Lowers corporate income tax and expands incentives for investment
11 Nov 2024
On 11 November 2024, the President of the Philippines signed the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act into law.
Under the CREATE MORE Act, Registered Business Enterprises (RBEs) in the Philippines have the option to choose between two tax regimes:
- The Special Corporate Income Tax (SCIT): This regime imposes a tax rate of 5% on the gross income earned by the RBE.
- The Enhanced Deductions Regime (EDR): Under this regime, RBEs are subject to a 20% Corporate Income Tax (CIT) on their taxable income (reduced from the previous 25%).
RBEs can also benefit from additional deductions on qualifying expenses, such as a 100% additional deduction on power expenses, which effectively reduces their overall tax liability (up from 50%).
The SCIT and EDR incentives, initially capped at a maximum of 10 years, are now extended to a period of up to 17 or 27 years, depending on the nature and impact of the investment.
The also Act seeks to clarify value-added tax (VAT) rules, including zero-rating for local purchases of export-oriented enterprises and exemptions for importations.
Finally, the Act authorizes the investment promotion agency to issue special visas to foreign nationals possessing highly specialized skills or holding executive positions. This initiative aims to attract and retain global talent essential for the operation and growth of registered business enterprises.
The aim of the CREATE MORE Act is to promote more high-impact investments both from international investors and domestic enterprises.
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Type:
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Treatment and operation (Corporate taxation, Immigration regulations)
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Promotion and facilitation (Investment facilitation , Investment incentives)
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Industry:
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