“We have taken a decisive step towards our vision of a globally competitive and investment-led Philippine economy,” Marcos said. “Despite our potential, we recognize the challenging road that still lies ahead.”
Implementing the new law will lead to revenue losses totaling 5.9 billion pesos ($101 million) from 2025 to 2028, according to Marcos’ communications office.
While the measure could result in a lower tax take, it brings the nation’s corporate income tax rate closer to those of its neighbors in Southeast Asia, according to Mike Ricafort, chief economist at Rizal Commercial Banking Corp. “It fine-tunes some loose ends and hopefully could make investors more decisive in investing in the country,” Ricafort said.
Prior to the new legislation, the Philippines had the highest corporate tax rate among Southeast Asia’s six major economies, according to a Senate study in August.
The push to attract more investments comes after the Philippine economy grew less than market expectations in the third quarter as a series of storms hit output. While the 5.2% expansion outpaced other economies in the region, the Philippines needs to perform better in the current quarter to meet Marcos’ goal of at least 6% growth for all of 2024.
The new law amends a measure enacted in 2021 to make the country’s tax incentives regime more globally competitive and predictable. It also streamlines the processing of value-added tax refund claims.
Other key provisions in the CREATE MORE Act include:
Simplifying local taxation by imposing a local tax on registered business enterprises in lieu of all other taxes, fees and charges
Allowing registered businesses to implement work-from-home arrangements for up to half of the workforce without jeopardizing their eligibility for incentives
Raising the capital approval threshold of investment promotion agencies such as the Philippine Economic Zone Authority and Board of Investments to 15 billion pesos from 1 billion pesos previously; projects exceeding this amount will be reviewed by the Fiscal Incentives Review Board
