Tax
CREATE Act corporate rate of 25 percent and 12 percent VAT
The National Internal Revenue Code as amended by TRAIN and CREATE sets corporate income tax at 25 percent, or 20 percent for small domestic corporations, personal rates to 35 percent, and VAT at 12 percent.
Key rules
- Jurisdiction — The Bureau of Internal Revenue administers national taxes; local government units levy business and real property taxes under the Local Government Code.
Governing law
- Republic Act 8424National Internal Revenue Code, as amended
- Republic Act 10963TRAIN Act, 2017
- Republic Act 11534CREATE Act, 2021
In practice
Domestic corporations are taxed on worldwide income, resident foreign corporations on Philippine-source income, and a minimum corporate income tax on gross income applies from the fourth year. TRAIN raised the personal exemption threshold so that annual income up to 250,000 pesos is untaxed, while raising excise on fuel, sugary drinks and vehicles. CREATE also cut the percentage tax and rationalised incentives, with income tax holidays followed by a special corporate rate or enhanced deductions, and it made incentives subject to performance and time limits. Local business tax and real property tax are separate obligations often overlooked by foreign entrants, and the Court of Tax Appeals hears assessment disputes.