PREFEREN

TIAL
TAXATION

Aliah M. Magumpara
Title XIII of the Tax Code
under CREATE ACT

TAX
INCENTIVES
SCOPE AND COVERAGE
Implementing Rules and Regulations of Title XIII of the NIRC, as amended by RA No. 11534 – CREATE Act

 All existing IPAs as defined in the Act or related laws with respect to the administration and grant
of tax incentives unless otherwise specifically exempted from the coverage thereof.
 All newly registered project or activities including qualified expansion projects or activities of
export enterprises and domestic market enterprises under the Strategic Investment Priority Plan (SIPP)
 Registered enterprises, projects, or activities currently registered with the IPAs and enjoying
incentives prior to the effectivity of the Act.
 Other government agencies administering tax incentives with respect to the administration and
grant of tax incentives and other registered enterprises availing of tax incentives; and
 Government-owned and/or Government-controlled corporations (GOCCs), government
instrumentalities (GIs), government commissaries and state universities and colleges (SUCs) that were
granted tax subsidies under the tax expenditure fund of the Annual General Appropriations Act.

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INVESTMENT PROMOTION AGENCIES (IPA)
(Definition)

Refer to government entities created by law, executive order, decree or other issuance, in charge of promoting investments, granting and
administering tax and non-tax incentives, and overseeing the operations of the different economic zones and freeports in accordance with their
respective special laws. These include the:
 Board of Investments (BOI)
 Regional Board of Investments-Autonomous Region in Muslim Mindanao (RBOI-ARMM)
 Philippine Economic Zone Authority (PEZA)
 Bases Conversion and Development Authority (BCDA)
 Subic Bay Metropolitan Authority (SBMA)
 Clark Development Corporation (CDC)
 John Hay Management Corporation (JHMC)
 Poro Point Management Corporation (PPMC)
 Cagayan Economic Zone Authority (CEZA)
 Zamboanga City Special Economic Zone Authority (ZCSEZA)
 PHIVIDEC Industrial Authority (PIA)
 Aurora Pacific Economic Zone and Freeport Authority (APECO)
 Authority of the Freeport Area of Bataan (AFAB)
 Tourism Infrastructure and Enterprise Zone Authority (TIEZA)
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INVESTMENT PROMOTION AGENCIES (IPA)
(continued)

The Philippines has a network of 19 IPAs tasked to formulate and develop strategies to
position the country as among prime destinations for investments – each one having distinct
locational advantages and offering attractive incentive packages The PIPP is divided into
three (3) clusters based on the priority industries, geographic locations and strengths of each
IPA namely:
 Manufacturing and Logistics
 Tourism
 Agro-Industrial

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INVESTMENT PROMOTION AGENCIES (IPA)
(continued)

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INVESTMENT PROMOTION AGENCIES (IPA)
(continued)

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INVESTMENT PROMOTION AGENCIES (IPA)
(continued)

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REGISTERED BUSINESS ENTERPRISE
(Definition)
• Refers to any individual, partnership, corporation, Philippine branch of a foreign corporation, or other entity organized and existing
under Philippine laws and registered with an Investment Promotion Agency (IPA) excluding service enterprises such as those engaged
in:
 customs brokerage
 trucking or forwarding services
 janitorial services
 security services
 insurance
 banking, and other financial services
 consumers' cooperatives
 credit unions
 consultancy services
 retail enterprises
 Restaurants, or such other similar services,

as may be determined by the Fiscal Incentives Review Board, irrespective of location, whether inside or outside the zones, duly accredited or
licensed by any of the Investment Promotion Agencies and whose income delivered within the economic zones shall be subject to taxes under
the National Internal Revenue Code of 1997, as amended;

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REGISTERED BUSINESS ENTERPRISE
(continued)

• Export enterprise refers to any individual, partnership, corporation, Philippine branch of

a foreign corporation, or other entity organized and existing under Philippine laws and
registered with the Investment Promotion Agency to engage in manufacturing,
assembling or processing activity, and services such as information technology (IT)
activities and business process outsourcing (BPO), and resulting in the direct exportation,
and/or sale of its manufactured, assembled or processed product or IT/BPO services to
another registered export enterprise that will form part of the final export product or
export service of the latter, of at least seventy percent (70%) of its total production or
output;
• Domestic market enterprise refers to any enterprise registered with the Investment
Promotion Agency other than export enterprise

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STRATEGIC INVESTMENT PRIORITY PLAN (SIPP)
(Definition)

• The BoI, in coordination with the FIRB, IPAs, other government agencies administering
tax incentives, and the private sector, shall formulate the strategic management
investment priority plan to be submitted to the president for approval, which may contain
recommendations for types of non-fiscal support needed to:
 Create high-skilled jobs to grow a local pool of enterprises, particularly MSMEs, that can supply to
domestic and global value chains
 Increase the sophistication of products and services that are produced and/or sourced domestically
 Expand domestic supply and reduce dependence on imports
 Attract significant foreign capital or investment
 Promote export diversification and accelerate countryside development
• It shall be valid for a period of 3 years, subject to review and amendment every 3 years
thereafter unless, there would be a supervening event that would necessitate its review.

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STRATEGIC INVESTMENT PRIORITY PLAN (SIPP)
(Contents)

• The SIPP shall contain the following:

 Priority projects or activities that are eligible or qualified to be granted incentives under this Act
 Scope and coverage of location and industry tiers
 Terms and Conditions on the grant of enhanced deductions
 Qualifications for expansion, or entirely new projects or activities, to avail of incentives
 Criteria and conditions for existing registered projects or activities prior to the effectivity of the Act to
register and avail of the incentives under the Act
 Conditions and qualifications for export enterprises registered prior to the effectivity of the Act to reapply
and avail of SCIT after the expiration of the transitory period under Section 311 of the Act
 Specific qualification requirements or conditions for a particular sector or industry and other limitations
as set and determined by the BoI and in coordination with the FIRB; and
 Export of at least seventy percent (70%) of products and services

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FREEPORT ZONE
(Definition)

