
Last Wednesday, I had the opportunity to participate in the CREATE MORE Roadshow organized by the Board of Investments (BOI). The gathering served to facilitate discourse and awareness on the recently enacted Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act (Republic Act No. 12066).
The CREATE MORE Act, which was signed last November 2024, expanded the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. This expanded investment incentives framework signifies a proactive move to stimulate economic activity, create jobs, and position the country better strategically on the map.
One of its salient features includes the corporate income tax (CIT) framework. Registered Business Enterprises (RBEs) in the Philippines can benefit from a zero percent corporate income tax through an Income Tax Holiday (ITH) for a period of four to seven years. This incentive is available to new investments in sectors such as tourism and hospitality, like hotels, resorts, and theme parks and also to Information Technology and Business Process Management projects.
Another feature is the reduced income tax rate for RBEs under the Enhanced Deductions Regime (EDR). RBEs availing themselves of the EDR are now subject to a lowered CIT rate of 20 percent, reduced from the previous 25 percent, in relation to their registered projects or activities. This is to entice investors more.
To incentivize businesses with heavy reliance on power consumption, there is a bright prospect through CREATE MORE by increasing the allowable tax deduction for power expenses from 50 percent to 100 percent. For labor, there are additional tax benefits provided for employee wages, research and development activities, and training costs. For tourism, a 50 percent additional deduction is now allowed for reinvestments in tourism (formerly limited to manufacturing) and for expenses related to trade fairs and missions.
The CREATE MORE Act likewise revised the allowable period for claiming Net Operating Loss Carry-Over (Nolco) under the Enhanced Deductions Regime. It clarifies that Nolco may be claimed as an allowable deduction within five years following the final year of availing ITH, rather than within five years immediately after the year the loss was incurred.
I also found one key provision interesting during the roadshow. There are work-from-home (WFH) incentives up to 50 percent for Information Technology and Business Process Management projects (IT-BPM) employees without affecting tax perks. This reform brought the exception that allows RBEs to implement a telecommuting program, including WFH arrangements, for not more than 50 percent of their total workforce. This is important since the post-pandemic landscape has truly underscored the benefits of remote work.
Another salient feature is the simplified local tax during incentive periods. Companies that qualify for tax incentives, whether through ITH or EDR, will only be required to pay a local tax of up to two percent of their gross income instead of multiple local taxes and fees. In this way, there is a reduction on the workload and financial pressure, thus allowing businesses to focus more on their operations. This applies during the ITH or EDR period, as long as the registered business enterprise remains properly registered with the appropriate Investment Promotion Agency (IPA) and meets the given criteria.
It was likewise mentioned by the keynote speaker during the event that for large-scale and impactful investments or “highly desirable projects,” there are substantial incentives provided by the legislation. First is the grant of up to 10 years of ITH—a generous allowance of period of tax exemption on their income, thereby boosting their profitability and accelerating their return on investment. Another benefit is the utilization of government resources, such as land and budgetary support provision under the Annual General Appropriations Act. However, certain conditions must be met such as a minimum investment capital of P50 billion or a minimum direct local employment generation of at least 10,000 within three years from the issuance of the certificate of entitlement. High stakes, high rewards, so to speak.
These streamlined incentives are expected to significantly boost the Philippines’ appeal to foreign investors and high-value sectors. Ultimately, the CREATE MORE Act aims to solidify the Philippines’ position as a highly competitive and attractive destination for global capital.