President Ferdinand “Bongbong” Marcos Jr. on Monday trimmed corporate taxes and offered more fiscal incentives under a new law aimed at drawing more foreign investments.
The Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act reduces corporate income tax to 20 percent from 25 percent and allows firms to adopt “work-from-home” arrangements for up to half their workforce, among others.
It also allows businesses currently enjoying investment incentives to take advantage of enhanced tax deductions, including a 100 percent coverage for power expenses, as well as extends VAT incentives to non-registered exporters and high-value domestic enterprises.
With the new law, only projects with capital exceeding P15 billion will require review by the Fiscal Incentives Review Board, raising the threshold from the previous P1 billion.
“We have taken a decisive step towards our vision of a globally competitive and investment-led Philippine economy. Through this law, we seek to attract… both domestic and global investments, focussing on strategic industries that will shape our future,” Mr. Marcos said in a speech during yesterday’s signing ceremony attended by legislators.
“This was a hard-fought and hard-won bill that really encompassed such a great scope of everything that we are trying to do in our economic transformation,” he added.
Foreign direct investment to the Philippines reached $6.2 billion last year, according to United Nations Conference on Trade and Development data. But that is a fraction of the $159.67 billion Singapore takes, and Indonesia’s $21.6 billion, while Vietnam’s stands at $18.5 billion.
Businesses often cite high power costs, foreign ownership restrictions, and poor infrastructure as key hurdles to investment.
“As we open new doors of opportunity, we drive businesses to reinvest their capital, build upon the workforce, and initiate a ripple effect that will be felt across generations,” the President said.
Finance Secretary Ralph Recto said the new law will be “significantly cutting costs for the manufacturing sector.”
“This will not only attract new investments and grow existing businesses to make more money but also enable us to create more high-quality jobs, increase our people’s income, and reduce poverty. Through CREATE MORE, we will secure a brighter future for every Filipino,” Recto said.
Presidential Adviser on Investment and Economic Affairs Secretary Frederick Go added: “The passage of CREATE MORE has triggered so much interest from foreign and domestic direct investors, especially the large scale ones. This is our main tool to make the Philippines an attractive investment destination.”
Bureau of Internal Revenue Commissioner Romeo Lumagui Jr. said the BIR will conduct a public information campaign on the tax incentives granted by the new law.
Speaker Ferdinand Martin G. Romualdez said the new law aims to resolve confusion and ambiguities that have arisen on tax incentives the original CREATE law had granted in March 2021.
“To resolve these issues, and to encourage these investors to remain in the country and keep their workers employed, we found it necessary to already amend the law,” he said.
Albay Rep. Joey Sarte Salceda, chair of the House committee on ways and means and the measure’s principal author, said CREATE MORE is “the largest pro-labor legislation in recent memory.”
“It increases the demand for labor, by encouraging more investments. This is the only way to truly sustain higher wages,” he said.
The Joint Foreign Chambers (JFC), German-Philippine Chamber of Commerce and Industry Inc. (GPCCI), and the Philippine Economic Zone Authority (PEZA) said the new law is expected to strengthen the Philippines’ investment climate and enhance its competitiveness as a destination for foreign direct investment.
The JFC emphasized that the CREATE MORE Act aligns local tax and incentive policies with global standards, making the Philippines more attractive for investment.
“This legislation addresses the urgent need to review and revise the country’s investment incentive policies, ensuring they remain aligned with international standards,” JFC said in a statement.
“We share the goal of creating a more favorable business landscape to foster growth and job opportunities. The German business community in the Philippines recognizes its potential, as demonstrated by our recent World Business Outlook survey, which reflects strong optimism in the Philippine market,” added GPCCI president Marie Antoniette Mariano.
PEZA director general Tereso Panga said: “The domestic market enterprises will benefit as well from the new incentive regime. This should stimulate domestic production by local manufacturers including foreign investors going into import substitution activities to cater to our growing domestic market.” With AFP
Editor’s Note: This is an updated article. Originally posted with the headline “Marcos signs law cutting Philippine corporate taxes.”
Be the first to comment