The Philippines has a new law called Corporate Recovery and Tax Incentives for Enterprises (CREATE). What’s in it for both domestic and foreign investors?

The Philippines is among the ASEAN countries with the highest tax rates, but now, it will be much lesser than you expect it to be. 

From a corporate income tax of 30%, Micro, Small and Medium Enterprises (MSMEs) are now down to 20% while corporations will only have to pay 25%.

This was done in order to give relief to taxpayers suffering from the pandemic and to speed up economic recovery.

The incentives system is also set to be performance-based, time-bound, targeted and transparent.

What The National Government Is Saying

According to National Economic Development Authority (NEDA) acting Socioeconomic Planning Secretary Karl Kendrick Chua, CREATE will put the country in a better position to compete for investments.

House Ways and Means Chair Joey Sarte Salceda also mentioned that the CREATE law will boost the innovation performance of the country.

Vetoed Items

President Rodrigo Duterte vetoed some items mentioned in the CREATE law in order to maintain fairness in tax payments and to respect existing tax laws.

Few of these items include:

  1. Increase of the Threshold for Vat Exemption in Residential Lots Worth P1.5 to P2.5 M and Housing from P2.5 M to P4.2 M

The VAT exemption for housing is aimed at giving relief only to buyers of

socialized housing and benefits those from the lower income bracket.

2. Tax Refunds Will Automatically be Processed Within 90 Days

 The president deems this provision inefficient because all taxpayers are required to have a full audit of liabilities and examination of tax payments, books, and returns.

3. Grant of Special Corporate Income Tax (SCIT) to Domestic Market Enterprise

This grant is repetitious since domestic market enterprises sell based on demand with or without incentives. This can also lead to an uneven business field because the tax savings can be used to lower prices and place huge enterprises at a bigger advantage over small ones. 

4. Domestic Market Enterprises are Those Considered 

as Critical to the Economy and have at Least P500 Million Investment Capital

This was deleted in relation to the veto of the grant of SCIT for domestic market enterprises.

5. Availing of Tax Incentives will be Extended

Only new activities and projects will have new incentives to be fair to all taxpayers.

6. Specific Industries will be Under Activity Tiers

This can interfere with the country’s adaptability to technological changes and

New industries that will be developed in the future.

7. Limitations of the Power of the Fiscal Incentives

Review Board (FIRB)

The investment promotion agency (IPA) will retain its power to grant incentives up to P1 billion as delegated by the FIRB.

8. Investment Capital Referred to as the Value of Investment in Philippine Currency Which Excludes the Value of Land and Working Capital and Includes Operating Costs and Tangible Assets

The president finds this item inconsistent with the standard principle on investments.

9. Power of the President to Exempt an Investment

Promotion Agency

This provision might be used to debase the will of Congress or

escape accountability measures regulated in the law and open up discretion and other fixed interests.

10. Automatic Approval of Applications for Incentives

Within 20 Days

This goes against the reform to establish a performance-based

incentive system. Furthermore, applications should be reviewed carefully and not be abandoned for the sake of practicality.

Do you find the impact good or bad for your business and future investment? Leave us a message on our Facebook page about your take on this new law. Follow us on Facebook and Instagram for more business updates.


  1. Philippine News Agency.” Philippine News Agency, Philippine News Agency, 29 Mar. 2021,
  1. Lozada, Bong. “Salceda: CREATE Bill Will Help PH Boost Innovation.” INQUIRER.Net, 7 Mar. 2021,
  1. IT & Business Process Association of the Philippines, Inc.