DOF, DILG, DTI clarify local tax rules

The Department of Finance, the Department of the Interior and Local Government, and the Department of Trade and Industry have issued Joint Memorandum Circular No. 01-2026 to standardize how local taxes, fees, and charges apply to registered business enterprises availing themselves of tax incentives.

The circular, titled “Guidelines on the Imposition of Local Taxes, Fees, and Charges on Registered Business Enterprises Availing of Tax Incentives Under Republic Act No. 12066,” took effect March 30, 2026, according to the DOF and the Fiscal Incentives Review Board.

The guidelines seek to address ambiguities caused by varying interpretations and implementation of the CREATE and CREATE MORE Acts, particularly for transitioning registered business enterprises.

The DOF said the circular gives businesses, local government units, and investment promotion agencies a clearer and more uniform framework for local tax administration.

The government said the policy is intended to improve ease of doing business, encourage compliance, and strengthen investor confidence.

Under the circular, the Registered Business Enterprise Local Tax applies to registered business enterprises availing themselves of an Income Tax Holiday or Enhanced Deductions Regime in economic zones, including expansion areas, under the CREATE MORE Act.

The circular also allows investment promotion agencies to enter into a memorandum of agreement with local government units to facilitate the collection, sharing, and remittance of the RBELT.

The RBELT must not exceed 2% of the gross income of the registered business enterprise’s registered project or activity.

The circular provides that the RBELT shall be in lieu of all local taxes, fees, and charges, including local business taxes and real property taxes.

Once a local government unit imposes the RBELT through an ordinance, it may no longer separately impose taxes outside the RBELT framework.

The guidelines also clarify that when an investment promotion agency owns the land but grants beneficial use to a registered business enterprise, the enterprise shall be considered the taxable person.

In such cases, the registered business enterprise may be liable for real property taxes and other applicable local taxes, including the RBELT.

To support implementation, the FIRB Secretariat conducted nationwide town hall meetings on May 5, 12, and 14, 2026, to brief stakeholders on the application of the RBELT.

“Our goal is to translate policy into practice—ensuring that reforms are delivered, translated, and felt by our investors. The CREATE MORE Act was designed to make the Philippines a more competitive and investment-friendly destination. Our responsibility now is to ensure that its provisions are implemented clearly, consistently, and effectively. Through clear guidance and coordinated implementation, we are making compliance easier, providing greater predictability, and encouraging more investments into the country,” FIRB Chairperson and Finance Secretary Frederick D. Go said.

The policy comes as the government continues to refine the country’s fiscal incentives system after the passage of Republic Act No. 12066, or the CREATE MORE Act, which updated the framework for corporate recovery and tax incentives for registered investors.

The circular is expected to reduce uncertainty for investors operating in economic zones by defining when local tax obligations apply and how they should be collected.

For local governments, the guidelines provide a standard basis for imposing the RBELT while limiting overlapping local taxes once the tax is adopted by ordinance.

The full text of Joint Memorandum Circular No. 01-2026 is available on the FIRB website through FIRB Advisory No. 005-2026.