Tax Resources PH icon

TAX RESOURCES PH

Tax resources for Filipinos

RMC No. 120-2021: Circularizes the Amendments to Rule 2, Sections 4, 5 and 8; Rule 3 Section 3; Rule 17 Section 2, and Rule 18 Section 5, and Addition of a New Rule 18 Section 6 of the Implementing Rules and Regulations of Title XIII of RA No. 8424 (National Internal Revenue Code of 1997), as amended by RA No. 11543 (CREATE Act)

Files
Download this file

Summary

RMC No. 120-2021 circularizes amendments to several sections of the Implementing Rules and Regulations (IRR) of Title XIII of the NIRC, as amended by the CREATE Act, and adds a new Rule 18 Section 6.

Key points

  1. Customs duty exemption. Rule 2, Section 4 now gives registered export and domestic market enterprises customs duty exemption on imported capital equipment, raw materials, spare parts and accessories for their registered project or activity. The maximum period is seventeen (17) years for export enterprises and twelve (12) years for domestic market enterprises from registration, unless extended under the SIPP.
  2. VAT zero-rating and exemption. Rule 2, Section 5 limits VAT exemption on importation and VAT zero-rating on local purchases to goods and services directly and exclusively used in the registered project of a registered export enterprise, for up to seventeen (17) years from registration. Local purchases are zero-rated upon endorsement of the concerned IPA, in addition to BIR documentary requirements.
  3. Expansion projects. Rule 3, Section 3 allows qualified expansion projects three (3) years ITH followed by enhanced deductions or SCIT, as applicable. They may also get duty exemption, VAT exemption on importation and VAT zero-rating on local purchases, with approval by the FIRB or concerned IPA based on investment capital.
  4. Existing enterprises. Rule 17, Section 2 lets existing registered business enterprises with a valid Certificate of Authority to Import or Admission Entry keep duty exemption until it expires. Rule 18, Section 5 lets existing enterprises keep duty exemption, VAT exemption on importation and VAT zero-rating on local purchases per their IPA registrations, and BOI-registered enterprises keep duty exemption on certain imports for five (5) years from registration.
  5. Offshore gaming licensees. New Rule 18, Section 6 lets offshore gaming licensees and accredited service providers registered with an IPA before the Act keep their incentives until the transitory period in Section 311 ends or their license or accreditation expires, whichever is earlier. They are then subject to the taxes under RA No. 11590.

Who is affected

  • Registered export enterprises and domestic market enterprises
  • Existing registered business enterprises
  • Offshore gaming licensees and accredited service providers with IPA registration

Deadlines and effectivity

  • Export enterprises: maximum of seventeen (17) years from registration
  • Domestic market enterprises: twelve (12) years from registration
  • Existing BOI-registered enterprises: five (5) years from registration for certain imports

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.

Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.