The CREATE MORE Law (RA 12066) modernizes the Philippine incentive framework for Export-Oriented Enterprises (EOEs) by redefining EOEs as businesses exporting at least 70% of their output and shifting incentives toward performance-based criteria. It expands VAT zero-rating on local purchases and VAT exemption on imports, allowing EOEs to continue enjoying these benefits even after Investment Promotion Agency registration expires or by registering directly with the DTI–Export Marketing Bureau. Implementing rules issued by the BIR and DTI-EMB establish streamlined certification, renewal, and post-audit procedures to ensure compliance while reducing cash flow burdens associated with VAT refunds. Overall, the reforms enhance competitiveness, ease administrative hurdles, and strengthen the role of EOEs in driving exports and economic growth.
CREATE MORE Law: Key Provisions for Export-Oriented Enterprises
The CREATE MORE Law (RA 12066) was designed to overhaul the existing tax incentive system by introducing a more performance-oriented approach. One of the key provisions of the law is the redefinition of what constitutes an Export-Oriented Enterprise (EOE). According to the law, an EOE is a business entity that exports at least seventy percent (70%) of its total output (goods or services) outside the Philippines. This redefinition ensures that the focus of tax incentives is on companies with substantial export activities, rather than those with incidental export sales (CREATE MORE Act, Sec. 6, RA 12066).
The new law expands the VAT zero-rating for local purchases and VAT exemption on imports for export enterprises. Prior to CREATE MORE, these incentives expired when an export enterprise’s registration with an Investment Promotion Agency (IPA) ended. Under CREATE MORE, export enterprises can continue to avail of these incentives even after their IPA registration expires.
Additionally, export enterprises can now access the same benefits by registering with the DTI-EMB, even without IPA registration. For export enterprises whose business activities are not listed under the Strategic Investment Priority Plan (SIPP), and therefore not eligible for IPA registration, the new provisions offer significant relief. The law allows these enterprises to claim VAT zero-rating on local purchases, VAT exemption on imports, and other incentives by registering with the Department of Trade and Industry’s Export Marketing Bureau (DTI-EMB).
Once certified by the DTI-EMB, the enterprise must present the certification to suppliers prior to the transaction. For local transactions, a copy of the certification must be submitted to local suppliers to verify VAT zero-rating eligibility. For importation, the certification should be provided to the Bureau of Customs (BoC) prior to the arrival of the goods.
The VAT-zero-rated and VAT-exempt invoices will then be issued for local purchases and importations, respectively. This change eliminates the cumbersome refund process, where businesses previously had to accumulate input tax without an output tax to offset, often resulting in delayed refunds upon the business’s closure. With this update, export enterprises can avoid these complexities—an immensely beneficial change.
It is important to distinguish between the DTI-EMB certification and the VAT zero-rating certification issued by an IPAs. An IPA-registered EOE can only obtain VAT zero-rating certification from the IPA to avail the VAT incentives. However, if the EOE’s IPA registration has expired or if the EOE was never registered with an IPA, it must secure certification from the DTI-EMB to qualify for VAT incentives on its purchases under the CREATE MORE Law.
From BIR to DTI-EMB: Registration and Incentives Availment Procedures
To implement the provisions of the CREATE MORE Law, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 10-2025, which provides detailed guidelines on VAT zero-rating for EOEs. The regulations outline the specific requirements for EOEs to qualify for VAT zero-rating on domestic purchases, as well as the procedures for claiming the exemptions (RR No. 10-2025, Sec. 2). Other related issuances, such as Revenue Memorandum Circular (RMC) No. 32-2025, further clarify the documentary requirements for EOEs, including the need for proof of export sales (RMC No. 32-2025, Sec. 3).
Under the said issuances, the registration requirements of an EOE with DTI-EMB include the submission of various documents as part of the certification process, including their business registration documents, audited financial statements showing the percentage of export sales, export sales contracts, and board resolutions. The DTI evaluates the submitted documentation to ensure that the business meets the 70% export threshold (DTI-EMB, Administrative Order No. 25-03, Sec. 2).
The DTI-EMB has 20 working days from submission to process completed applications. Furthermore, the EMB shall provide the BIR with a Master List of all export-oriented enterprises issued a certification, including those with disapproved applications and revoked certifications, no later than the fifth (5th) day after the close of each month. The DTI-EMB certification is valid until the end of the EOE’s taxable year, unless revoked earlier.
Application Renewal and Post-Audit Procedures
Under RR 10-2025, EOEs must renew their application for VAT zero-rating and other tax incentives annually. This renewal ensures that the enterprise continues to meet the eligibility criteria, including maintaining at least 70% export sales. The renewal application must be submitted to the DTI-EMB along with updated documentation, such as audited financial statements, export sales contracts, and proof of export activities, 45 days before the end of the EOE’s taxable year. Failure to renew on time may result in the loss of VAT zero-rating and other benefits (RR No. 10-2025, Sec. 3).
In addition to the renewal process, RMC 32-2025 requires the BIR to perform a post-audit on EOEs to verify compliance with the VAT zero-rating provisions. During the post-audit, the BIR checks that the enterprise consistently meets the 70% export requirement and correctly applies the VAT exemptions. If discrepancies are found—such as the failure to meet the export threshold or improper use of tax incentives—the BIR may revoke the enterprise’s certification. Once revoked, the enterprise is disqualified from continuing to avail of VAT zero-rating and other tax benefits, which can lead to significant financial implications (RMC No. 32-2025, Sec. 4).
Conclusion
EOEs remain a cornerstone of Philippine economic strategy. The CREATE MORE Law enhances their competitiveness by articulating clear definitions, streamlined incentive entitlements, and a framework for certification and compliance. Through DTI certification and coordinated tax administration by the BIR and BoC, export enterprises are better positioned to contribute to trade performance and economic revitalization. The new rules under CREATE MORE, which will ease the burden on EOEs in applying for refunds, represent just one of many steps in a whole gamut of improvements the government can implement to support the export industry.
References:
- Republic Act No. 12066, CREATE MORE Law, Sec. 6 and Sec. 7, 2021.
- Revenue Regulations No. 10-2025, BIR, Sec. 2, 2025.
- Revenue Memorandum Circular No. 32-2025, BIR, Sec. 3, 2025.
- Department Administrative Order No. 25-03, DTI-EMB, Sec. 2, 2003.
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Article Written By: Imy B. Eulin, CPA, CTT; Kyle Clarence L. Williams, CPA, MICB, RCA, CAT ; Rhea Pelayo, CPA