• Refer to an isolated and policed area adjacent to a port of entry, which shall be operated
and managed as a separate customs territory to ensure free flow or movement of goods,
except those expressly prohibited by law, within, into, and exported out of the freeport
zone where imported goods may be unloaded for immediate transshipment or stored,
repacked, sorted, mixed, or otherwise manipulated without being subject to import duties.
However, movement of these imported goods from the free-trade area to a non-free trade
area in the country shall be subject to all applicable internal revenue taxes and duties:
Provided, That for the freeport to qualify as a separate customs territory, a freeport shall
have a permanent customs control or customs office at its perimeter

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SPECIAL ECONOMIC ZONE OR ECOZONE

(Definition)

• Refers to a selected area, which shall be operated and managed as a separate customs
territory that is highly developed or has the potential to be developed into an agro-
industrial, industrial, information technology, or tourist/recreational area, whose metes
and bounds are fixed or delimited by presidential proclamations and within a specific
geographical area which includes industrial estates (IEs), export processing zones (EPZs),
ICT parks and centers, and free trade zones: Provided, That for the ecozone to qualify as a
separate customs territory, an ecozone shall have a permanent customs control or customs
office at its perimeter: Provided, however, That areas where mining extraction is
undertaken shall not be declared as an ecozone: Provided, further, That vertical economic
zones, such as, but not limited to, buildings, selected floors within buildings, and selected
areas on a floor, need to comply with the minimum contiguous land area as determined by
the Fiscal Incentives Review Board

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TAX AND DUTY
INCENTIVES
INCOME TAX HOLIDAY (ITH)
Tax and Duty Incentives

 Refers to the cessation from payment of income tax levied by the national government for a certain period of time
 Shall be limited to the income generated from a registered project or activity
 Period of availment of both Export Enterprises and Domestic Market Enterprises shall be 4 to 7 years depending on the location and
industry priorities, the basis of which is the SIPP.
 In addition to the incentives provided in tiers above, projects or activities of registered enterprises located in areas recovering from armed
conflict or a major disaster, as determined by the Office of the President, shall be entitled to two (2) additional years of income tax holiday.
 Project or activity relocating from the NCR shall be entitled to 3 additional years of ITH to commence at the completion of the relocation of
operations.
 Complete relocation shall mean the total physical relocation of the facilities outside of NCR, including the transfer of the full operations of the registered project or activity to the
new area of operation.

 Registered business enterprises whose projects or activities were granted only an income tax holiday prior to the effectivity of this Act
shall be allowed to continue with the availment of the income tax holiday for the remaining period of the income tax holiday as specified in
the terms and conditions of their registration: Provided, That for those that have been granted the income tax holiday but have not yet
availed of the incentive upon the effectivity of this Act, they may use the income tax holiday for the period specified in the terms and
conditions of their registration;

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SPECIAL CORPORATE INCOME TAX (SCIT)
Tax and Duty Incentives

 Solely available to Export Enterprises after the expiration of the ITH, effective on July 1, 2020
 Equivalent to 5% of Gross Income Earned (GIE) for 10 years, in lieu of all national and local taxes.
 Gross Income Earned (GIE) refers to gross sales or revenues derived from the registered project or activity, net of
sales discounts, sales returns and allowances and minus cost of sales or direct cost but before any deduction is
made for administrative expenses or incidental losses during a given taxable period
 The following are considered ‘direct costs’ per IRR, relative to the computation of the GIE:
 Direct salaries, wages or labor expenses
 Production supervision salaries
 Raw materials used in the manufacture of products
 Goods in process
 Finished goods
 Supplies and fuels used in production
 Depreciation of properties related in the rendition of the registered activity
 Rent and utility charges associated with properties used directly and exclusively in the rendition of registered activity
 Financing charges, not previously capitalized, associated with fixed assets used directly and exclusively in the registered
activity
 Service supervision salaries
 Direct materials and supplies used
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SPECIAL CORPORATE INCOME TAX (SCIT)
Tax and Duty Incentives (continued..)

 The option to avail of either the SCIT or Enhanced Deductions (ED) after the ITH period shall
be exercised by the RBE at the time of application for registration of the project. Such option
shall be irrevocable for the entire duration of entitlement to such incentives.
 Registered business enterprises currently availing of the five percent (5%) tax on gross
income earned granted prior to the effectivity of this Act shall be allowed to continue availing
the said tax incentive at the rate of five percent (5%) for ten (10) years

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ENHANCED DEDUCTIONS (ED)
Tax and Duty Incentives

 Available to both Export Enterprises and Domestic Market Enterprises after the expiration of the ITH
 Export enterprises may, at their option, avail of the SCIT or the ED, but in no case shall both be granted simultaneously.
 The following may be allowed as deduction, in addition to the allowable ordinary and necessary deductions under Sec. 34
of the NIRC:
 Depreciation allowance of the assets acquired for the entity's production of goods and services (qualified capital expenditure) —
additional ten percent (10%) for buildings; and additional twenty percent (20%) for machineries and equipment;
 Fifty percent (50%) additional deduction on the labor expense incurred in the taxable year;
 One hundred percent (100%) additional deduction on research and development expense incurred in the taxable year;
 One hundred percent (100%) additional deduction on training expense incurred in the taxable year;
 Fifty percent (50%) additional deduction on domestic input expense incurred in the taxable year;
 Fifty percent (50%) additional deduction on power expense incurred in the taxable year;
 Deduction for reinvestment allowance to manufacturing industry — When a manufacturing registered business enterprise
reinvests its undistributed profit or surplus in any of the projects or activities listed in the Strategic Investment Priority Plan, the
amount reinvested to a maximum of fifty percent (50%) shall be allowed as a deduction from its taxable income within a period of
five (5) years from the time of such reinvestment; and
 Enhanced Net Operating Loss Carry-Over (NOLCO). — The net operating loss of the registered project or activity during the first
three (3) years from the start of commercial operation, which had not been previously offset as deduction from gross income, may
be carried over as deduction from gross income within the next five (5) consecutive taxable years immediately following the year
19 of such loss.
ENHANCED DEDUCTIONS (ED)
Tax and Duty Incentives (continued..)

