CREATE MORE Act Incentives Philippines: What Registered Enterprises Actually Get
Understand the CREATE MORE Act incentives in the Philippines, including VAT zero-rating rules for registered business enterprises and their local suppliers.
The CREATE MORE Act incentives in the Philippines center on tax relief for businesses registered with Investment Promotion Agencies (IPAs). Under the VAT rules implementing Republic Act No. 12066, a Registered Business Enterprise (RBE) qualified for VAT zero-rating on local purchases no longer needs to apply for separate BIR approval. Instead, it relies on a VAT zero-rating certification issued by its IPA, and its local suppliers can sell to it without charging the 12% VAT. The BIR retains the right to conduct post-audit verification that the purchases are genuinely attributable to the registered project or activity.
Who qualifies as a Registered Business Enterprise
An RBE is an enterprise registered with an IPA and covered under Title XIII of the Tax Code, as amended by the CREATE law (Republic Act No. 11534). The VAT zero-rating on local purchases applies to goods and services directly attributable to the registered project or activity.
The rules distinguish RBEs from export-oriented enterprises. An export-oriented enterprise is one engaged in the sale of goods or services from the Philippines to a foreign country or economy, and it must meet a specific export threshold to enjoy zero-rating on its own local purchases.
How the VAT zero-rating works for RBEs
Under Revenue Regulations No. 10-2025, the VAT zero-rating on local purchases of goods and services is availed of on the basis of the VAT zero-rating certification issued by the concerned IPA. Local suppliers of the qualified RBE are no longer required to apply for approval of VAT zero-rating with the BIR.
This is a significant simplification. Previously, suppliers had to secure their own approval before they could bill an RBE without VAT. Now the IPA certification drives the entitlement, subject to post-audit by the BIR.
If a supplier mistakenly passes on VAT, the qualified RBE may contest the charge and resolve with the local supplier for reimbursement of the VAT paid. Where the classification of a sale shifts from 12% VAT to zero percent, the previously issued invoice bearing VAT must be surrendered or returned to the supplier for cancellation and replacement with a VAT zero-rated invoice.
What the export-oriented enterprise threshold requires
For export-oriented enterprises, zero-rating on local purchases of goods or services requires that export sales be at least seventy percent (70%) of total annual production of the preceding taxable year. The Export Marketing Bureau (EMB) of the Department of Trade and Industry determines compliance and issues a certification, which must be presented to local suppliers before the transaction.
An export-oriented enterprise that fails to meet the threshold is not qualified to avail of VAT zero-rating on local purchases in the immediately succeeding year. Those that attained the threshold but failed to secure EMB certification are likewise not allowed a VAT refund covering the succeeding year.
Input tax and refund mechanics
Input tax on purchases related to zero-rated sales is available as a tax credit or refund. A VAT-registered person whose sales are zero-rated or effectively zero-rated may apply for a cash refund or tax credit certificate, and the application should be filed within two (2) years after the close of the taxable quarter when the sales were made.
Where a taxpayer is engaged in both zero-rated and taxable or exempt transactions, only the proportionate share of input taxes allocated to the zero-rated sales can be claimed. The Commissioner of Internal Revenue is required to grant a refund for creditable input taxes within ninety (90) days from submission of the certified true copies of invoices and supporting documents.
Frequently asked questions
Do local suppliers of CREATE-registered enterprises still need BIR approval for zero-rating? No. Under RR No. 10-2025, local suppliers of qualified RBEs no longer need to apply for approval of VAT zero-rating with the BIR. The IPA-issued certification is the basis, subject to post-audit.
What happens if a supplier charges VAT by mistake? The qualified RBE may contest the charge and resolve with the supplier for reimbursement. The invoice with VAT must be surrendered for cancellation and replaced with a zero-rated invoice.
How long do I have to claim a VAT refund? The application must be filed within two (2) years after the close of the taxable quarter when the zero-rated sales were made.
Practical takeaways
- RBEs qualified for VAT zero-rating rely on an IPA certification, not a separate BIR approval.
- Local suppliers can sell zero-rated to a certified RBE without securing their own BIR zero-rating approval.
- Export-oriented enterprises must meet the 70% export threshold and secure EMB certification to qualify.
- Input tax on zero-rated sales may be refunded or credited, but the claim must be filed within two years after the close of the taxable quarter.
- The BIR may conduct post-audit verification, so documentation must show purchases are directly attributable to the registered activity.
Primary sources
The rules discussed above are drawn from the following primary sources. Where the firm's library holds the document as a PDF it is embedded here in full; the rest are cited by title.
RR No. 10-2025 — Amending the Pertinent Provisions of Revenue Regulations No. 16-2005 to Implement the Value-Added Tax Provisions under Sections 106, 108, 109, and 112 the National Internal Revenue Code of 1997, as Amended by Republic Act No. 12066 (Date Posted: February 27, 2025)Open in Law LibraryDownload PDF
RR No. 18-2024 — Implementing Section 32(B)(5) of the National Internal Revenue Code of 1997, as amended by Republic Act 12066, or the CREATE MORE Act (Date posted: December 17, 2024) Digest | Full Text | Annex AOpen in Law LibraryDownload PDF
- REPUBLIC ACT NO. 11534 - AN ACT REFORMING THE CORPORATE INCOME TAX AND INCENTIVES SYSTEM, AMENDING FOR THE PURPOSE SECTIONS 20, 22, 25, 27, 28, 29, 34, 40, 57, 109, 116, 204 AND 290 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND CREATING THEREIN NEW TITLE XIII, AND FOR OTHER PURPOSES
This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.
Related reading
FIRB approval of tax incentives in the Philippines depends on registration with an Investment Promotion Agency and the scope of the approved project under the SIPP.
The enhanced deductions regime lets registered business enterprises pay a 20% corporate income tax while claiming extra deductions under the CREATE MORE Act.
Foreign manufacturers in the Philippines can access income tax holidays, duty-free imports, and VAT zero-rating through registered incentives.
Understand the registered business enterprise local tax in the Philippines, how the 2% RBELT works under CREATE MORE, and who may qualify for it.
Have a question about this topic?
This article is general information, not legal advice. Ask ASG Legal AI for a cited, plain-language answer on your own situation — free, no sign-up.