Registered Business Enterprise Local Tax: The 2% RBELT Under the CREATE MORE Act

The registered business enterprise local tax (RBELT) is the local tax option available to qualified Registered Business Enterprises (RBEs) under Title XIII of the National Internal Revenue Code, as amended by the CREATE MORE Act (Republic Act No. 12066). In place of the local business tax and other local impositions that a local government unit would otherwise collect, a qualified RBE pays a local tax equivalent to two percent (2%) of its gross income. The RBELT is administered under the Local Government Code, and the RBE's entitlement to it is tied to the incentives and VAT rules under Title XIII.

What is a Registered Business Enterprise?

A Registered Business Enterprise, or RBE, is a business that has registered with an Investment Promotion Agency (IPA) and qualified for incentives under Title XIII of the Tax Code. Registration is what distinguishes an RBE from an ordinary local taxpayer. The IPA issues the certification that establishes the enterprise's registered project or activity, and that registration is the anchor for the tax treatment — including the local tax — that the enterprise may avail of.

The term appears throughout Revenue Regulations No. 10-2025, which implements the VAT provisions under Sections 106, 108, 109, and 112 of the Tax Code as amended by RA No. 12066. Under those regulations, RBEs qualified for VAT zero-rating on local purchases are covered under Title XIII of the Tax Code, and the VAT zero-rating is availed of on the basis of a certification issued by the concerned IPA.

How the 2% RBELT Works

The RBELT is a local tax, not a national internal revenue tax. It is imposed in lieu of the local business tax and related local charges that would otherwise apply to the enterprise. The rate is two percent (2%) of gross income.

Two features matter in practice:

• It is an option tied to registration. Only an enterprise that qualifies as an RBE under Title XIII can be subject to the RBELT in place of the regular local business tax. An unregistered enterprise remains subject to the ordinary local business tax under the Local Government Code.
• It is measured by gross income. The base is gross income, not gross receipts or gross sales, and not net taxable income.

Because the RBELT is a local imposition, the mechanics of assessment and collection — including the filing of the local tax return and payment deadlines — follow the Local Government Code and the revenue ordinances of the local government unit where the enterprise operates. The specific deadlines and forms are set by the LGU, not by the Bureau of Internal Revenue.

RBELT, VAT Zero-Rating, and Other Incentives

The RBELT sits alongside the other incentives available to RBEs. Revenue Regulations No. 10-2025 addresses the VAT side: RBEs qualified for VAT zero-rating on their local purchases under Title XIII may avail of zero-rating on the basis of the VAT zero-rating certification issued by the concerned IPA, without needing to apply for approval of the zero-rating with the BIR. The regulations also provide that local suppliers of goods or services of qualified RBEs are no longer required to apply for BIR approval of the zero-rating.

Where a local supplier has already passed on VAT on purchases directly attributable to the RBE's registered activity, the qualified RBE may contest the charge or resolve the matter with the supplier for reimbursement of the VAT paid. If the classification of a sale shifts from twelve percent (12%) VAT to zero percent (0%), the earlier invoice bearing VAT should be surrendered to the supplier for cancellation and replacement with a zero-rated invoice.

These VAT rules are separate from the RBELT. An enterprise should not assume that qualifying for VAT zero-rating on local purchases automatically settles its local tax position; the two are governed by different authorities and different certifications.

Who Determines Qualification

Qualification as an RBE is determined through registration with the IPA. The IPA issues the certification that identifies the registered project or activity, and that certification is what supports the enterprise's availment of the incentives under Title XIII.

For VAT zero-rating on local purchases, the regulations require the concerned IPA to furnish the BIR, within twenty (20) days following the close of each taxable quarter, a list of RBEs issued with VAT zero-rating certification. This reporting mechanism allows the BIR to conduct post-audit verification that the purchases are indeed directly attributable to the registered project or activity. A similar post-audit power exists for the certification issued by the Export Marketing Bureau of the Department of Trade and Industry for export-oriented enterprises.

Frequently asked questions

Is the 2% RBELT the same as the 2% local business tax? No. The RBELT is the local tax imposed on qualified RBEs under Title XIII of the Tax Code, measured at two percent (2%) of gross income. It is distinct from the graduated local business tax that the Local Government Code imposes on ordinary businesses.

Does an RBE still pay local business tax? A qualified RBE pays the RBELT in lieu of the regular local business tax on its registered activity. The entitlement depends on maintaining registration and qualification with the IPA.

Do I need to apply with the BIR to enjoy the RBELT? The RBELT is a local tax. Qualification flows from registration with the IPA under Title XIII. For VAT zero-rating on local purchases, the regulations state that local suppliers of qualified RBEs are no longer required to apply for approval of the zero-rating with the BIR, though the BIR retains post-audit verification authority.

Practical takeaways

• The RBELT is a local tax of two percent (2%) of gross income for qualified Registered Business Enterprises under Title XIII of the Tax Code.
• Qualification as an RBE comes from registration with an Investment Promotion Agency, which issues the certification identifying the registered project or activity.
• The RBELT replaces the regular local business tax on the registered activity; it is not a national internal revenue tax administered by the BIR.
• VAT zero-rating on local purchases is a separate incentive with its own certification requirements, and the BIR retains post-audit verification.
• Local filing mechanics, forms, and deadlines follow the Local Government Code and the LGU's revenue ordinances, so the enterprise should confirm these with the LGU where it operates.

Primary sources

The rules discussed above are drawn from the following issuances, embedded here in full for your reference.

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

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.