The following may be allowed as deduction, in addition to the allowable ordinary and necessary deductions under
Sec. 34 of the NIRC:

Enhanced Deduction Condition of Availment

Depreciation allowance of the assets acquired for the entity's The depreciation allowance of the assets acquired for the entity’s production of goods and
production of goods and services (qualified capital expenditure) — services (qualified capital expenditure) shall be allowed for assets that are directly related
additional ten percent (10%) for buildings; and additional twenty to the registered enterprise's production of goods and services other than administrative
percent (20%) for machineries and equipment and other support services

Fifty percent (50%) additional deduction on the labor expense The additional deduction on the labor expense shall not include salaries, wages, benefits,
incurred in the taxable year and other personnel costs incurred for managerial, administrative, indirect labor, and
support services.
One hundred percent (100%) additional deduction on research The additional deduction on research and development expense shall only apply to
and development expense incurred in the taxable year research and development directly related to the registered project or activity of the entity
and shall be limited to local expenditure incurred for salaries of Filipino employees and
consumables and payments to local research and development organizations.
One hundred percent (100%) additional deduction on training The additional deduction on training expense shall only apply to trainings, as approved by
expense incurred in the taxable year the Investment Promotion Agencies based on the Strategic Investment Priority Plan, given
to the Filipino employees engaged directly in the registered business enterprise's
production of goods and services.

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ENHANCED DEDUCTIONS (ED)
Tax and Duty Incentives (continued..)

Enhanced Deduction Condition of Availment

Fifty percent (50%) additional deduction on domestic input expense The additional deduction on domestic input expense shall only apply to
incurred in the taxable year domestic input that are directly related to and actually used in the
registered export project or activity of the registered business enterprise
Fifty percent (50%) additional deduction on power expense incurred in the The additional deduction on power expense shall only apply to power
taxable year utilized for the registered project or activity.
Deduction for reinvestment allowance to manufacturing industry — When a The deduction for reinvestment allowance to manufacturing industry shall
manufacturing registered business enterprise reinvests its undistributed be determined in the Strategic Investment Priority Plan.
profit or surplus in any of the projects or activities listed in the Strategic
Investment Priority Plan, the amount reinvested to a maximum of fifty
percent (50%) shall be allowed as a deduction from its taxable income
within a period of five (5) years from the time of such reinvestment
Enhanced Net Operating Loss Carry-Over (NOLCO). — The net operating -
loss of the registered project or activity during the first three (3) years from
the start of commercial operation, which had not been previously offset as
deduction from gross income, may be carried over as deduction from gross
income within the next five (5) consecutive taxable years immediately
following the year of such loss.

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ITH – SCIT / ED
Tax and Duty Incentives
DOMESTIC MARKET
EXPORT ENTERPRISES
ENTERPRISES
ITH ITH
( 4 – 7 years) ( 4 – 7 years)
DURING the period of
availment of Tax
Incentives
SCIT or ED ED
( 10 years ) ( 10 years )

AFTER
Regular Tax provided under the Regular Tax provided under the NIRC
EXPIRATION of Tax
NIRC
Incentives

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PERIOD OF AVAILMENT (ITH – SCIT / ED)
Tax and Duty Incentives

 The period of availment of the foregoing incentives shall commence from the actual start of
commercial operations with the registered business enterprise availing of the tax incentives
within three (3) years from the date of registration, unless otherwise provided in the
Strategic Investment Priority Plan and its corresponding guidelines: Provided, That after the
expiration of the transitory period under Section 311(C), export enterprises registered prior
to the effectivity of this Act shall have the option to reapply and avail of the incentives granted
under Section 294(B) for the same period provided under this Section,[246] subject to the
conditions and qualifications set forth in the Strategic Investment Priority Plan and
performance review by the Fiscal Incentives Review Board.

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PERIOD OF AVAILMENT (ITH – SCIT / ED)
Tax and Duty Incentives

 The determination of the category shall be based on both location and industry of the registered project or activity, and other relevant
factors as may be defined in the Strategic Investment Priority Plan.
 The location of the registered project or activity shall be prioritized according to the level of development as follows:
 National Capital Region
 Metropolitan areas (as determined by the NEDA) or areas contiguous and adjacent to the NCR
 All other areas

 The industry of the registered project or activity shall be prioritized according to national industrial strategy specified in the Strategic
Investment Priority Plan. The Strategic Investment Priority Plan shall define the coverage of the tiers and provide the conditions for qualifying
the activities:

 Tier I shall include activities that (i) have high potential for job creation; (ii) take place in sectors with market failures resulting in underprovision of basic
goods and services; (iii) generate value creation through innovation, upgrading or moving up the value chain; (iv) provide essential support for sectors
that are critical to industrial development; or (v) are emerging owing to potential comparative advantage.
 Tier II shall include activities that produce supplies, parts and components, and intermediate services that are not locally produced but are critical to
industrial development and import-substituting activities, including crude oil refining.

 Tier III activities shall include (i) research and development resulting in demonstrably significant value-added, higher productivity, improved efficiency,
breakthroughs in science and health, and high-paying jobs; (ii) generation of new knowledge and intellectual property registered and/or licensed in the
24 Philippines; (iii) commercialization of patents, industrial designs, copyrights and utility models owned or co-owned by a registered business enterprise;
(iv) highly technical manufacturing; or (v) are critical to the structural transformation of the economy and require substantial catch-up efforts.
PERIOD OF AVAILMENT (ITH – SCIT / ED)
Tax and Duty Incentives

 The table below summarizes the projects or activities:

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PERIOD OF AVAILMENT (ITH – SCIT / ED)
Tax and Duty Incentives

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PERIOD OF AVAILMENT (ITH – SCIT / ED)
Tax and Duty Incentives

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PERIOD OF AVAILMENT (ITH – SCIT / ED)
Tax and Duty Incentives

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CUSTOMS DUTY EXEMPTION

Tax and Duty Incentives
 Direct and Exclusive Use. The duty exemption shall only apply to the importation of capital equipment, raw materials, spare parts or accessories directly and exclusively used in the registered
project or activity by RBEs.

 The capital equipment, raw materials, spare parts, or accessories

 are directly and reasonably needed and
 will be used exclusively in and as part of the direct cost of the registered project or activity of the registered business enterprise, and
 are not produced or manufactured domestically in sufficient quantity or of comparable quality and at reasonable prices. Provided, that for a period of one year from the issuance of the IRR, the Certificate of
Authority to Import (CAI) or Admission entry for imports shall be used to satisfy this condition. The IPA shall furnish the DTI with copies of the issued CAI or admission entry every 5 th day of the month. After the
expiration of the one-year period, the IPAs shall secure from the DTI the Certificate of Non-Local Availability in compliance with this condition

 Prior Approval. The approval of the IPA through the CAI/admission entry must be obtained by the RBE prior to the importation of the goods.

