Finance Secretary Benjamin Diokno and Trade and Industry Secretary Alfredo Pascual approved the amendment to the implementing rules and regulations (IRR) of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act to resolve the value-added tax (VAT) issues raised by transitory registered business enterprises (RBEs). In a statement on Friday, the Finance department said the amendment to Rule 18, Section 5 of the CREATE Act IRR was made following President Ferdinand Marcos Jr.'s directive to review and address the VAT-related issues concerning both domestic market enterprises (DMEs) and registered export enterprises (REEs). The DTI said the amendment gives transitory registered DMEs inside the economic or freeport zone availing of the 5 percent gross income tax (GIT) regime the option to register as VAT taxpayers. This will enable VAT-registered DMEs covered by the transitory provisions of CREATE to either charge output VAT to domestic customers or receive a refund from the Bureau of Internal Revenue (BIR) for the input VAT directly attributable to their zero-rated sales. Meanwhile, transitory REEs whose income tax-based incentives have expired may now continue to enjoy VAT zero-rating on their local purchases until the electronic sales reporting system under Section 237-A of the Tax Code, as amended, is fully operational or until the expiration of the 10-year transitory period, whichever comes earlier. Before the approval of the CREATE IRR amendment, the technical working group (TWG) on VAT-led consultations with investment promotion agencies and other relevant stakeholders. The TWG is composed of representatives from the Department of Finance, DTI and BIR. 'We welcome this amendment in support of our RBEs and in alignment with the national government's efforts to establish a more conducive investment climate in the country,' Diokno said.
Source: Philippines News Agency
