In the years ahead, the Philippines is expecting a huge influx of foreign investments and new business registrations, thanks to the CREATE MORE Act (Republic Act 12066).

Signed by President Ferdinand R. Marcos Jr. in November 2024, the new law amends quite a few provisions of the CREATE Act which was passed in 2021.

So, what’s new this time around? 

For starters: more tax incentives for registered business enterprises (RBEs), more deductible expense items, and broader qualification for foreign and local businesses. 

With reduced corporate taxes and duties, over ₱5 billion in tax revenue will be uncollected in the next four years. The government hopes that these changes will create a more favorable business landscape and make the Philippines a preferred destination for foreign capital in the long run. 

Let’s examine the most important updates to this pivotal legislation.

Content Summary

🎯 CREATE MORE stands for Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy

🎯 The corporate income tax rate for registered business enterprises is now 20%. 

🎯 Several tax perks and non-fiscal incentives can be used for a maximum of up to 17 or 27 years. 

🎯 Export-oriented businesses, manufacturing, and heavy industries are some of the big beneficiaries of the new law.

The key highlights of CREATE MORE 

If you want to go through R.A. 12066 in detail, here’s a copy published by the Official Gazette. There’s a lot to sift through, but if you want the key takeaways straight away, here they are:

1. Special Corporate Income Tax Rate (SCIT). A generous tax rate of 20% is now available to RBEs under the Enhanced Deductions Regime. This can help reduce overall tax liabilities while reducing costs on qualifying expenses.

2. Enhanced Deductions Regime (EDR). RBEs now have a wider scope of deductible expenses. For instance, power expenses are now 100% deductible. Industries with significant energy footprint, such as logistics, manufacturing, and some technology centers, will greatly benefit. In addition, net operating loss can now be carried over as a deduction in the next five consecutive taxable years (immediately following the last year of the income tax holiday period of the project). 

3. Wider eligibility for incentives. More foreign and local businesses in the Philippines can take advantage of SCIT and other deductibles under EDR, subject to certain conditions. If you think your business qualifies, you must register with the appropriate investment promotion agencies, such as the Board of Investments (BOI) and Philippine Economic Zone Authority (PEZA).

4. Longer duration to enjoy incentives. CREATE MORE has extended the timeframe to enjoy these tax incentives—now up to a maximum of 17 or 27 years, depending on the nature of the project.  

5. Wider qualification for Value Added Tax (VAT) exemption. Previously, VAT incentives were only possible if the expense was directly and exclusively used for a particular project. Now, CREATE MORE allows for “directly attributable” expenses, which can include janitorial, security, marketing, consultancy, and promotion services.  

6. VAT perks for registered export enterprises (REEs). For instance, REEs can now claim VAT exemption on imported goods if their export sales are at least 70% of total annual production of the preceding taxable year. 

7. A boost for High Value Domestic Market Enterprises (HVDMEs). CREATE MORE also offers HVDMEs (export-oriented manufacturing, heavy industries) 0% VAT on local purchases and importation. Qualifying companies must have:

• An investment capital of at least ₱15 billion; and
• Export sales of at least US$100 million or be import-substituting/serving non-resident markets.

8. Streamlined local tax on RBEs. Companies that are eligible for incentives like income tax holidays or deductions under EDR are subject to a local tax of up to 2% of gross income—in lieu of all other local fees. 

9. Process improvements for tax incentives application. To further improve the ease of doing business in the Philippines, CREATE MORE will move the VAT refund process to an electronic system. The Department of Finance (DOF) will also set up VAT refund centers. What’s more, the new law will also impose a 20-day timeframe to approve tax incentives. 

10. More flexible work-from-home arrangements. Under CREATE MORE, RBEs can now assign 50% of its total workforce to remote positions, without incurring penalties or a reduction in incentives.

Get your business registered in the Philippines

CREATE MORE is a major boon for foreign and local companies doing business in the Philippines. But before you can enjoy the wide array of tax breaks available, you’ll need to sort out a few things first. 

Loft can help you breeze through the Philippine business registration and secure PEZA/BOI accreditations.

Complete the form below to get started now. 

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