REVENUE MEMORANDUM CIRCULAR NO. 120-2021 issued on December 13, 2021 circularizes the Amendments to Rule 2, Sections 4, 5 and 8; Rule 3 Section 3; Rule 17 Section 2, and Rule 18 Section 5, and Addition of a New Rule 18 Section 6 of the Implementing Rules and Regulations (IRR) of Title XIII of Republic Act (RA) No. 8424 (National Internal Revenue Code of 1997), as amended by RA No. 11543 (Corporate Recovery and Tax Incentives for Enterprises [CREATE] Act).
                         Rule 2, Sections 4, 5 and 8 of the CREATE IRR is amended to read as follows:

                                                     “RULE 2. Tax and Duty Incentives
                             SECTION 4. Customs Duty Exemption on Importation of Capital
                                 Equipment, Raw Materials, Spare Parts, or Accessories. —
                                         REGISTERED EXPORT AND DOMESTIC MARKET
                                ENTERPRISES SHALL ENJOY EXEMPTION FROM CUSTOMS 
                           DUTIES ON THEIR importation of capital equipment, raw materials,
                           spare parts, and accessories FOR THEIR REGISTERED PROJECT OR
                                   ACTIVITY FOR A MAXIMUM PERIOD OF SEVENTEEN (17)
                                     YEARS AND TWELVE (12) YEARS FROM THE DATE OF
                                      REGISTRATION, RESPECTIVELY, UNLESS OTHERWISE
                           EXTENDED UNDER THE SIPP; provided, that the following conditions
                                                             are complied with:

                                                                  xxx xxx xxx.
                              SECTION. 5. Value-added Tax (VAT) zero-rating and exemption. –
                              The VAT exemption on importation and VAT zero-rating on local
                        purchases shall only apply to goods and services directly and exclusively
                       used in the registered project or activity of a registered export enterprise,
                                 FOR A MAXIMUM PERIOD OF SEVENTEEN (17) YEARS FROM
                                         THE DATE OF REGISTRATION, UNLESS OTHERWISE
                                                        EXTENDED UNDER THE SIPP.

                       The direct and exclusive use for the registered project or activity refers to
                             raw materials, inventories, supplies, equipment, goods, PACKAGING
                                    MATERIALS, SERVICES, INCLUDING PROVISION OF BASIC
                                  INFRASTRUCTURE, UTILITIES, AND MAINTENANCE, REPAIR
                                   AND OVERHAUL OF EQUIPMENT, and other expenditures
                                DIRECTLY ATTRIBUTABLE TO the registered project or activity
                          without which the registered project or activity cannot be carried out;
                                      PROVIDED, THAT THE VAT ZERO-RATING ON LOCAL
                                PURCHASES SHALL BE GRANTED UPON THE ENDORSEMENT
                                             OF THE CONCERNED IPA, IN ADDITION TO THE
                                               DOCUMENTARY REQUIREMENTS OF THE BIR.
 
                            SECTION 8. Taxation after the expiration of the period of availment of
                            incentives. – All registered business enterprises shall pay all applicable
                       taxes at the regular rates under the Code and other laws after the expiration
                           of the period of incentives of their registered project or activity, UNLESS
                                                OTHERWISE PROVIDED IN THESE RULES.”
                             Rule 3, Section 3 of the CREATE IRR is amended to read as follows:

                                “SECTION 3. Qualified expansion, entirely new project, or existing
                                                        registered projects or activities.
                                                                           xxx
                            Qualified expansion projects or activities defined under Rule 1, Section
                                 4(U), may be granted three (3) YEARS ITH FOLLOWED BY THE
                                      ENHANCED DEDUCTIONS OR SCIT, AS APPLICABLE. THE
                                   EXPANSION PROJECT OR ACTIVITY MAY ALSO BE ENTITLED
                                    TO DUTY EXEMPTION, VAT EXEMPTION ON IMPORTATION 
                                  AND VAT ZERO RATING ON LOCAL PURCHASES UNDER RULE

                                      2, SECTIONS 4 AND 5, RESPECTIVELY; Provided, that the
                       application for tax incentives for a qualified expansion project or activity
                    shall be approved by the FIRB or concerned IPA, as the case may be, based
                        on the amount of investment capital of the expansion project or activity
                                                            under Rule 5, Section 1.”

