE Group
Group Group CE Phils Group
Phils Phils Phils
TAX COLLECTED AT -
local jurisdiction of the Low Taxed jurisdiction of the Ultimate jurisdiction of the Intermediate allocated to other jurisdictions
Constituent Entities (“LTCE”) Parent Entity (“UPE”) Parent Entity (“IPE”) with Constituent Entities
(“CEs”) in the Group
[NOTE: Phils has no BEPS legislation [NOTE: Korea has BEPS legislation –
yet] IIR]
Illustration: Income Inclusion Rule (IIR)
UPE
(Country X) IIR
Low-Taxed CE Low-Taxed CE
Subsidiary 1 Subsidiary 2 Subsidiary 3 Subsidiary 4 Subsidiary 5
(Country A) (Country A) (Country B) (Country C) (Country C)
Adjusted Adjusted Adjusted

GloBE GloBE GloBE
Country A Covered GloBE ETR Country B Covered GloBE ETR Country C Covered GloBE ETR
Income Income Income
taxes taxes taxes
Global Minimum Tax 15% Global Minimum Tax 15% Global Minimum Tax 15%
Subsidiary 1 400 1,000 40% Subsidiary 4 200 1,000 20%

Subsidiary 3 300 1,000 30%
Subsidiary 2 100 1,000 10% Subsidiary 5 50 1,000 5%
Jurisdictional 300 1,000 30% Jurisdictional 240 2,000 12%
Jurisdictional 500 2,000 25%
Top-Up Tax 0% Top-Up Tax 0% Top-Up Tax 3%
Illustration: Undertaxed Payment Rule (UTPR)
UPE
(Country X)
Low-Taxed CE
Low-Taxed CE
Subsidiary 1 Subsidiary 2 Subsidiary 3
(Country A) (Country A) (Country B) Subsidiary 4 Subsidiary 5
(Country C) (Country C)
UTPR UTPR
Temporary relief under the Transitional Country-by-Country Safe Harbor (TCSH) Test
(1) De minimis test (2) Effective tax rate test (3) Routine profits test
Simplified Substance-based
Total revenue <€10m and
Net Profit Before Tax (NPBT) <€1m
covered taxes > Transition
rate*
income exclusion
(SBIE)
> NPBT
NPBT
Must meet at least 1 of 3 tests to exclude a tested jurisdiction

*Transition rate:
15% for fiscal years beginning in 2023 and 2024
16% for fiscal years beginning in 2025
17% for fiscal years beginning in 2026
► Detailed GloBE calculations will not be necessary for a tested jurisdiction = Top-up tax is deemed to be zero.
► Transition Period covers all of the Fiscal Years beginning on or before 31 December 2026
► No requirement to use the same test for every jurisdiction or subsequent year
“Once out, always out”
Status of legislation as of January 2024
IAS12: Accounting and disclosures
Type of Tax Disclosure Reporting Period
Deferred Tax Mandatory temporary exception Immediately

– use of which must be disclosed
Current Tax Current tax expense (income) related to Beginning on or after

(Pillar Two laws are effective) Pillar Two income tax 1 January 2023, but not for any
interim period ending on or before
31 December 2023
Current Tax - If known or reasonably estimable, Beginning on or after

(Pillar Two laws are not yet disclose quantitative and qualitative 1 January 2023, but not for any
effective, but enacted or information about the company’s interim period ending on or before
substantively enacted) exposure to Pillar Two income taxes 31 December 2023
- If not known or reasonably estimable,

disclose a statement to that effect
and information about the company’s
progress in assessing its exposure
Key points to consider
▪ Pillar 2 is the future of the international tax landscape. 15% will be

the new 0% for tax.
▪ Monitor the implementation of Pillar 2 Rules in relevant

jurisdictions including the Philippines.
▪ Closely coordinate with the Group Headquarters / Parent Entity

for regular Pillar 2 impact assessment
▪ Identify at-risk / high-risk entities (e.g., with tax incentives, low-

tax entities) and consider -
▪ Calculating potential ETR impact under Pillar 2 rules
▪ Assessing eligibility for safe harbor exemptions
▪ Engaging with Regulators regarding the impact of existing
incentives in light of Pillar 2
▪ Potential restructuring opportunities
▪ Assess Group’s data readiness for Pillar 2.
▪ Form and educate a dedicated team to handle Pillar 2 calculations