 Sale, Transfer, or Disposition. Within the first five (5) years from the date of importation, approval of the IPA must be secured before the sale, transfer, or disposition of the capital
equipment, raw materials, spare parts, or accessories, which were granted tax and customs duty exemption hereunder. Provided, that the sale, transfer or disposition of the capital
equipment, raw materials, spare parts, or accessories within 5 years from date of importation shall require payment of duties based on the net book value of the capital equipment, raw
materials, spare parts, or accessories.. The sale, transfer or disposition thereof shall be allowed only under the following circumstances:
 If made to another enterprise availing customs duty exemption on imported capital equipment, raw materials, spare parts, or accessories;
 If made to another enterprise not availing of duty exemption on imported capital equipment, raw materials, spare parts, or accessories, upon payment of any taxes and duties due on t
he net book value of the capital equipment, raw materials, spare parts, accessories to be sold;
 Exportation of capital equipment, raw materials, spare parts, accessories, source documents, or those required for pollution abatement and control;
 Proven technical obsolescence of the capital equipment, raw materials, spare parts, accessories; or
 If donated to the TESDA, state universities and colleges (SUCs), or DepEd and CHED-accredited schools: Provided, That the donation shall be exempt from import duties and taxes,
including donor's tax.

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CUSTOMS DUTY EXEMPTION

Tax and Duty Incentives (continued..)
 Solidary Liability. if the registered business enterprise sells, transfers, or dispose the aforementioned imported items without prior approval, the concerned RBE and the vendee,
transferee, or assignee shall be solidarily liable to pay twice the amount of the duty exemption that should have been paid during its importation, without prejudice to any
penalties or sanctions the concerned IPA may impose

 Utilization of Non-registered Project or Activity. In the event that the capital equipment, raw materials, spare parts, or accessories shall be used for a non-registered
project or activity of the registered business enterprise at any time within the first five (5) years from the date of importation, the registered business enterprise shall
first seek prior approval of the concerned Investment Promotion Agency and pay the taxes and customs duties that were not paid upon the importation

 Sale, Transfer, or Disposition. Within the first five (5) years from the date of importation, approval of the IPA must be secured before the sale, transfer, or disposition of
the capital equipment, raw materials, spare parts, or accessories, which were granted tax and customs duty exemption hereunder. Provided, that the sale, transfer or
disposition of the capital equipment, raw materials, spare parts, or accessories within 5 years from date of importation shall require payment of duties based on the net
book value of the capital equipment, raw materials, spare parts, or accessories.. The sale, transfer or disposition thereof shall be allowed only under the following
circumstances:
 If made to another enterprise availing customs duty exemption on imported capital equipment, raw materials, spare parts, or accessories;
 If made to another enterprise not availing of duty exemption on imported capital equipment, raw materials, spare parts, or accessories, upon payment of any taxes and
duties due on t he net book value of the capital equipment, raw materials, spare parts, accessories to be sold;
 Exportation of capital equipment, raw materials, spare parts, accessories, source documents, or those required for pollution abatement and control;
 Proven technical obsolescence of the capital equipment, raw materials, spare parts, accessories; or
 If donated to the TESDA, state universities and colleges (SUCs), or DepEd and CHED-accredited schools: Provided, That the donation shall be exempt from import duties
and taxes, including donor's tax.

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VALUE ADDED TAX EXEMPTION

Tax and Duty Incentives
 The VAT exemption on importation and VAT zero rating on local purchases shall only apply to goods and services
directly and exclusively used in the registered project or activity of export enterprises, during the period of
registration of the said registered project or activity with the concerned IPA.

 The direct and exclusive use in the registered project or activity refers to raw materials, inventories, supplies,
equipment, goods, services and other expenditures necessary for the registered project or activity without
which the registered project or activity cannot be carried out.

 The VAT exemption on importation and VAT zero-rating on local purchases shall only apply to goods and
services directly and exclusively used in the registered project or activity. RR No. 21-2021 established that
sales of goods and/or services to a registered export enterprise to be directly and exclusively used in the
registered project or activity are VAT zero-rated sales.

 Excess input taxes attributable to zero-rated sales by VAT-registered RBEs may at their option be refunded or
applied for a tax credit.
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OTHER INCENTIVES ON IMPORTATION OF

COVID-19 VACCINES
Tax and Duty Incentives
 The importation of COVID-19 vaccines by RBEs shall be exempt from import duties, taxes
and other fees, subject to the approval or licenses issued by the DOH or the FDA.

 Availment condition: (IRR of CREATE Act)

 COVID-19 vaccines must not be intended for resale or other commercial use and shall be
distributed without any consideration from persons to be vaccinated
 RBEs availing duty and tax exemption must declare that the vaccines shall be for the sole and
exclusive use of such entities.

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OTHER INCENTIVES ON IMPORTATION OF

PETROLEUM PRODUCTS
Tax and Duty Incentives
 Persons who directly import petroleum products defined under RA 8749 – Downstream Oil Industry Deregulation Act of 1998, for resale in the Philippine
Customs Territory and/or in free zones as defined under RA 10863 – Customs Modernization and Tariff Act (CMTA), shall not be entitled to the foregoing tax
and duty incentives, and shall be subject to appropriate taxes imposed under the Tax Code, as amended.
 Petroleum Products – refers to products formed in the course of refining crude petroleum through distillation, cracking, solvent refining and chemical
treatment coming out as primary stocks from the refinery such as, but not limited to : LPG, naptha, gasolines, solvent, kerosenes, aviation fuels, diesel oils, fuel
oils, waxes and petrolatums, asphalt, bitumens, coke and refinery sludges, or such refinery petroleum fractions which have not undergone any process or
treatment as to produce separate chemically-defined compouns in a pure or commercially pure state and to which various substances may have been added to
render them suitable to for particular uses: Provided, that the resultant product contains not less than 50% by weight of such petroleum products.
 Notwithstanding any law to the contrary, the importation of petroleum products by any person, including RBEs, shall be subject to the payment of applicable
duties and taxes as provided under the CMTA, and the Tax Code, respectively, upon importation into the Philippine customs territory and/or into free zones as
defined under the CMTA.
 Provided, That the importer can file for claims for the refund of duties and taxes applicable under Section 900 of the CMTA, and Sections 106(A)(2), 109(u),
and 112 of the Tax Code, respectively, for direct export of the petroleum products such as sales to international carriers or sea vessels engage in International
trade under Section 135 of the Tax Code or indirect export of petroleum products, and/or other tax-exempt sales under the CMTA and other special laws.
 Provided, further, That the importers who subsequently export fuel, subject to the appropriate rules of the fuel marking program, may apply for a refund of
duties and taxes, as applicable under the CMTA, and this Code .

