Officials of Ayala Corp inspect an electric big bike assembly plant in Laguna. Handout from July 2023 

MANILA - The Senate has approved a bill seeking to amend corporate income taxes and attract more foreign investments into the Philippines. 

Senate Bill 2762 or the proposed Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy, also known CREATE MORE bill, was approved with 23 votes in favor of the measure on third and final reading.

The head of the Senate's tax-writing panel said he expects the proposed measure to bring in more foreign direct investments that will support the country’s economic growth.

“With the expected enactment of the measure, CREATE MORE is anticipated to draw in more foreign direct investments, creating a ripple effect that includes job generation, improved living standards, lower prices for goods and services, and enhanced infrastructures,” said Senate Ways and Means Committee Chair Sherwin Gatchalian.

“To achieve this, the measure focuses on enhancing the tax incentives regime for registered business enterprises, clarifying existing rules and policies on the grant and administration of fiscal incentives, and fostering an investment climate favorable for FDIs,” said Gatchalian, the bill’s principal author and sponsor.

CREATE MORE will provide "much-needed clarity" regarding VAT zero-rating on local purchases and VAT exemption on the importation of goods and services, Gatchalian said. VAT zero-rating and exemption will now apply to goods and services clearly linked to the registered project or activity, including essential services like janitorial, security, financial, consultancy, marketing, and even administrative functions such as human resources, legal, and accounting services.

The proposed measure also introduces the Registered Business Enterprise Local Tax (RBELT), which is capped at 2 percent based on gross income. This is meant to simplify the tax process for businesses. 

“Sa halip na magbayad ng iba't ibang buwis sa bawat lokal na pamahalaan, ngayon ay iisang buwis na lang ang babayaran ng mga negosyo,” Gatchalian said. (Instead of paying several taxes to the local government, businesses will need to pay just one tax.)

It also provides for a 100 percent additional deduction on power expenses of businesses and corporations and seeks to grant a 50 percent additional deduction for reinvestment in the tourism industry. 

“CREATE MORE offers enhanced and targeted incentives to further drive investment and economic recovery in the country,” Gatchalian said.

Senator Juan Miguel Zubiri said that the CREATE More Act is a measure that will address the issues currently hampering the growth of the investment. 

"This will finally solve the problems of existing investors such as DOLE Philippines, which has lost billions in unrefunded VAT payments. We were able to answer this problem, and CREATE More is a crucial measure that will be able to help us save tens of thousands of jobs under these companies," Zubiri said.

The original CREATE Law reduced corporate income taxes but was criticized by exporters and the BPO industry for removing tax incentives for their sectors. 

The Philippines has largely trailed its regional peers in terms of attracting foreign investments, but the government is hoping that recent amendments to the country's investment laws will help reverse this.