CREATE MORE Law Summary: The Key to Employment Growth

Truly, the Philippines is one of the countries that foreigners entrust their business in. With our competitive, efficient and skilled workforce, access to cutting-edge technology and not to mention, our capacity to adapt with norms and customs, it becomes our advantage when it comes to enticing entrepreneurs to come work with us. However, how more thriving would it be if we create more opportunities in terms of jobs, growth, and continuous progress through government programs? With the aid of a refined law, discover how the administration takes its steps in making this happen though CREATE MORE LAW, and how this taxation reform would be beneficial for corporations in the days to come.

What is CREATE MORE Law?

Republic Act No. 12066, also known as the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Law, was signed into law by President Ferdinand R. Marcos, Jr. on November 11, 2024, which amended CREATE Law (Republic Act No. 11534). The CREATE MORE Law’s effectivity aims to enhance the Philippines’ tax incentives framework, ensuring that we are aligned with global standards, remain reliable and investment-friendly amongst investors, and with greater consistency.

Comparison between CREATE Law and CREATE MORE Law

Maybe you’re also curious as to why the government felt the need to amend the CREATE Law into CREATE MORE Law. No worries — we’ve got you covered.

CREATE Law (RA 11534), which has been enacted in March 2021, spiked a significant shift in the country’s corporate tax regime. It lowered corporate income tax rates and rationalized tax incentives to entice more foreign direct investment. However, it lacked some significant regulations. That’s why CREATE MORE Law (RA 12066) was built upon CREATE Law to further refine tax incentives, simplify application processes and approvals, and to enhance the role of investment promotion agencies.

Under the provisions of the CREATE MORE Law, the National Internal Revenue Code (NIRC) of 1997, as amended, has been further adjusted the rates of Income Tax on Domestic and Resident Foreign Corporations, which are subject to conditions.

To dive deep further into the general summary of relevant changes, kindly refer to the table below:

Category	CREATE Law (RA 11534)	CREATE MORE Law (RA 12066)
Objective	Lower corporate tax rates and rationalize fiscal incentives	Enhance and simplify tax incentives to attract more investment
Corporate Income Tax	25% for large corporations, 20% for Small Business Enterprises (SMEs)	20% flat rate for Registered Business Enterprises (RBEs) opting for Enhanced Deduction Regime (EDR)
Scope of Tax-Exempt Income	Limited exemptions for certain entities	Expanded exemptions for treaty-based income
Application of Incentives	Involved multiple agencies like Fiscal Incentives Review Board (FIRB) and Board of Investments (BOI)	Simplified process with fewer agency approvals
Incentive Sunset Period	Fixed transition period for old incentives	Extended transition period for businesses shifting to the new scheme
Role of Investment Promotion Agencies	Investment Promotion Agencies (IPAs) required FIRB approval for major incentives	IPAs given more autonomy in granting incentives

1. Simplified Incentive Application and Approvals
2. It is notable that one of the most significant changes under the CREATE MORE Law is the simplified application and approval process for fiscal incentives. Due to delays in application approval from FIRB, BOI, and IPA’s, the law granted more autonomy to IPA, for projects below a certain threshold, which helped in reducing the administrative burden and approval delays.

• Expanded Tax Exemptions
• CREATE MORE Law broadens the scope of tax-exempt income to include treaty-based income and other forms not formerly covered by CREATE Law. Through this change, it encourages more foreign investments in the country since it provides more favorable tax environment to businesses.

• Incentive Sunset Period Adjustment
• Since the government took note of existing investor and entrepreneurial pains, CREATE MORE extended the transition period for those who are transitioning from old incentive schemes to the new system. It provides businesses with longer durations for some companies, depending on the type of incentive and how long the company enjoys the fruits from it, while protecting investments made under previous agreements.

• Improved Deductions for RBEs
• Since the law introduces a flat rate of 20% corporate income tax rate for RBEs which opted for enhanced deductions instead of income tax holidays, it covered a vast range of expenses, which included research and development, training, infrastructure development and other sustainable practices, which aims to give businesses long-term growth.

• Performance-Based Incentive System
• Because the new law enforces that the fiscal incentives shall be performance-based, the government incentivizes business projects with significant economic impact, which generates innovation, new jobs, and exports.

To summarize, CREATE MORE Law addressed key challenges investors and entrepreneurs alike faced and improved tax system by making it more competitive compared to the CREATE Law. It refined tax and business incentives, simplified and reduced burden from former procedures, lengthened deadlines and enhanced holistic investment schemes.

RA 12066: How did it CREATE MORE?

