Philippines zero-rates local purchases "directly attributable" to exporters with 70% export sales (CREATE MORE Act, RA 12066)

What changed in detail

Republic Act No. 12066, the CREATE MORE Act, was approved on 8 November 2024, as the signature page of the enrolled copy shows. Under Section 35 it takes effect 15 days after publication. The reported effective date is 27 November 2024; the publication date is not printed in the Act.

Its VAT changes to the NIRC:

• Zero-rating (Secs. 106(A)(2)(a)(3) and 108(B)(5)): local sales of goods and services to an export-oriented enterprise whose export sales are at least 70% of total annual production for the preceding taxable year are zero-rated, provided they are directly attributable to its export activity. The Export Marketing Bureau of the Department of Trade and Industry checks the threshold. An enterprise that misses it loses zero-rating on local purchases in the following year.
• “Directly attributable” covers goods and services incidental to and reasonably necessary for the export activity. It expressly includes janitorial, security, financial, consultancy, marketing and promotion services, and administrative services such as HR, legal and accounting.
• Imports (Sec. 109): imports by such enterprises are VAT-exempt under the same test.
• Input tax: input tax attributable to VAT-exempt sales is deductible from gross income.
• Refunds: VAT refund centres are set up in the BIR and the Bureau of Customs, and VAT refund claims are processed on a risk basis.

The BIR circularised the Act through RMC No. 135-2024.

What it means

These rules are in force. The definition settled a long-running dispute over which supplier services to exporters qualify for zero-rating. Exporters’ suppliers of security, cleaning, accounting and similar services can now zero-rate those sales, provided the buyer meets the 70% test. A supplier should keep evidence that the buyer qualifies.

The same Act amended NIRC Sections 237 and 237-A. RR No. 11-2025 builds the electronic invoicing mandate on those amendments, and RR No. 26-2025 extended its deadline to 31 December 2026.