The Philippines Department of Finance (DOF) has assured investors that the forthcoming enactment of the Corporate Recovery and Tax Incentives for Enterprises to Maximise Opportunities for Reinvigorating the Economy (CREATE MORE) Act will make it easier for Singaporean investors to do business in the country.

Finance Secretary Ralph G. Recto said this during the business and investment summit in Singapore on 19 September 2024.

“The new amendments to the country’s fiscal incentives regime – known as CREATE MORE – are designed to attract even more Singaporean investors to lay down roots and flourish in the Philippines,” he said before over a hundred Singaporean investors at the 4th Philippine-Singapore Business and Investment Summit (PSBIS) held on 19 September 2024 at Singapore.

Earlier, the Philippine Senate approved the CREATE MORE Act on 9 September 2024 to implement various tax reforms. This legislation encourages investment by implementing a reduced corporate tax rate of 20% for eligible businesses that take advantage of the Enhanced Deductions Regime (EDR) incentive. An income tax holiday has been introduced, providing an opportunity to benefit from a special income tax rate of 5%.

Showcasing the Philippines’ more open and liberalised investment landscape, Secretary Recto highlighted that the CREATE MORE bill, which is expected to be passed within the year, will enhance both fiscal and non-fiscal incentives, resolve key investor concerns, and respond to emerging global developments.

For instance, it will streamline business compliance by reducing documentary requirements.

A dedicated Registered Business Enterprise Taxpayer Service (RBETS) will be created to provide personalised tax compliance support for investors and serve as a one-stop-shop for the Bureau of Internal Revenue’s (BIR) services.

The bill also directly addresses investors’ concerns about value-added tax (VAT) by exempting export-oriented enterprises from paying it.

It also provides a more attractive incentive package for registered projects or activities with an investment capital exceeding about USD 260 million (PHP 15 billion).

Under the enhanced deductions regime, registered business enterprises (RBEs) will enjoy a 5% reduction in corporate income taxes, from 25% to 20%.

In addition, the maximum duration of tax incentives availability will be extended by 10 more years, from 17 years to 27 years. Another 10-year extension will be allowed for labour-intensive projects.

Meanwhile, RBEs will also benefit from the 100% deduction on power expenses – significantly cutting costs for the manufacturing sector.

The tourism sector will be given an additional 50% deduction for reinvestment allowances on priority tourism projects or activities.

The Finance Chief underscored that CREATE MORE will bolster the country’s investment attractiveness, enticing more Singaporean investors to the Luzon Economic Corridor.

“This will be a perfect nexus for Singaporean investors involved in manufacturing, semiconductor supply chains, renewable energy, and agribusiness,” he said. “True to the bill’s name, we envision this new policy to CREATE MORE thriving economic corridors in every corner of the Philippine archipelago, with Singapore taking a leading role.”

Apart from this, the Finance Chief highlighted the new Public-Private Partnership (PPP) Code that has made PPP involvements faster and easier.

He encouraged Singaporean investors to submit unsolicited proposals, respond to solicited ones, and explore more joint ventures with the Philippine government through the administration’s 186 flagship infrastructure projects (IFPs).

Meanwhile, the Finance Chief highlighted that the government is actively addressing bottlenecks and streamlining processes to clear the way for Singaporean investors’ seamless participation in high-priority sectors.

These include clean energy, critical minerals, retail, digital technologies, food production, financial services, pharmaceuticals, and many more.

With the Philippine Digital Infrastructure Project and the National Broadband Programme in place, the Secretary said the Philippines is ready to become the hotspot for technology-driven businesses, from hyper-scale data centres to smart manufacturing and high-tech agriculture.

To fuel this digital transformation, Secretary Recto explained that the government has developed an Artificial Intelligence roadmap and strategy to upskill and retool the Filipino workforce.

The Finance Chief pointed out that these reforms, along with the country’s booming economy and the strategic complementarities of Singapore and the Philippines, make the latter the most strategic haven for Singaporean investors.

The Philippines and Singapore have enjoyed 55 years of strong diplomatic ties, with Singapore being the country’s eighth-biggest trading partner; second-largest source of foreign direct investment (FDI) inflows; sixth major investor in the Philippine Economic Zone Authority (PEZA); and ninth top source of tourist arrivals.