Narayan AmmachchiThe Philippines has introduced significant tax reforms, reducing the tax burden on companies, aiming to encourage job creation, and boost export revenues.
The law, known as “CREATE More”, lowers the corporate income tax rate from 25% to 20% for registered enterprises. It also provides additional tax concessions, including deductions on electricity costs and expenses for organizing events like trade fairs, which attract foreign tourists.
A major highlight of the Act is its clarification for Special Economic Zone (SEZ) companies, addressing concerns about tax benefits for remote work. The new legislation allows SEZ companies to have up to 50% of their workforce operating remotely, which analysts view as a significant boost for the business process outsourcing (BPO) sector. Many BPO firms have already adopted hybrid work arrangements, and this provision ensures they can continue to benefit from tax incentives.
The government has aligned the Act with the OECD’s global minimum tax requirement of 15%, enhancing the Philippines’ appeal to global companies, particularly in sectors like manufacturing, technology, and renewable energy.
Businesses can also claim tax reductions by reporting net operating losses incurred over the past five years, providing financial relief to enterprises recovering from economic challenges. Additionally, the maximum period for tax incentives has been extended from 17 years to 27 years.
Analysts highlight that deductions for workforce training and R&D expenses under the Act will encourage investments in skill development and technology upgrades, helping industries remain competitive.
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