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OTHER INCENTIVES ON IMPORTATION OF

PETROLEUM PRODUCTS
Tax and Duty Incentives (continued..)
 Refund claims of VAT and excise tax referred to in this Section shall be filed at the BIR for verification ad evaluation. Once approved, the claim shall be
forwarded to the BOC for cash payment or issuance of a tax credit certificate, as applicable.
 Crude oil that is intended to be refined at a local refinery, including the volumes that are lost and not converted to petroleum products when the crude
oil actually undergoes the refining process, shall be exempt from payment of applicable duties and taxes upon importation:.
 Provided, That applicable duties and taxes on petroleum products shall be payable only upon lifting of the petroleum products produced from the
imported crude oil, subject to rules and regulations that may be prescribed by the Bureau of Customs and the Bureau of Internal Revenue, to ensure that
crude oil shall not be lifted from the refinery without payment of appropriate duties and taxes.
 Provided, further, that in case of withdrawal of the petroleum products produced from the imported crude oil, for introduction into the customs
territory, all applicable duties, taxes and other charges shall be paid to the Bureau before release from custody subject to the prior requirement of
authority to release imported goods.

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INVESTMENTS PRIOR TO THE EFFECTIVITY OF THE
CREATE ACT
Tax and Duty Incentives

 Registered business enterprises with incentives granted prior to the effectivity of this Act shall
be subject to the following rules:
 Registered business enterprises whose projects or activities were granted only an income tax holiday prior to the
effectivity of this Act shall be allowed to continue with the availment of the income tax holiday for the remaining
period of the income tax holiday as specified in the terms and conditions of their registration: Provided, That for
those that have been granted the income tax holiday but have not yet availed of the incentive upon the effectivity
of this Act, they may use the income tax holiday for the period specified in the terms and conditions of their
registration;
 Registered business enterprises, whose projects or activities were granted an income tax holiday prior to the
effectivity of this Act and that are entitled to the five percent (5%) tax on gross income earned incentive after the
income tax holiday, shall be allowed to avail of the five percent (5%) tax on gross income earned incentive based
on Subsection (C); and
 Registered business enterprises currently availing of the five percent (5%) tax on gross income earned granted
prior to the effectivity of this Act shall be allowed to continue availing the said tax incentive at the rate of five
percent (5%) for ten (10) years.

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TAX INCENTIVES PRIOR
TO REPUBLIC ACT NO.
11534 – CREATE ACT
INVESTMENT INCENTIVES
https://boi.gov.ph/how-to-setup-business/incentives-to-investors/

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OMNIBUS INVESTMENTS CODE OF 1987
(EO 226)
• The Omnibus Investments Code of 1987, as amended, integrates the basic laws on
investments, clarifying and harmonizing their provisions to encourage and guide domestic and
foreign investors. It was passed through EO 226, which took effect on 13 August 1987.
• Qualified proponents who will invest in priority areas of activity listed in the Investment
Priorities Plan (IPP) can qualify for incentives. The IPP identifies the investment areas eligible
for incentives under the Code.
• The IPP identifies the investment areas eligible for incentives under the Code, which includes:
 Preferred Activities
 Export Activities
 Special Laws
 ARMM List

38
OMNIBUS INVESTMENTS CODE OF 1987
(EO 226)
Tax Exemptions
Income Tax Holiday (ITH)
 BOI registered enterprises shall be exempt from the payment of income tax reckoned from the approved target or actual date of commercial operations, whichever comes first, but in no
case earlier than the date of registration, as follows:
 Six (6) years for new projects granted pioneer status;
 Six (6) years for projects located in Less Developed Areas (LDAs), regardless of status (pioneer or non-pioneer) or type of projects (new or expansion);
 Four (4) years for new projects granted non-pioneer status; and
 Three (3) years for expansion and modernization projects. (As a general rule, ITH shall be limited only to incremental sales given a specified base year.)

 New registered pioneer and non-pioneer enterprises, expansion enterprises granted pioneer incentives under Article 40 of EO 226, and those located in LDAs may be granted one (1)
bonus year of ITH incentive for each of the following criterion:
 Capital Equipment to Labor Ratio Criterion. The ratio of derived dollar cost of capital equipment to the average number of direct labor does not exceed US$10,000; or
 Net Foreign Exchange Earnings/Savings Criterion. The net foreign exchange savings or earnings for the first three (3) years of commercial operation should at least be US$500,000; or
 Indigenous Raw Material Cost Criterion. The indigenous raw materials used in the manufacture or processing of the registered product is at least fifty percent (50%) of the total cost of raw materials for
each of the taxable year beginning the start of commercial operation up to when the extension using this criterion was applied for.
 In no case shall a registered firm avail of ITH for a period exceeding eight (8) years.
Duty free importation of capital equipment, spare parts and accessories, subject to conditions
A registered enterprise with a bonded manufacturing warehouse shall be exempt from customs duties and national internal revenue taxes on its importation of required supplies/spare parts
for consigned equipment or those imported with incentives. The availment period shall not exceed ten (10) years from date of registration.
Exemption from wharfage dues and export tax, duty, impost, and fees
All enterprises registered under the IPP will be given a ten (10) year period from the date of registration to avail of the exemption from wharfage dues and any export tax, impost, and fees on
its non-traditional export products.
Tax and duty-free importation of breeding stocks and genetic materials
Agricultural production and processing projects will be exempt from the payment of all taxes and duties on their importation of breeding stocks and genetic materials within ten (10) years
from the date of registration or commercial operations.

