The Bureau of Internal Revenue (BIR) has issued Revenue Regulation No. 5-2021, which implements the new income tax rates for corporations under the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act).
The CREATE Act, which was signed into law in December 2020, amended the National Internal Revenue Code (NIRC) of 1997 to lower the income tax rates for corporations. The new rates are as follows:
0% for the first P250,000 of taxable income
20% for taxable income in excess of P250,000
The new rates are effective for taxable year 2021 and succeeding years.
RR No. 5-2021 also provides for a number of additional deductions that corporations may claim under the CREATE Act. These deductions include:
Research and development expenses
Taxable income from export sales
Investment in new machinery and equipment
Investment in infrastructure
RR No. 5-2021 is a significant development for the Philippine corporate tax landscape. The new rates and deductions will make it more attractive for businesses to operate in the Philippines and are expected to boost economic growth.
(RR No. 5-2021: New Income Tax Rates for Corporations)
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