Finance Secretary Seeks CREATE Act Revision for Investment Boost

March 28, 2024

Amendments to CREATE Act Proposed to Boost Philippine Investment Climate

Finance Secretary Ralph Recto is championing significant amendments to the Corporate Recovery and Tax Incentives for Enterprises Law (CREATE Act), with a clear goal of enhancing the Philippines’ allure as an investment destination. The CREATE Law, originally designed to provide economic relief for businesses amid the Covid-19 pandemic, has already taken a bold step by lowering the corporate income tax rate from 30% to 25% for both domestic and foreign corporations operating in the country.

During a recent engagement with the Manila Overseas Press Club, Recto expressed optimism about the proposed changes, noting, “We anticipate this to be a transformative measure to enhance the business climate in the Philippines, attract investments, and generate more high-quality jobs for our people.” Among the key changes is a further reduction of the income tax rate to 20% for domestic and resident foreign corporations.

Recto’s proposal also includes measures to streamline tax processes. An expedited process for value-added tax refunds is on the cards, promising minimal documentary requirements and faster processing times, particularly for low-risk claims. Moreover, a more efficient tax refund system is being proposed for registered business enterprises.

The overarching strategy, as outlined by Recto, is to invigorate the economy by stimulating investments through regulatory improvements and the removal of business constraints. “We will enhance investments by reducing the cost of doing business, improving the regulatory framework, and eliminating constraints,” he affirmed.

The administration under President Bongbong Marcos Jr. has already initiated reforms such as the Ease of Paying Taxes Act and amendments to the Public-Private Partnership Code, aiming to create a more business-friendly environment that encourages growth and investment.

Recto highlighted the administration’s commitment to an ambitious poverty reduction target. The ultimate aim is to elevate 14 million Filipinos out of poverty, bringing the national poverty incidence down to single-digit levels—specifically, to 8-9% by 2028. “We are determined not to fall short of achieving this critical goal,” Recto stated, emphasizing that economic growth must lead to “tangible improvements in the lives of ordinary Filipinos” through better employment, education, and health outcomes.

tax incentives
The CREATE Acts tax incentives are designed to attract foreign investment, reduce corporate tax burdens, and stimulate economic growth by enhancing the competitiveness of Philippine businesses in the global market.

Can the CREATE Act revision truly boost investments by 2028?

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