CREATE Act

The CREATE Act is Republic Act No. 11534, the Corporate Recovery and Tax Incentives for Enterprises Act, signed on 26 March 2021. It lowered Philippine corporate income tax and rebuilt the country’s fiscal incentive rules for registered business enterprises.

For outsourcing firms, this was the biggest tax shift in decades. The law rewrote both sides of the ledger at once: headline tax rates came down, and the incentive menu that offshore delivery centres had relied on was rationalised into a single, time-bound framework.

It amends the National Internal Revenue Code of 1997 and adds a new Title XIII covering fiscal incentives. That title defines which activities count as registered, and how capital equipment, spare parts and raw materials are treated.

The Philippine Department of Finance framed the law, alongside FIST, as a direct answer to the top concerns of COVID-hit businesses. Recovery was the stated goal; incentive discipline was the trade.

Key takeaways

• Republic Act No. 11534 was signed on 26 March 2021 and amends the 1997 Tax Code.
• General corporate income tax for domestic corporations sits at 25%, with 20% for qualifying small domestic corporations.
• Incentives run through the Strategic Investment Priority Plan, with approvals overseen by the Fiscal Incentives Review Board.
• Open-ended perks were replaced by time-bound incentives with defined entry and exit points.
• The later CREATE MORE Act refined the same regime.

How it works

The law works on two tracks. It cuts the standard corporate income tax rate, then channels every incentive claim through one national framework instead of scattered agency-by-agency deals. Registration status, not company size, decides what a firm can claim.

Under the rate track, domestic corporations pay a general rate of twenty-five percent (25%), while qualifying small domestic corporations pay twenty percent (20%). PwC’s Worldwide Tax Summaries for the Philippines tracks the current rates as applied.

Under the incentive track, a registered business enterprise qualifies through activities listed in the Strategic Investment Priority Plan.

Promotion agencies such as PEZA and the Board of Investments (BOI) still register firms, but the Fiscal Incentives Review Board (FIRB) sits above them.

The full statute text sits on LawPhil’s copy of Republic Act No. 11534, including the capital equipment, spare parts and raw materials definitions that importers care about most.

Time-bound is the operating word. Instead of perks that ran indefinitely, incentives now carry a defined life, so finance teams plan for the sunset from day one.

Examples

CREATE reaches any Philippine firm that either pays corporate income tax or claims tax incentives. In practice, three groups feel it most: registered outsourcing providers, zone locators, and small domestic corporations that qualify for the lower rate.

A business process outsourcing (BPO) provider registered with PEZA is the clearest case. Its incentive package now flows from the Strategic Investment Priority Plan and is reviewed under the FIRB framework rather than negotiated in isolation.

Locators inside a special economic zone (SEZ) sit in the same position. A firm operating under the Cagayan Economic Zone Authority (CEZA) registers locally, but its fiscal treatment traces back to the CREATE title in the Tax Code.

Then there’s the small domestic corporation — a local support firm, say, serving offshore teams. If it qualifies, it pays twenty percent (20%) rather than the general twenty-five percent (25%).

The Department of Finance set out the recovery logic in its statement on CREATE and FIST, issued as pandemic pressure peaked.

Related terms

CREATE sits inside a cluster of Philippine investment and outsourcing terms. Knowing which body registers you, which zone you sit in, and which later law amended the regime keeps your incentive filings accurate and your renewals on schedule.

• CREATE MORE Act: the amending law that refined the CREATE incentive regime.
• Fiscal Incentives Review Board (FIRB): the national body overseeing incentive grants.
• PEZA: the authority registering economic zone locators, including many IT-BPM firms.
• Board of Investments (BOI): a promotion agency registering priority-activity investments.
• Special Economic Zone (SEZ): a designated area with its own incentive and customs treatment.
• Tax Incentives: reliefs that cut a registered firm’s tax burden.

FAQ

What does CREATE stand for?

Corporate Recovery and Tax Incentives for Enterprises. It’s Republic Act No. 11534, signed on 26 March 2021.

What is the corporate income tax rate under CREATE?

The general rate for domestic corporations is twenty-five percent (25%). Qualifying small domestic corporations pay twenty percent (20%).

Does CREATE affect BPO companies in the Philippines?

Yes. It rationalised the incentive regime that PEZA-registered BPO and IT-BPM firms depend on, and moved incentive approvals under the Fiscal Incentives Review Board.

Has the CREATE Act been amended?

Yes — the CREATE MORE Act later refined the same incentive regime.

If you want to see how Philippine providers position themselves under this regime, browse the Outsource Accelerator hubs.