The much-awaited enactment of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act in 2024 is one of the Marcos, Jr. administration’s biggest Christmas and New Year’s gifts to both local and foreign investors and the Filipino people.

Signed into law on November 11, 2024, Republic Act (RA) No. 12066, or the CREATE MORE Act, transforms the Philippines into an attractive destination for business by making the tax incentives regime more globally competitive, investment-friendly, predictable, and accountable.

“CREATE MORE is definitely among the best gifts for our current and future investors as well as the whole nation this year. Matagal na itong hiniling ng business community, and we acted fast on passing this measure,” Finance Secretary Ralph G. Recto said.

“The economic outlook for 2025 is brighter as we see foreign investment pledges materialize and local businesses grow stronger because of this law. This is a true win-win for everyone — not only for the businesses but especially for Filipinos, who will reap the bigger benefits of CREATE MORE,” he added.

Among the exciting features of the law is a more competitive and generous incentive package that awaits strategic and highly desirable investments.

For instance, Registered Business Enterprises (RBEs) will have the option to choose between the Special Corporate Income Tax (SCIT) of 5% or the Enhanced Deductions Regime (EDR) right from the start of their commercial operations.

The SCIT and EDR incentives, initially capped at a maximum of 10 years, are now extended to a period of up to 17 or 27 years. Labor-intensive projects will be allowed to apply for an extension of another five or ten years.

More incentives are given to registered export enterprises (REEs) and high-value domestic market enterprises (DMEs) with investment capital exceeding PHP 15 billion and are engaged in sectors considered import-substituting or export sales in the immediately preceding year of at least USD 100 million.

Meanwhile, CREATE MORE expands the EDR to provide additional relief to RBEs by reducing the CIT rate to 20% from 25%.

The law also increased to 100% from 50% the additional deduction on power expenses, significantly cutting costs for the manufacturing sector.

To boost the tourism industry, an additional 50% deduction for expenses related to trade fairs and tourism reinvestments will be provided until 2034.

The law also maximized the benefits of the Net Operating Loss Carry-Over (NOLCO) by changing the reckoning period from “year of loss” to the “last year of the project’s income tax holiday (ITH) entitlement period”.

Likewise, the law provides tax and duty exemption on donations of capital equipment, raw materials, spare parts, or accessories to the government, government-owned or -controlled corporations (GOCCs), the Technical Education and Skills Development Authority (TESDA), State Universities and Colleges (SUCs), and the Department of Education (DepEd) or the Commission on Higher Education (CHED)-accredited schools.

Moreover, CREATE MORE provides an optional imposition of an RBE local tax (RBELT) at a rate not exceeding 2% of gross income, which shall be in lieu of all local taxes, fees, and charges during the ITH or EDR.

In addition, the reform acknowledges the evolving business model as it institutionalizes the adoption of flexible work arrangements for RBEs operating within economic zones and freeports, without compromising their tax incentives.

To address investors’ pain points, export-oriented enterprises’ local purchases are zero-rated while importations are value-added tax (VAT)-exempt.

This law also liberalizes the condition for the availment of VAT incentives by shifting from “direct and exclusive use” to “directly attributable” requirements for goods and services. This broadens the scope of VAT incentives covering necessary services such as janitorial, security, financial consultancy, marketing, and administrative services.

CREATE MORE is one of the key reforms championed by the economic team during the Philippine economic briefings (PEBs) and investor roundtables in the United States, Japan, and the United Kingdom this year—earning the endorsement of nearly a thousand foreign investors.

Led by the Department of Finance (DOF) and the Bangko Sentral ng Pilipinas (BSP), the PEBs and investor roundtable meetings serve as platforms to highlight the Philippine government’s current initiatives to further improve the country’s investment landscape and fast-track economic progress.

During the roadshow in Tokyo, Japanese investors welcomed CREATE MORE as a solution to their long-standing concerns about VAT refunds, as it exempts export-oriented enterprises from paying VAT upfront.

American investors at the PEB in Washington, D.C. acknowledged CREATE MORE as a gateway to their swift entry into the Luzon Economic Corridor following the Philippines-US-Japan Trilateral Alliance.

British investors in London, on the other hand, view CREATE MORE as one of the cornerstones bringing predictability and stability to doing business in the country. To them, it strengthens the Philippines’ strategic investment advantages, particularly its vibrant labor force, which is young, well-educated, and English-speaking.

Overall, international investors who have ongoing investments in the Philippines expressed their desire to expand their operations in the country.

These include top-notch companies involved in manufacturing, technology, renewable energy, banking and finance, infrastructure, hotel and accommodation, healthcare, and insurance, among others.

Along with other investment-friendly reforms in the Philippines, CREATE MORE was also in the spotlight during the Philippines’ hosting of the World Economic Forum (WEF) Country Roundtable from March 18 to 19, 2024.

The Forum was the first high-level roundtable to be convened in the Asia Pacific Region since the pandemic. It was attended by global business leaders and decision-makers who have flown to Manila for an immersive look into the Philippine economy’s growth story, and to explore investment opportunities through discussions with government officials and local private sector leaders.

More PEBs and investor roundtable meetings are lined up for 2025, as the government completes the implementing rules and regulations (IRR) of the CREATE MORE Act.

###