39
OMNIBUS INVESTMENTS CODE OF 1987
(EO 226)
Tax Credits

Tax credit on the purchase of domestic breeding stocks and genetic materials
A tax credit equivalent to one hundred percent (100%) of the value of national internal revenue taxes
and customs duties that would have been waived (had these been imported) on the purchase of local
breeding stocks and genetic materials within ten (10) years from the date of registration or
commercial operations.

Tax credit on raw materials and supplies

Tax credit equivalent to the national internal revenue taxes and duties paid on raw materials,
supplies, and semi-manufactured products used in the manufacture of export products and forming
part thereof.

40
OMNIBUS INVESTMENTS CODE OF 1987
(EO 226)
Additional Deductions from Taxable Income

Additional deduction for labor expense (ADLE)

For the first five (5) years from date of registration, a registered enterprise shall be allowed an additional deduction from taxable
income equivalent to fifty percent (50%) of the wages of additional skilled and unskilled workers in the direct labor force. This
incentive shall be granted only if the enterprise meets a prescribed capital to labor ratio and shall not be availed of simultaneously
with ITH.

This additional deduction shall be doubled or become one hundred percent (100%) if the activity is located in an LDA. The
privilege, however, is not granted to mining and forestry-related projects as they would naturally be located in certain areas to be
near their source of raw materials.

ADLE cannot be simultaneously availed of with ITH.

Additional deduction for necessary and major infrastructure work

A registered enterprise locating in LDAs or in areas deficient in infrastructure, public utilities, and other facilities may deduct from
taxable income an amount equivalent to the expenses incurred in the development of necessary and major infrastructure works.

41
OMNIBUS INVESTMENTS CODE OF 1987
(EO 226)
Zero-rated Value-Added Tax (VAT)

The BOI endorses to the BIR two types of zero percent (0%) VAT applications:

• For purchases of raw materials and supplies used in the manufacture and which form part of the
registered export product; and

• For purchases of goods, services, or properties of firms exporting one hundred percent (100%) of
their product. (Motor vehicles are not covered, except specialized vehicles such as backhoe,
forklift, etc.)

42
BASES CONVERSION AND DEVELOPMENT ACT OF
1992 (RA 7227), AS AMENDED
Objective

 RA 7227, otherwise known as the Bases Conversion and Development Act of 1992, was enacted into
law on 13 March 1992. The objective of the Act is to accelerate the sound and balanced conversion
and development of the former United States military bases into special economic zones in
order to promote the economic and social development of Central Luzon in particular, and the country
in general.

 RA 7227 created two administrative bodies for the purpose of adopting, preparing, and implementing
a comprehensive development program for the conversion of the Clark and Subic military
reservations and their surrounding communities into special economic zones: (1) the Bases
Conversion and Development Authority (BCDA) and (2) the Subic Bay Metropolitan Authority (SBMA)

 The Clark Development Corporation (CDC) is the operating and implementing arm of the BCDA to
manage the Clark Special Economic Zone and the Clark Freeport Zone (CFZ).

43
BASES CONVERSION AND DEVELOPMENT ACT OF
1992 (RA 7227), AS AMENDED
Tax Incentives

Fiscal Incentives
 A final tax of five percent (5%) on gross income earned shall be paid in lieu of all local and national
taxes.
(Gross income refers to gross sales or gross revenues derived from the business
activity within the zone, net of sales discounts and sales returns and allowances
and less cost of sales, cost of production or direct cost of services.)
 Tax and duty-free importation of raw materials and capital equipment

Non-fiscal Incentives
 Permanent residency status for investors, their spouses and dependent children under twenty one
(21) years of age, provided they have continuing investments of not less than US$250,000.
 Employment of foreign nationals.

44
THE SPECIAL ECONOMIC ZONE ACT OF 1995
(RA 7916), AS AMENDED
Objective

 RA 7916 was enacted on 24 February 1995 to encourage and promote the establishment and
development of economic zones or “ecozones” in identified and selected areas in the country as a
means to achieve sound and balanced industrial, economic, and social development.

 It also created the Philippine Economic Zone Authority (PEZA) as the agency mandated to enforce
the provisions and objectives of the law.

45
THE SPECIAL ECONOMIC ZONE ACT OF 1995
(RA
Tax 7916), AS AMENDED
Incentive

PEZA-registered enterprises located within the ecozones administered by PEZA may avail of the
following incentives and benefits:
 All incentives under EO 226 which include ITH;
 Preferential final tax of five percent (5%) of gross income in lieu of all national and local taxes, after the ITH
period (alternatively, this incentive may be waived by the registered enterprise subject to certain conditions);
 Tax and duty-free importation of capital equipment, spare parts, raw materials, and supplies, which are
needed in the registered activity; and
 Tax credits for exporters using local materials as inputs under RA 7844 or the Export Development Act of
1994.

An amount equivalent to one-half (1/2) of the value of training expenses incurred in developing skilled
or unskilled labor or for managerial or other management development programs incurred by a PEZA
firm can be deducted from the national government’s share of 3% (out of 5%) final tax.

46
OTHER SPECIAL ECONOMIC ZONES
Tax Incentive

Aside from the ecozones under PEZA, the Subic area under SBMA, and the Clark area under CDC, there
are four other special economic zones established under special laws. These are:
 Zamboanga City Special Economic Zone created under RA 7903 on 23 February 1995;
 Cagayan Special Economic Zone and Freeport created under RA 7922 on 24 February 1995;
 Aurora Economic Zone created under RA 9490 on 29 June 2007, which later became the Aurora
Pacific Economic and Freeport Zone in 2010 under RA 10083; and
 Freeport Area of Bataan created under RA 9728 on 23 October 2009.

Incentives available to locators in these ecozones:

Firms registered with and located within the territorial boundaries of these ecozones shall be entitled
to fiscal and non-fiscal benefits similar to those available to PEZA-registered enterprises.

47
THE TOURISM ACT OF 2009 (RA 9593)
Objective

RA 9593 was enacted to establish and develop Tourism Enterprise Zones (TEZs) in identified and
selected areas in the country for the purpose of developing the Philippine Tourism industry as an
engine of socioeconomic growth.

