“CREATE MORE” Law Expected To Attract Foreign Investments

Finance Secretary and Fiscal Incentives Review Board (FIRB) Chairperson Ralph G. Recto praised the recent enactment of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, describing it as a win-win for both local and international businesses and the Filipino people.

The ceremonial signing of CREATE MORE was attended by top officials including President Marcos, Executive Secretary Lucas Bersamin, and Senate President Francis Escudero, as well as stakeholders from the business community. I Photo: Presidential Communications Office

Republic Act (RA) No. 12066, or the CREATE MORE Act, is designed to make the Philippines' tax incentives regime more competitive, investment-friendly, predictable, and accountable on a global scale.

“CREATE MORE will open the floodgates for more high-impact investments from both international and domestic enterprises,” Recto stated.

“This will not only attract new investments and enable existing businesses to grow but also create high-quality jobs, increase incomes, and reduce poverty. Through CREATE MORE, we are securing a brighter future for every Filipino.”

During the ceremonial signing on November 11, 2024, President Ferdinand R. Marcos, Jr. said, “As we open new doors of opportunity, we drive businesses to reinvest, strengthen the workforce, and create a ripple effect across generations.”

CREATE MORE is expected to facilitate investment-led growth for the Philippines by enhancing the ease of doing business, clarifying value-added tax (VAT) rules, offering attractive tax incentives, and strengthening governance and accountability, particularly for pre-CREATE registered business enterprises (RBEs).

“CREATE MORE will accelerate the entry of foreign investors into the Philippines, as evidenced by the strong interest from nearly a thousand investors at our recent economic briefings abroad. This will help establish more partnerships and joint ventures with local companies,” said Recto.

Notable features of CREATE MORE include a competitive incentive package for strategic investments. RBEs can choose between a 5% Special Corporate Income Tax (SCIT) or an Enhanced Deductions Regime (EDR) at the start of commercial operations.

The SCIT and EDR incentives, initially capped at 10 years, are now extended up to 17 or 27 years. Labor-intensive projects may qualify for an additional five- or ten-year extension.

Additional incentives are offered to registered export enterprises (REEs) and high-value domestic market enterprises (DMEs) with investment capital exceeding PHP15 billion or annual export sales of at least USD100 million.

CREATE MORE also reduces the Corporate Income Tax (CIT) rate for RBEs from 25% to 20%, increases the additional deduction on power expenses to 100%, and provides tourism-related tax benefits until 2034.

To improve cash flow for exporters, local purchases by export-oriented enterprises are zero-rated, while imports are VAT-exempt, eliminating the need for VAT refunds.

The law also expands VAT incentives by shifting from a “direct and exclusive use” condition to a “directly attributable” standard, thus covering necessary services such as janitorial, security, consultancy, and administrative services.

Pre-CREATE RBEs have until December 31, 2034, to fully transition to the CREATE MORE framework. REEs may continue to avail of duty and VAT incentives, subject to provisions of the Tax Code and the Customs Modernization and Tariff Act (CMTA).

To bolster governance, CREATE MORE requires compliance with the Ease of Doing Business and Efficient Government Service Delivery Act, mandating a 20-working-day decision period on incentive applications once documents are submitted.

Additionally, investment capital approval thresholds for IPAs have been raised from PHP1 billion to PHP15 billion.

The ceremonial signing was attended by top officials including President Marcos, Executive Secretary Lucas Bersamin, and Senate President Francis Escudero, as well as stakeholders from the business community.