Philippines enacts CREATE MORE Act to boost investments, create jobs
MANILA, PHILIPPINES — Philippine President Ferdinand Marcos Jr. recently signed the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act on Monday, November 11, 2024.
The law aims to enhance the Philippines’ tax incentive framework, making the country more attractive for foreign and domestic investments, with significant benefits for the outsourcing industry.
The CREATE MORE Act amends the original CREATE law, which was enacted to lower corporate income tax rates during the COVID-19 pandemic. The new legislation clarifies tax rules for businesses in special economic zones and extends incentives to non-registered exporters and high-value domestic market enterprises.
“We have enhanced our tax regime [and] incentive framework, making it more inviting for investment—while remaining steadfast in the principles of fiscal prudence and stability,” said President Marcos during the signing ceremony.
Outsourcing industry to benefit from tax breaks
One key sector expected to benefit from CREATE MORE is the business process outsourcing (BPO) industry. The law provides several advantages that will help these sectors remain competitive globally.
First, outsourcing companies will benefit from reduced corporate income tax rates — from 20% to 25% — under the Enhanced Deductions Regime (EDR). This reduction will lower operational costs for BPO firms, making the Philippines an even more attractive destination for outsourcing services.
Additionally, CREATE MORE introduces flexibility in work-from-home (WFH) arrangements within economic zones. Up to 50% of a company’s workforce can now work remotely without losing eligibility for tax incentives.
This provision is crucial for BPOs, many of which have adopted hybrid work models since the pandemic. The ability to maintain WFH setups while still enjoying tax breaks will allow outsourcing companies to optimize operations and reduce overhead costs.
The law also streamlines VAT and excise refund processes and reduces compliance requirements — key improvements that will ease administrative burdens for BPO firms handling complex tax filings due to their international operations.
PEZA welcomes the CREATE MORE Act
The Philippine Economic Zone Authority (PEZA) expressed strong support for CREATE MORE, emphasizing its potential to attract foreign direct investments (FDI) and boost job creation. PEZA stated that the law strengthens its ability to promote export-driven industries like BPOs by offering competitive fiscal incentives compared to other Southeast Asian nations.
“CREATE MORE is a testament to this administration’s serious effort in attracting long-term Foreign Direct Investments into the Philippines,” said PEZA Director General Tereso Panga.
“With these new policies in place, coupled with our country’s skilled workforce and conducive business environment, we are confident that new investors will come in and old investors will choose to stay.”
Economic growth and job creation expected
Beyond the outsourcing sector, CREATE MORE is expected to attract broader investments across various industries. Finance Secretary Ralph Recto emphasized that the law would open opportunities for both international investors and local businesses.
“This will not only attract new investments but also enable us to create more high-quality jobs, increase our people’s income, and reduce poverty,” Recto said.
Senate President Francis Escudero noted that business owners have long sought clearer taxation rules. Meanwhile, House Speaker Martin Romualdez said that amendments under CREATE MORE would help preserve current investments while enticing new foreign capitalists.
“The enactment of the new law signals our unwavering commitment to keep and attract investments that will preserve jobs and create more opportunities for our people,” he added.
With CREATE MORE now in effect, the Philippines aims to strengthen its position as a competitive investment destination in Southeast Asia while fostering growth in key sectors like outsourcing.
