Philippines Seeks to Boost Investment Climate with CREATE Act Amendments
In a bid to further enhance the Philippines’ attractiveness to investors, Finance Secretary Ralph Recto has announced a series of proposed amendments to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law. This move is part of a broader strategy to revitalize the economy in the aftermath of the Covid-19 pandemic.
The CREATE Law, which initially reduced the corporate income tax rate from 30% to 25% for both domestic and foreign corporations, has been a cornerstone in providing relief to businesses during these challenging times. The new amendments seek to lower this rate even further to 20% for domestic and resident foreign corporations, signaling the country’s commitment to fostering a competitive business environment.
Recto, during his discussion with the Manila Overseas Press Club, highlighted the importance of these reforms. “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,” he remarked.
Moreover, the proposed changes include streamlining the tax refund system for registered business enterprises. An expedited process for value-added tax refunds will feature minimal documentary requirements and faster processing times, particularly for low-risk claims. This simplification aims to reduce the bureaucratic burden on businesses and improve overall efficiency.
Recto’s vision extends beyond immediate economic recovery. The strategy encompasses improving the regulatory framework, reducing the cost of doing business, and eliminating investment constraints. These efforts are complemented by the enactment of the Ease of Paying Taxes Act and revisions to the Public-Private Partnership Code under President Bongbong Marcos Jr.’s administration.
The overarching goal of these initiatives is ambitious yet clear: to significantly reduce poverty levels in the country. By 2028, Recto aspires to decrease poverty incidence to single-digit levels, targeting an 8-9% rate. “We are determined not to fall short of achieving this critical goal,” Recto asserted, emphasizing that economic growth must translate into tangible benefits such as employment, education, and health outcomes for ordinary Filipinos.