INCOME TAXATION
Effect of
CREATE Law on
Income types
Prepared by: Rosales, Kaye T.
Professor: Sir Ariel Serrano
Index:
A.
CREATE LAW: A research
B.
COMPARATIVE TABLE: Passive
income and Capital Gains
C.
Resources
CREATE ACT
A RESEARCH
WHERE
DOES IT
APPLIES?
WHAT
DOES IT
AIM?
On April 8, the Bureau of Internal Revenue (BIR)
issued Tax Regulations (RR) No. 5-2021 applying
certain provisions of the Business Revenue and
Business Taxes Act (CREATE) Act. It mainly utilizes
new corporate income tax (CIT) rates, new income
tax estimates for certain revenues, and other
deductions from corporate and sole proprietors'
income.
Through this RR, the BIR provides additional
guidelines on how to calculate additional
deductions under Section 25 (E) as applicable to
corporate and international ownership. The
amount deducted is equivalent to a 20% increase in
employee costs during the tax year compared to
the average personnel costs for 2019 and 2020.
The CREATE Act aims to help businesses that
have been hit hard by COVID-19 recover by
reducing their CIT level, allowing them to retain
their additional profits. The bill also includes
incentives to encourage Filipinos to start or grow
their own businesses.
CREATE ACT
A RESEARCH
The Bureau of Internal Revenue (BIR) issued
several revenue regulations to fully implement the
CREATE Law. For easy reference, here’s a summary
list of revenue issuances dated April 8, 2021:
TAX RATES
(a) RR No. 2-2021 which amends certain
provisions of RR No. 2-98, as amended, to
implement the amendments introduced by the
CREATE Act to the National Internal Revenue Code
(NIRC) of 1997, as amended, relative to the Final
Tax on certain passive income;
-A Capital gains tax of 15% is imposed
from sale of shares of stock not traded in the Stock
Exchange of both resident and non-resident foreign
corporation
-It implements the new final tax rates on
certain passive incomes of individuals and
corporations.
(b) RR No. 5-2021 implements new Income Tax
rates on the regular income of corporations, on
certain passive incomes, including additional
allowable deductions from Gross Income of
persons engaged in business or practice of
profession pursuant to the CREATE Act, which
further amended the NIRC of 1997.
CREATE ACT
A RESEARCH
The matrix below shows the new Income Tax rates
applicable to certain passive incomes of individuals
and corporations:
TAX RATES
CREATE ACT
A RESEARCH
TAX RATES
CREATE ACT
A RESEARCH
TAX RATES:
CAPITAL
GAINS
The CREATE Act amends the Republic Act No.
8424 or National Revenue Code of 1997, as
amended, is one of the following important
provisions: The Capital Gains Tax (CGT) in the sale
of shares not sold in stock will be 15% for both
occupiers and non-residential companies. These
huge profits come from the RFC and the NRFC
through the sale of shares that are not traded on
the stock market.
A single rate of 15%, in general, will be charged
on interest rates, dividends and maximum profits.
This
concludes
by
saying,
THERE
ARE
DIFFERENCES IN THE TAX RATES ON THE USE
OF THE CREATE ACT.
CREATE ACT
A RESEARCH
TAX RATES:
CAPITAL
GAINS
INDIVIDUAL
(1) Capital Gains from Sale of Shares of Stock not
Traded in the Stock Exchange. –
The provisions of Section 39(B) notwithstanding, a
final tax at the rate of fifteen percent (15%) [16] is
hereby imposed upon the net capital gains realized
during the taxable year from the sale, barter, exchange
or other disposition of shares of stock in a domestic
corporation, except shares sold, or disposed of through
the stock exchange.
(2) Capital Gains from Sale of Real Property. –
In General. - The provisions of Section 39(B)
notwithstanding, a final tax of six percent (6%) based
on the gross selling price or current fair market value
as determined in accordance with Section 6(E) of this
Code,.
Index:
A.
CREATE LAW: A research
B.
COMPARATIVE TABLE: Passive
income and Capital Gains
C.
Resources
COMPARATIVE TABLE
CAPITAL GAINS
CAPITAL GAINS TAX FOR ONEROUS
TRANSFER OF SHARES OF STOCKS NOT
TRADED THROUGH THE LOCAL STOCK
EXCHANGE
COMPARATIVE TABLE
CAPITAL GAINS
ANNUAL CAPITAL GAINS TAX FOR
ONEROUS TRANSFER OF SHARES OF
STOCKS NOT TRADED THROUGH THE
LOCAL STOCK EXCHANGE
Index:
A.
CREATE LAW: A research
B.
COMPARATIVE TABLE: Passive
income and Capital Gains
C.
Resources
RESOURCES
WHEN EXAMINING THE RECORDS OF A TAXPAYER
1, A. (2022). Capital Gains
Tax - Bureau of Internal
Revenue. Retrieved 15 March
2022,
from
https://www.bir.gov.ph/index.
php/tax-information/capitalgains-tax.html
Finance, D. (2022). Package
4: Passive Income and
Financial
Intermediary
Taxation Act (PIFITA) |
Comprehensive Tax Reform
Program • #TaxReformNow.
Retrieved 15 March 2022,
from
https://taxreform.dof.gov.ph/
tax-reform-packages/p4passive-income-andfinancial-taxes/
I can play and enjoy
I can play and enjoy
1, I. (2022). CREATE - Bureau
of the outdoors.
Internal
Revenue.
Retrieved 15 March 2022,
I can read and study.
from
https://www.bir.gov.ph/index.
I can help a friend.
php/create.h
Division, L. (2022). Tax Code
the outdoors.
- Bureau
of Internal Revenue.
Retrieved 15 March 2022,
I can read and study.
from
https://www.bir.gov.ph/index.
I can help a friend.
php/tax-code.html
I can list down why I
feel good to help
cheer me up when
I'm not okay.
I can list down why I
feel good to help
cheer me up when
I'm not okay.