The Bureau of Internal Revenue (BIR) prompted taxpayers about reverted rates for percentage tax, minimum corporate income tax and regular corporate income tax for select institutions under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.
The agency on Tuesday released Revenue Memorandum Circular No. 69-2023, which announced the reversion of the tax rates effective July 1.
The government temporarily reduced corporate income tax rates through the CREATE law to support businesses recovering from a coronavirus pandemic.
Under the law, the percentage tax rate was lowered to 1% from 3% from July 1, 2020 to June 30, 2023.
“The rate of percentage tax shall now revert to 3% of gross quarterly sales or receipts of the taxpayer,” the BIR said.
“This rate applies to corporations, self-employed individuals and professionals whose gross sales or gross receipts are not exceeding the PHP 3-million threshold, except for cooperatives and self-employed individuals availing themselves of the 8% income tax rate,” it added.
The minimum corporate income tax will also revert to 2% from 1% under the CREATE law.
“The minimum corporate income tax rate for domestic and resident foreign corporations, including offshore banking units and regional operating headquarters, will revert to 2% based on the gross income of such corporations,” the BIR added.
The regular corporate income tax for proprietary nonprofit educational institutions and hospitals will also revert to 10% of their taxable income. The CREATE law cut the rate to 1%.
The BIR also noted that gross income, taxable income or quarterly sales from January 1 to June 30, 2023 will still be subject to the reduced tax rate under CREATE.
Data from the Department of Finance showed that revenue losses from the CREATE law reached PHP 80.4 billion in 2022, higher than PHP 68 billion in losses in the previous year. Of the losses last year, PHP 59.2 billion came from the reduction in corporate income taxes. — Luisa Maria Jacinta C. Jocson
This article originally appeared on bworldonline.com