and data monitoring.
Thank you.
The SGV Purpose

Nurture leaders and enable businesses for a better Philippines. #SGVforABetterPhilippines
Deonah L. Marco-Go
International Tax Partner, Global Compliance and
Reporting (GCR), SGV & Co.
BEPS 2.0
Q&A
Margaux A. Advincula Hentje Leo L. Leaño
Tax Advocacy and Controversy Partner, Global Partner, Global Compliance and Reporting (GCR),
Compliance and Reporting (GCR), SGV & Co. SGV & Co.

18 January 2024

SGV | Assurance | Tax | Strategy and
Transactions | Consulting
About SGV & Co.

SGV is the largest professional services firm in the
Philippines. We provide assurance, tax, strategy and
transactions and consulting services. In everything we do,
we nurture leaders and enable businesses for a better
Philippines. This Purpose is our aspirational reason for being
that ignites positive change and inclusive growth. Our
insights and quality services help empower businesses and
the economy, while simultaneously nurturing our people and
strengthening our communities. All this leads to building a
better Philippines,
and a better working world. SGV & Co. is a member firm of
Ernst & Young Global Limited.
EY refers to the global organization, and may refer to one or

more, of the member firms of Ernst & Young Global Limited,
each of which is a separate legal entity. Ernst & Young
Global Limited, a UK company limited by guarantee, does not
provide services to clients.
For more information about our organization, please visit

ey.com/ph.
© SyCip Gorres Velayo & Co.
All Rights Reserved.
UEN 198905395E
This material has been prepared for general informational purposes only and is
not intended to be relied upon as accounting, tax or other professional advice.
Please refer to your advisors for specific advice.
ey.com/ph

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Briefing on the Ease of

Paying Taxes Act, CREATE

January 18, 2024 #SGVforABetterPhilippines

Page 3 January 18, 2024 #SGVforABetterPhilippines

CREATE “MORE” Bill

Page 5 January 18, 2024 #SGVforABetterPhilippines

Substitute Bill to HB 8968

Under CREATE Under CREATE MORE

Additional income tax rate

25% / 20% Corporations under Enhanced Deductions

Total Assets** Taxable Income Tax Rate

Under CREATE Under CREATE MORE

Additional income tax rate

Corporations under Enhanced Deductions

BIR shall establish an expedited

A simplified and streamlined tax refund

Amount of VAT refund claim

Tax compliance history

Frequency of filing VAT refund claims

*Basis is not exclusive

Submission of invoices/other documents prescribed by the CIR* in support of the VAT

Power Expense Under CREATE Under CREATE MORE

Effective Jan. 1, 2024, until Dec. 31, 2028

Reinvestment Allowance Under CREATE Under CREATE MORE

Reinvestment in any of the projects or activities

Trade Fairs, Exhibitions or Trade Missions

Net Operating Loss Carry-Over Under CREATE Under CREATE MORE

following the last

of gross sales IN LIEU of all local taxes

Unless: Shall continue to be imposed in lieu of

Incentives CREATE MORE

Customs Duty Exemption

Incentives CREATE MORE

Customs Duty Exemption

Incentives CREATE MORE

To enterprise not availing of duty

Incentives CREATE MORE

Sales VAT Treatment

DME to DME 12% Philippine peso and are import-

VAT-reg. seller VAT Zero-Rated

VAT-registered seller under: VAT Treatment

Income Tax VAT Zero-Rated

RBEs in the IT-BPO sector, compliant with on-site work

Under CREATE Under CREATE MORE

Duty / VAT exemption on importation / VAT

REEs outside Duty exemption on importation / VAT zero-

Under CREATE Under CREATE MORE

Expanded Functions of the FIRB

To recommend, upon the directive of the

Implementing Rules and Regulations

Publication in the Promulgation of the

Page 30 January 18, 2024 #SGVforABetterPhilippines

January 18, 2024 #SGVforABetterPhilippines

JAN JAN JAN

Signed into law by the Publication in the

Section 2 of RA No. 11976

To modernize tax administration and improve its efficiency and effectiveness

To enact policies and procedures, which are appropriate to different types of

Section 3 of RA No. 11976