The law created the Tourism Infrastructure and Enterprises Zone Authority (TIEZA) which is tasked to
designate, regulate, and supervise the TEZs, and exercises sole and exclusive jurisdiction in the grant
and administration of incentives provided under the Act. The TIEZA is an attached agency to the
Department of Tourism and is under its supervision in terms of policy and programs.

TEZs are classified as:

(1) Greenfield Tourism Zones - which are areas with new or pioneer development, or
(2) Brownfield Tourism Zones - which are areas with existing infrastructures or development as
determined by the TIEZA.

48
THE TOURISM ACT OF 2009 (RA 9593)
Tax Incentive

Registered TEZ operators and enterprises are entitled to the following fiscal and non-fiscal incentives.

A. Income Tax Holiday (ITH)

 New enterprises in Greenfield and Brownfield Tourism Zones shall be entitled to six (6) years ITH from start of business operations, which may be extended up to a maximum of six (6)
years if the enterprise undertakes substantial expansion or upgrade prior to the expiration of its first six (6) years ITH.
 An existing enterprise in a Brownfield Zone may avail of a maximum of six (6) years non-extendible ITH if it undertakes extensive expansion or upgrade of facilities
 Net operating losses for any taxable year immediately preceding the current taxable year which had not been previously offset as deduction from gross income, may be carried over as
deduction from gross income for the next six (6) consecutive years immediately following the year of the loss.

B. Gross Income Taxation

Final tax of five percent (5%) on gross income earned in lieu of all other national and local taxes, license fees, imposts and assessments, except real estate taxes, and such
fees as may be imposed by TIEZA, after the ITH.
C. Exemption of one hundred percent (100%) from all taxes and customs duties on importation of capital investment and equipment that will be used directly, actually, and
exclusively by the enterprise in its registered activity.

D. Exemption from customs duties and national taxes on importation of transportation equipment and accompanying spare parts that are reasonably needed and will be
exclusively used by the accredited enterprise, provided they are not manufactured locally in sufficient quantity, of comparable quality, and at reasonable prices.

E. Goods and Services

 Exemption of one hundred percent (100%) from all taxes and customs duties on importation of goods actually consumed in the course of services actually rendered by or through the
registered enterprise, excluding goods imported for the purpose of operating a wholesale or retail establishment in competition with the Duty Free Philippines Corporation.
 Tax credit equivalent to all national internal revenue taxes paid on all locally sourced goods and services directly or indirectly used by the registered enterprise within the TEZ.

49
THE TOURISM ACT OF 2009 (RA 9593)
Tax Incentive (continued)
C. Social Responsibility Incentive
 Tax deduction equivalent to a reasonable percentage, not exceeding fifty percent (50%), of the cost of environmental protection or cultural heritage preservation activities, sustainable livelihood programs for
local communities, and other similar services.

G. Employment of foreign nationals in executive, supervisory, technical, and advisory positions for reasonable periods and under such terms as approved by TIEZA.

H. Special Investor’s Resident Visa

 A foreign national with a minimum investment of US$200,000 in a registered enterprise shall be entitled to a special investor’s resident visa enabling the foreign national to reside in the Philippines while his
or her investment subsists.
 Working visas renewable every two (2) years shall be issued to foreign personnel and other aliens possessing highly-technical skills, subject to certain conditions.

I. Foreign Currency Transactions

Subject to appropriate rules and regulations of the Bangko Sentral ng Pilipinas, registered enterprises are guaranteed the right to repatriate entire proceeds of the liquidation of the foreign
investment or remit earnings from foreign investment, in the currency in which the investment was originally made and at the exchange rate prevailing at the time of repatriation; and in the
case of foreign loans and foreign obligations arising from technological assistance contracts, the right to remit at the exchange rate prevailing at the time of remittance such sums as may be
necessary to meet the payment of interest and principal.

J. Requisition of Investment
Protection from requisition of the property of the registered enterprise except in cases of war or national emergency, subject to payment of just compensation and repatriation of such
compensation.

K. Lease and Ownership of Land

 Subject to conditions set forth under the Investor’s Lease Act, lands and buildings in each TEZ may be leased to foreign investors for a period not exceeding fifty (50) years, renewable once for a period not
more than twenty-five (25) years.
 Leasehold right acquired under long-term contracts may generally be sold, transferred, or assigned.

50
 The Philippines has entered into several tax treaties for the
avoidance of double taxation and prevention of fiscal evasion
with respect to income taxes. At present, there are 31 Philippine
TAX TREATIES Tax Treaties in force. Copies are available at the BIR Library
and the International Tax Affairs Division of the BIR, which is
under the Deputy Commissioner for Legal and Inspection Group.
OECD MODEL TAX CONVENTION

ROYALTIES
 Royalties arising in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in that other State.
 The provisions of paragraph 1 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in
which the royalties arise through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such
permanent establishment. In such case the provisions of Article 7 shall apply.
 Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard
to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of
each Contracting State, due regard being had to the other provisions of this Convention
DIVIDENDS
 Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
 However, dividends paid by a company which is a resident of a Contracting State may also be taxed in that State according to the laws of that State, but if the beneficial owner of the
dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
 5 percent of the gross amount of the dividends if the beneficial owner is a company which holds directly at least 25 per cent of the capital of the company paying the
dividends throughout a 365 day period that includes the day of the payment of the dividend (for the purpose of computing that period, no account shall be taken of changes of
ownership that would directly result from a corporate reorganisation, such as a merger or divisive reorganisation, of the company that holds the shares or that pays the
dividend);
 15 percent of the gross amount of the dividends in all other cases.
The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations. This paragraph shall not affect the taxation
of the company in respect of the profits out of which the dividends are paid.

52
OECD MODEL TAX CONVENTION
(continued)
DIVIDENDS (continued)
 The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-
claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which
the company making the distribution is a resident.
 The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State
of which the company paying the dividends is a resident through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively
connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
 Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid
by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected
with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid
or the undistributed profits consist wholly or partly of profits or income arising in such other State.
INTEREST
 Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
 However, interest arising in a Contracting State may also be taxed in that State according to the laws of that State, but if the beneficial owner of the interest is a resident of the other
Contracting State, the tax so charged shall not exceed 10 percent of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement
settle the mode of application of this limitation.
 The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the
debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or
debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
 Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of
this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions ofthis Convention.

