Tax Updates May 2021 (SyCipLaw Tax Issues And Practical Solutions (T.I.P.S.) Vol. 10)

1. What are the rules on the exclusion of land in the computation of the PhP100 million threshold on total assets in order to qualify for the reduced corporate income tax rate of 20% under the CREATE Law?

The Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Circular No. 62-2021 dated April 30, 2021 (RMC No. 62-2021) to clarify certain provisions of Revenue Regulations No. 5-2021 relative to corporate income taxation under Republic Act No. 11534, or the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Law). Section 27 (A) of the National Internal Revenue Code, as amended (Tax Code), and as amended further by the Create Law imposes an income tax rate of 25% on domestic corporations. However, a lower income tax rate of 20% is imposed on domestic corporations with net taxable income not exceeding PhP5 million and total assets not exceeding PhP100 million, excluding the land on which the particular business entity's office, plant