CREATE MORE bill to reshape Philippines’ BPO landscape

MANILA, PHILIPPINES — The recently approved Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill is poised to significantly impact the business process outsourcing (BPO) sector in the Philippines.
The bill aims to make the Philippines a more attractive destination for business investments by lowering corporate income tax rates from 25% to 20% for both domestic and foreign companies.
Tax incentives and remote work flexibility
The CREATE MORE bill also institutionalizes work-from-home (WFH) arrangements, allowing registered business enterprises (RBEs) up to 50% remote work flexibility. This provision is expected to influence how BPO firms manage their workforce and office space requirements.
Kevin Jara, director of office services at Colliers, added that “the clarity provided under CREATE MORE on key issues such as VAT exemption, zero-rating, and WFH arrangements offers investors greater regulatory stability and transparency.”
Shifts in office space utilization
The bill’s provisions could lead to shifts in office space utilization within the BPO sector. Companies that transferred from the Philippine Economic Zone Authority (PEZA) to the Board of Investments (BOI) in 2023 may face challenges in maintaining tax incentives if they do not adhere to onsite work requirements unless specific exemptions are granted.
This could result in a renewed demand for office space as firms adjust to fulfill these requirements.
Conversely, firms registered under BOI, which does not manage economic zones or free ports, may continue to benefit from up to 100% WFH arrangements. This flexibility is crucial for BPO companies that have adapted remote work practices during the COVID-19 pandemic.
Economic growth and investment attraction
The CREATE MORE bill aligns with the government’s objectives of attracting investments and creating jobs.
The bill is expected to stimulate economic growth and increase foreign direct investments by eliminating value-added tax (VAT) on essential services and offering VAT zero-rating and duty exemptions for large domestic enterprises.
Industry support and future prospects
The Philippine Senate approved the third and final reading of the bill last Monday, September 9.
Senator Sherwin Gatchalian, who sponsored the bill, stated that “CREATE MORE offers [enhanced] and targeted incentives to further drive investment and economic recovery in the country.”
Meanwhile, House Ways and Means Committee Chairman Joey Salceda expressed hope that President Ferdinand R. Marcos Jr. will sign the measure soon, given his certification of urgency on the matter.
“It sustains the President’s very strong pro-investment record and could cement his legacy as the President who fixed manufacturing,” he added.
The Information Technology and Business Process Association of the Philippines (IBPAP) previously expressed support for these reforms, anticipating that they will help the BPO industry achieve its 2024 targets of $39 billion in revenue and 1.84 million full-time employees. The association believes that enhanced incentives and policy clarity on remote work arrangements will bolster the sector’s growth prospects.
As the CREATE MORE bill awaits presidential approval, its potential effects on the BPO sector remain a focal point for industry stakeholders. The law’s implementation could redefine how companies operate within the Philippines, balancing tax incentives with evolving workplace dynamics.