How to Compute the CREATE MORE Enhanced Deduction for Power Expense: A Worked Example

Under the CREATE MORE Act, a Registered Business Enterprise (RBE) that elects the Enhanced Deductions Regime (EDR) may deduct an additional amount equal to 100% of the power expense actually and directly used in its registered project or activity — on top of the actual electricity cost it already deducts as an ordinary business expense. That doubles the power-related deduction compared with the 50% additional deduction available under the original CREATE Act, and it directly reduces the corporate income tax an RBE owes. This guide works through the arithmetic with concrete numbers.

What is the CREATE MORE enhanced deduction for power expense? #

The Enhanced Deductions Regime (EDR) is an income-tax incentive package under Republic Act (RA) No. 12066 — the CREATE MORE Act, signed into law on November 11, 2024, amending RA No. 11534 (the CREATE Act) — that lets a qualifying RBE claim a menu of additional deductions from taxable income, on top of its ordinary allowable business expenses. Power expense is one line item on that menu, and CREATE MORE increased its additional-deduction rate from 50% to 100% of the cost of electricity actually and directly used in the registered project or activity.

Multiple independent tax-advisory summaries of RA No. 12066 — including analyses published after the law’s enactment — consistently describe this change the same way: the additional deduction on power expense under the Enhanced Deductions Regime was raised from 50% (under the original CREATE Act) to 100% (under CREATE MORE), amending Section 294(C)(6) of the Tax Code. Two independent tax-advisory descriptions of that amended provision converge on the same operative phrasing:

“One hundred percent (100%) additional deduction on power expense incurred in the taxable year.”

This guide could not retrieve the amended statutory or implementing-rules text directly from a primary source at the time of writing (the primary BIR/Official Gazette/FIRB documents were unreachable during research), so the line above is presented as secondary-source reporting of the provision’s operative language, not a confirmed direct quotation of the law itself. Readers relying on this for a specific filing position should confirm the exact wording against the BIR or the Fiscal Incentives Review Board’s published issuances.

Mechanically, the “additional deduction” is not a tax credit and does not replace the actual expense deduction — it is a second, separate deduction computed as a percentage of the same power cost, stacked on top of the first.

Worked example: computing the deduction and the tax savings #

Here is a full walk-through using concrete, fictional figures for an illustrative RBE — call it “Luzon Circuit Components, Inc.,” an export-oriented electronics assembler registered with an Investment Promotion Agency that elects the Enhanced Deductions Regime under CREATE MORE from its first year of commercial operations. Its registered manufacturing line runs three shifts, and electricity is its single largest controllable cost after direct materials.

Assumed facts:

• Annual power expense actually and directly used in the registered assembly line: ₱4,000,000
• Taxable income from the registered activity, before the enhanced power-expense deduction (i.e., after gross income less ordinary allowable deductions, which already include the ₱4,000,000 actual power cost): ₱30,000,000
• Corporate income tax (CIT) rate applicable to RBEs under the Enhanced Deductions Regime: 20%

Step 1 — Deduct the actual power expense (already reflected above). Like any business, Luzon Circuit first deducts its real electricity bill of ₱4,000,000 as an ordinary cost of doing business. This is already netted into the ₱30,000,000 pre-enhanced-deduction taxable income figure above — it is not something CREATE MORE adds; every taxpayer gets this deduction regardless of RBE status.

Step 2 — Compute the CREATE MORE additional deduction. The enhanced deduction equals 100% of that same power expense:

₱4,000,000 × 100% = ₱4,000,000 additional deduction

Step 3 — Reduce taxable income by the additional deduction.

₱30,000,000 − ₱4,000,000 = ₱26,000,000 taxable income after the enhanced deduction

Step 4 — Apply the 20% CIT rate.

• CIT due with the enhanced deduction: ₱26,000,000 × 20% = ₱5,200,000
• CIT due without the enhanced deduction (i.e., on the full ₱30,000,000): ₱30,000,000 × 20% = ₱6,000,000

Step 5 — Isolate the tax savings.

₱6,000,000 − ₱5,200,000 = ₱800,000 in tax savings attributable to the enhanced power-expense deduction alone, for this one taxable year, holding all other facts constant.

How does this compare to the original CREATE Act’s 50% rate? #

Because CREATE MORE only changed the percentage applied to the same power expense, isolating that one variable shows exactly how much of the ₱800,000 savings above is due to the rate increase itself, versus what an RBE would have received under the original CREATE Act’s 50% additional deduction — useful for enterprises that registered before the amendment and are now re-checking their numbers.

Doubling the additional-deduction rate doubles the tax savings attributable to power expense specifically: from ₱400,000 to ₱800,000 in this example — an incremental ₱400,000 gain from the CREATE MORE amendment alone, before accounting for CREATE MORE’s separate reduction of the EDR’s CIT rate itself.

