Philippines Seeks to Boost Investments with CREATE Act Amendments
In a bid to further invigorate the Philippine economy, Finance Secretary Ralph Recto has announced plans to amend the Corporate Recovery and Tax Incentives for Enterprises Law, better known as the CREATE Act. This initiative is set to build upon the existing benefits provided to both local and international businesses, which were initially introduced as a response to the economic challenges posed by the Covid-19 pandemic.
The CREATE Law has already made significant strides by reducing the corporate income tax rate from 30% to 25% for domestic corporations and for both resident and nonresident foreign corporations. However, Recto’s latest proposal aims to take this a step further by lowering the income tax rate to an even more competitive 20% for domestic and resident foreign corporations.
During a recent engagement with the Manila Overseas Press Club, Recto outlined the proposed changes, which also include an expedited process for value-added tax refunds. This new system promises minimal documentary requirements and faster processing times, particularly for low-risk claims, as well as a more streamlined tax refund system for registered business enterprises.
Recto believes that these reforms will not only stimulate investments but also expand the nation’s economy. “We will enhance investments by reducing the cost of doing business, improving the regulatory framework, and eliminating constraints,” he declared. The goal is to replace bureaucratic hurdles with a more welcoming environment, thereby encouraging investments that will contribute to economic growth.
These efforts align with President Bongbong Marcos Jr.’s administration’s broader strategy, which includes the enactment of the Ease of Paying Taxes Act and amendments to the Public-Private Partnership Code. The overarching aim is ambitious: to lift 14 million Filipinos out of poverty and reduce the poverty incidence to single-digit levels, targeting 8-9% by 2028.
Recto emphasized the administration’s commitment to this objective, stating, “We are determined not to fall short of achieving this critical goal.” He highlighted that success would be measured by tangible improvements in the lives of ordinary Filipinos, including increased employment opportunities, enhanced education levels, and better health outcomes.