To know how the law significantly impacted various sectors of the economy, here are some key factors wherein the law has influenced and created more investment, economic growth, and local employment:

1. Foreign Direct Investment (FDI) Boost
2. Due to reduced bureaucracy and simplified tax structure, the Philippines has been a more attractive hub for businesses to invest in. Furthermore, several companies from other countries have expanded their operations in the Philippines due to the enhanced investment landscapes.

For SMEs, the law offers a more simplified incentives, which helps them thrive and compete with both domestic and international markets. Since the reform aligns the tax policy with current global standards, it helped improve investor confidence and economic resilience.

• Competitiveness in the Southeast Asian Region
• Before CREATE and CREATE MORE Laws come into picture, the Philippines has been known to have one of the highest corporate tax rates in the region at 30%. Now, it has been reduced to a flat rate of 20% for companies that choose the EDR, (from then 25% under CREATE Law), uniformed for RBEs under RA 12066. The country has now stepped up and is in parallel with ASEAN neighbors such as Cambodia, which both currently have as low as 20% corporate income tax.

• Encouraging Growth in Key Sectors While Generating More Jobs and Economic Security
• Due to the enhanced deductions and expanded tax exemptions, it benefits relevant sectors such as business process outsourcing (BPO), manufacturing, and renewable energy. The current major contributor, which is the BPO sector, heavily benefits from the incentive process, which is evidenced by some foreign companies deciding to expand their entities within the Philippines.

Additionally, since the CREATE MORE Law has encouraged businesses to reinvest in the country, it paved way to more economic stability not only by maintaining but creating new jobs and possibilities. More foreign investment would lead to more enterprises, which increases greater job opportunity for the Philippine workforce.

The BIR Under the CREATE MORE Law

The Bureau of Internal Revenue (BIR) plays a key role in CREATE MORE Law’s effectivity. While the law is the basis of streamlining fiscal incentives and enhancing the effectivity of investment opportunities, the BIR is the agency that is governing through tax administration, compliance, and enforcement of the law.

1. Tax Compliance and Collection
2. The BIR is solely responsible for collecting and administering taxes from RBEs and other taxpayers which includes verification of business entitlement to incentives such as Income Tax Holidays (ITH), enhanced deductions, and Special Corporate Income Tax (SCIT), if applicable.

• Monitoring, Reporting and Issuance of Implementing Rules
• The BIR systematizes with FIRB and IPAs to regulate whether RBEs comply with their incentive terms and tax obligations. This helps track the actual tax benefits granted to businesses, and whether they meet performance metrics such as job creation or export targets.

As the agency tasked with issuing Revenue Regulations (RRs) and Revenue Memorandum Circulars (RMCs) to operate tax provisions under CREATE MORE, it details how enhanced deductions are computed, providing guidelines in applying for VAT exemptions or zero-rating, and transition procedures for businesses shifting from old to new tax regimes.

• Law Enforcement and Auditing
• The BIR has the authority to audit RBEs and other taxpayers, making sure that they do not abuse the privileges from these incentives. They have an eye for any ineligible claims, misreporting and other relevant tax compliance issues.

For more information about the BIR, head on to their website here.

CREATE MORE Law: Simplified

To summarize, RA 12066 (CREATE MORE Law) stemmed from the reforms of RA 11534 (CREATE Law) to further enhance and streamline the Philippines corporate tax landscape. Through the introduction of a uniformed corporate income tax rate, expansion of tax-exempt income, empowering investment promotion agencies and providing a more seamless application process, this reform has indeed been effective in attracting more foreign investors to start and continue entrusting their business and investments in the country, armed with these regulations that not only benefit businesses, but the local workforce.

While we would still be searching for continuous improvement in the future, CREATE MORE Law has been a major leap in helping the Philippines rank in the global economy. The law promises long-term economic growth and continues to open doors with the aim to solidify the country’s tax system, hence, making the Philippines one of the prime investment hubs in Southeast Asia.

You Can CREATE MORE with Manila Bookkeepers

While the law represents a major step forward for the economy and opens incredible opportunities, its success depends on proper implementation and continuous refinement. To reduce complexities in terms of navigating tax incentives, compliance and regulations, we should have ample guidance from experts who know the technicalities.

At Manila Bookkeepers, we can help you CREATE MORE. Based in the Central Business District of Makati City, Philippines, our team of accountants and tax professionals specialize in helping businesses in terms of their local tax compliance while ensuring that we are abreast and accurate with current taxation laws and reforms.

Let us guide you through tax implementations and help your business thrive more! Contact Manila Bookkeepers today for a free consultation and start maximizing the benefits of your tax incentives.