Philippines Eyes Further Tax Reforms to Boost Investment
In a bid to enhance the Philippines’ business environment and attract more investments, Finance Secretary Ralph Recto has announced plans to push for amendments to the Corporate Recovery and Tax Incentives for Enterprises Law, commonly known as the CREATE Act. The law, which originally aimed to provide relief to companies amid the economic challenges posed by the Covid-19 pandemic, has already made significant strides by reducing 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 on March 20, Recto outlined the proposed changes, which include a further reduction of the income tax rate to 20% for domestic and resident foreign corporations. In addition, he highlighted the introduction of an expedited process for value-added tax refunds. This new system promises minimal documentary requirements, quicker processing times for low-risk claims, and a more efficient tax refund system for registered business enterprises.
Recto’s strategy revolves around stimulating investments and expanding the economy through a series of reforms. “We will enhance investments by reducing the cost of doing business, improving the regulatory framework, and eliminating constraints,” he stated, emphasizing the need to replace bureaucratic hurdles with a more welcoming environment for investors.
Under President Bongbong Marcos Jr.’s administration, efforts such as the enactment of the Ease of Paying Taxes Act and amendments to the Public-Private Partnership Code have been made to create a more investment-friendly climate.
The overarching goal of these reforms is ambitious yet clear: to reduce poverty levels significantly. Recto underscored the administration’s commitment to lifting 14 million Filipinos out of poverty, aiming to decrease the poverty incidence to single-digit levels—specifically, 8-9% by 2028. “This is the key indicator that our economic growth has translated into tangible improvements in the lives of ordinary Filipinos through increased employment opportunities, improved education levels, and better health outcomes,” Recto concluded.