What other enhanced deductions does CREATE MORE add, besides power expense? #

Power expense is one line item on a longer Enhanced Deductions Regime menu; CREATE MORE increased or added several other additional deductions for qualifying RBEs, summarized below for context. This post focuses on the power-expense computation in detail; the other items follow the same “actual expense plus a percentage add-on” mechanic but are not separately worked through here.

As with the power-expense example above, each of these is computed as a percentage add-on to the actual expense already deducted — not a replacement for it — and reduces taxable income before the CIT rate is applied. For the broader incentive picture (the 20% CIT rate itself, outright SCIT/EDR election, and the RBE Local Tax cap), see CREATE MORE Act Incentives: Enhanced Deductions and Tax Breaks for RBEs.

What documentation does an RBE need to claim this deduction? #

Claiming the enhanced power-expense deduction is not automatic on the strength of an electricity bill alone — the enterprise must show the expense is actually and directly tied to the registered project, and recent implementing guidance has tightened the paperwork trail. Reporting on a Department of Finance order circularized through the Fiscal Incentives Review Board in mid-2026 describes stricter substantiation requirements for Enhanced Deductions Regime claims, including a notarized comprehensive summary report, with compliance mandatory beginning with the taxable year ending December 31, 2026; that reporting also notes that penalties and late-payment fees charged by the power distributor are excluded from the power-expense base used to compute the additional deduction.

Practically, an RBE claiming this deduction should be able to trace each peso of power expense to metered consumption at the registered production site or activity — not shared corporate overhead, administrative offices, or unregistered lines — and retain billing and consumption records that match what is reported to the RBE’s Investment Promotion Agency and to the BIR at annual income tax filing. Enterprises still filing withholding certificates and other routine returns alongside their EDR claim can use the app linked above to keep BIR Form 2307 and related filings organized while the incentive computation itself is handled by their tax preparer — the app does not compute CREATE MORE incentives.

Frequently asked questions #

What is the CREATE MORE enhanced deduction for power expense? #

It is an additional deduction, on top of the actual electricity cost already deductible as an ordinary business expense, that a Registered Business Enterprise under the Enhanced Deductions Regime may claim for power actually and directly used in its registered project or activity. Multiple tax-advisory sources consistently report the additional deduction at 100% of the power expense under the CREATE MORE Act, up from 50% under the original CREATE Act.

Is the enhanced power-expense deduction on top of the actual expense, or instead of it? #

On top of it. The RBE first deducts its actual power expense as an ordinary cost of doing business, then claims the enhanced deduction as a separate, additional line item equal to 100% of that same power expense, effectively doubling the power-related deduction from taxable income.

How much tax does the enhanced power-expense deduction actually save? #

The savings equal the additional deduction multiplied by the applicable corporate income tax rate. For an RBE under the Enhanced Deductions Regime paying the 20% CIT rate, a ₱4,000,000 additional deduction produces ₱800,000 in tax savings; the exact figure scales with the enterprise’s actual power expense and applicable rate.

Does every RBE automatically qualify for the enhanced power-expense deduction? #

No. The enterprise must be registered with an Investment Promotion Agency, have elected the Enhanced Deductions Regime (rather than the Special Corporate Income Tax option), and the power expense must be actually and directly used in the registered project or activity, supported by documentation such as billing records tied to the registered site or production line.

What other enhanced deductions does CREATE MORE offer besides power expense? #

Reported alongside the power-expense increase are an additional depreciation allowance for buildings and production machinery, an additional deduction on direct labor expense, an additional deduction on research and development expense, an additional deduction on training expense, and a reinvestment allowance for manufacturing and tourism enterprises that plow undistributed profits back into qualified projects.

Does the enhanced deduction change the corporate income tax rate itself? #

No. The enhanced deduction reduces taxable income before the corporate income tax rate is applied; it does not change the rate. Separately, CREATE MORE also set a 20% CIT rate for RBEs under the Enhanced Deductions Regime, and that rate is what the worked example in this guide applies to the reduced taxable income.

Summary #

An RBE under the CREATE MORE Act’s Enhanced Deductions Regime deducts its actual power expense as usual, then claims a second, additional deduction equal to 100% of that same expense — double the 50% rate under the original CREATE Act. In the worked example above, a ₱4,000,000 annual power expense produces a ₱4,000,000 additional deduction and, at the 20% EDR corporate income tax rate, ₱800,000 in tax savings for that year. For the fuller incentive picture beyond this one line item, see CREATE MORE Act Incentives: Enhanced Deductions and Tax Breaks for RBEs, and for how the standard 25%/20% corporate income tax rates apply to corporations outside these RBE incentive regimes, see Corporate Income Tax Rates in the Philippines: 25% vs 20% for MSMEs Under the CREATE Act.