RMC No. 38-2022: Clarifies the Transitory Provision for the non-income related tax incentives granted to registered export enterprises under Investment Promotion Agencies

Key points

1. VAT zero-rating continues. Existing REEs that continue to avail of their existing Income Tax incentives may keep VAT zero-rating on local purchases directly attributable and exclusively used in the registered project or activity. This lasts until the transitory period expires.
2. Length of the transitory period. REEs granted only an Income Tax Holiday (ITH) enjoy it until the remaining period of the ITH. REEs granted an ITH and/or five percent (5%) tax on gross income earned enjoy it until the ten (10) year limit expires.
3. Expired incentives. If the REE’s Income Tax incentive expired before CREATE, VAT zero-rating on local purchases can no longer be availed.

Who is affected

• Existing Registered Export Enterprises registered before CREATE

Deadlines and effectivity

• ITH only: until the remaining period of the ITH
• ITH and/or 5% tax on gross income earned: until the ten (10) year limit expires