Philippines

Tax changes in the second half of 2023

In July 2020, the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law, or RA 11534, was enacted, which brought about major changes in the Philippine tax rules and regulations that are intended to aid taxpayers during the pandemic and develop economic competitiveness to attract investments. This included certain temporary reductions in tax rates.

Beginning 1 July 2023, the temporary reduction of rates for certain taxes will expire and revert to the following original tax rates:

• 3% tax on value-added tax (VAT)-exempt persons whose gross annual sales and/or receipts do not exceed 3 million Philippine pesos (PHP) pursuant to Section 109 (CC) of the Tax Code.
• 2% minimum corporate income tax (MCIT) on corporations based on their gross income.
• 10% CIT rate on proprietary educational institutions and non-profit hospitals.