53
OECD MODEL TAX CONVENTION
(continued)
CAPITAL GAINS
 Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that
other State.
 Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other
Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.
 Gains that an enterprise of a Contracting State that operates ships or aircraft in international traffic derives from the alienation of such ships or aircraft, or of movable property
pertaining to the operation of such ships or aircraft, shall be taxable only in that State.
 Gains derived by a resident of a Contracting State from the alienation of shares or comparable interests, such as interests in a partnership or trust, may be taxed in the other
Contracting State if, at any time during the 365 days preceding the alienation, these shares or comparable interests derived more than 50 percent of their value directly or indirectly
from immovable property, as defined in Article 6, situated in that other State.
 Gains from the alienation of any property, other than that referred to in paragraphs 1, 2, 3 and 4, shall be taxable only in the Contracting State of which the alienator is a resident.
BUSINESS PROFIT
 Where, in accordance with paragraph 2, a Contracting State adjusts the profits that are attributable to a permanent establishment of an enterprise of one of the Contracting States
and taxes accordingly profits of the enterprise that have been charged to tax in the other State, the other State shall, to the extent necessary to eliminate double taxation on these
profits, make an appropriate adjustment to the amount of the tax charged on those profits. In determining such adjustment, the competent authorities of the Contracting States
shall if necessary consult each other.
 For the purposes of this Article and Article [23 A] [23 B], the profits that are attributable in each Contracting State to the permanent establishment referred to in paragraph 1 are the profits it might
be expected to make, in particular in its dealings with other parts of the enterprise, if it were a separate and independent enterprise engaged in the same or similar activities under the same or
similar conditions, taking into account the functions performed, assets used and risks assumed by the enterprise through the permanent establishment and through the other parts of the enterprise.

54
US TAX CONVENTION

ROYALTIES
1. the tax imposed by that other Contracting State shall not exceed-
1. In the case of the United States, 15 percent of the gross amount of the royalties, and
2. In the case of the Philippines, the least of:
1. 25 percent of the gross amount of the royalties,
2. 15 percent of the gross amount of the royalties, where the royalties are paid by a corporation registered with the Philippine Board of Investments and engaged in preferred
areas of activities, and
3. The lowest rate of Philippine tax that may be imposed on royalties of the same kind paid under similar circumstances to a resident of a third State.
2. Where an amount is paid to a related person and would be treated as a royalty but for the fact that it exceeds an amount which would have been paid to an unrelated person, the
provisions of this article shall apply only to so much of the amount as would have been paid to an unrelated person. In such a case, the excess amount may be taxed by each
Contracting State according to its own law, including the provisions of this Convention where applicable.
DIVIDENDS
3. The rate of tax imposed by one of the Contracting States on dividends derived from sources within that Contracting State by a resident of the other Contracting State shall not
exceed-
1. 25 percent of the gross amount of the dividend; or
2. When the recipient is a corporation, 20 percent of the gross amount of the dividend if during the part of the paying corporation's taxable year which precedes the date of
payment of the dividend and during the whole of its prior taxable year (if any), at least 10 percent of the outstanding shares of the voting stock of the paying corporation was
owned by the recipient corporation.
4. The term "dividends" as used in this Convention means income from shares, mining shares, founders' shares or other rights, not being debt-claims, participating in profits, as well
as income from other corporate rights assimilated to income from shares by the taxation law of the State of which the corporation making the distribution is a resident.

55
US TAX CONVENTION
(continued)
INTEREST
 Interest derived by a resident of one of the Contracting States from sources within the other Contracting State shall not be taxed by the other Contracting State at a rate in excess of
15 percent of the gross amount of such interest.
 Interest derived by a resident of one of the Contracting States from sources within the other Contracting State with respect to public issues of bonded indebtedness shall not be
taxed by the other Contracting State at a rate in excess of 10 percent of the gross amount of such interest.
 Notwithstanding paragraphs (1), (2), and (3), interest derived by-
 One of the Contracting States, or an instrumentality thereof (including the Central Bank of the Philippines, the Federal Reserve Banks of the United States, the Export-Import
Bank of the United States, the Overseas Private Investment Corporation of the United States, and such other institutions of either Contracting State as the competent authorities
of both Contracting States may determine by mutual agreement), or
 A resident of one of the Contracting States with respect to debt obligations guaranteed or insured by that Contracting State or an instrumentality thereof. shall be exempt from
tax by the other Contracting State.
CAPITAL GAINS
 Gains from the alienation of tangible personal (movable) property forming part of the business property of a permanent establishment which a resident of a Contracting State has
in the other Contracting State or of tangible personal (movable) property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for
the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or together with the whole
enterprise) or of such a fixed base, may be taxed in the other State. However, gains derived by a resident of a Contracting State from the alienation of ships, aircraft or containers
operated by such resident in international traffic shall be taxable only in that State, and gains described in Article 13 (Royalties) shall be taxable only in accordance with the
provisions of Article 13.

56
REFERENCES:

• National Internal Revenue Code (NIRC), as amended by RA 11534 – CREATE Act

• Implementing Rules and Regulations of the Title XIII of the NIRC, as amended by RA 11534
• Revenue Regulations No. 21-2021
• Revenue Memorandum Circular Nos. 24-2022 and 49-2022
• Tabag, E., & Garcia, E. (2021). Transfer and Business Taxation with Special Topics (2021st ed.) [Review of Transfer
and Business Taxation with Special Topics]. EDT Book Publishing.
• INCOME TAX CONVENTION WITH THE REPUBLIC OF THE PHILIPPINES, AND AN EXCHANGE OF NOTES. (n.d.).
Retrieved November 26, 2022, from https://www.irs.gov/pub/irs-trty/philip.pdf
• PricewaterhouseCoopers. (n.d.). A closer look at recent amendments to the CREATE IRR. PwC. Retrieved November
26, 2022, from
https://www.pwc.com/ph/en/tax/tax-publications/taxwise-or-otherwise/2022/a-closer-look-at-recent-amendm
ents-to-the-create-irr.html
• PricewaterhouseCoopers (no date) Investment incentives in the Philippines, PwC. Available at:
https://www.pwc.com/ph/en/business-guides/iip-2015.html (Accessed: November 26, 2022)
THANK YOU