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

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Summary

RMC No. 38-2022 clarifies the transitory provision for non-income related tax incentives of Registered Export Enterprises (REEs) under Investment Promotion Agencies, under Section 5, Rule 18 of the amended CREATE IRR and Section 311 of Title XIII of RA No. 11534.

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

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

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