                             Rule 17, Section 2 of the CREATE IRR is amended to read as follows:
                                       “RULE 17. Transitory and Miscellaneous Provisions
                            SECTION 2. Entitlement to duty exemption on importation of capital
                           equipment, raw materials, spare parts or accessories. — Existing RBEs
                             with valid Certificate of Authority to Import (CAI) or Admission Entry
                         whose capital equipment, raw materials, spare parts or accessories were
                      ordered, as reflected in the date of the purchase order or on the date of the
                      opening of the corresponding letters of credit; or loaded, as reflected in the
                          bill of lading date; or are still in transit during the effectivity of Executive
                            Order 85, Series of 2019, shall qualify for the duty exemption until the
                                                expiration of the CAI/Admission Entry.”
               Rule 18, Section 5 of the CREATE IRR is amended and Section 6 is inserted to read as  follows:

                                   “RULE 18. Investments prior to the effectivity of the Act

                                 SECTION 5. Non-income related tax incentives. – All registered
                             EXPORT AND DOMESTIC MARKET enterprises that will continue to
                         avail of their existing tax incentives subject to Sections 1, 2 and 3 of this
                          Rule, may continue to enjoy the duty exemption, VAT EXEMPTION ON
                                        IMPORTATION, AND VAT ZERO-RATING ON LOCAL
                                       PURCHASES AS PROVIDED IN THEIR RESPECTIVE IPA
                        REGISTRATIONS; Provided, that the DUTY EXEMPTION, VATexemption
                                 on importation, and VAT zero-rating on local purchases shall
                            only apply to goods and services directly ATTRIBUTABLE TO and
                                exclusively used in the registered project or activity OF SAID
                                    REGISTERED export enterprises LOCATED INSIDE THE
                                 ECOZONES AND FREEPORTS UNTIL THE EXPIRATION OF
                                   THE TRANSITORY PERIOD; PROVIDED, FURTHER, THAT
                                   IMPORTATION OF CAPITAL EQUIPMENT, SPARE PARTS,
                                   AND ACCESSORIES BY EXISTING EXPORT ENTERPRISES
                                  AND DOMESTIC MARKET ENTERPRISES REGISTERED WITH

                                    THE BOI PRIOR TO THE EFFECTIVITY OF THE ACT SHALL
                                    CONTINUE TO BE SUBJECT TO DUTY EXEMPTION FOR A
                                   PERIOD OF FIVE (5) YEARS FROM DATE OF REGISTRATION.

                                   SECTION 6. TRANSITORY RULES FOR OFFSHORE GAMING
                                      LICENSEES AND ACCREDITED SERVICE PROVIDERS. –
                                   NOTWITHSTANDING THE PROVISIONS OF REPUBLIC ACT
                                       NO. 11590, AN OFFSHORE GAMING LICENSEE OR AN
                                        ACCREDITED SERVICE PROVIDER DEFINED UNDER
                                  SECTIONS 22 (Il) AND 27 (G) OF THE CODE, AS AMENDED,
                                      DULY REGISTERED WITH, AND ENJOYING INCENTIVES
                                     GRANTED BY AN IPA UNDER ITS CHARTER PRIOR TO THE
                                      EFFECTIVITY OF THIS ACT, SHALL CONTINUE TO ENJOY
                                          SAID INCENTIVES UNTIL THE EXPIRATION OF THE
                                      TRANSITORY PERIOD IN SECTION 311 OF THE CODE, AS
                                     IMPLEMENTED BY SECTIONS 1, 2, AND 3 OF THIS RULE, OR

                                      THE EXPIRY OF THE LICENSE OR ACCREDITATION OF THE
                                      REGISTERED ENTERPRISE, WHICHEVER COMES EARLIER; 
                                    PROVIDED THAT, SAID OFFSHORE GAMING LICENSEES AND
                                     ACCREDITED SERVICE PROVIDERS SHALL THEREAFTER BE
                                       SUBJECT TO THE APPLICABLE TAXES UNDER REPUBLIC

                   ACT NO. 11590 AND ITS IMPLEMENTING RULES AND REGULATIONS.”All existing rules and regulations or parts thereof which are inconsistent with the provisions of the IRR are amended accordingly.