CREATE MORE Act

The measure aims to further expand the enhanced tax deduction regime as already implemented by the current CREATE law. According to House Representative Joey Salceda, the bill was conceptualized due to stakeholders’ concerns over differences between how the CREATE law was written and its corresponding Implementing Rules and Regulations.

The House version of the measure, known as HB 9794, was approved in third reading on March 18, 2024. Meanwhile, the Senate version, known as SB 2762, was recently approved on July 31, 2024 in first reading.

Contents of Bills

Both the House and Senate bills have many similar provisions. Some of these similar provisions are outlined below:

• Establishing a 20 percent income tax rate for domestic and foreign corporations under the enhanced deduction income tax region;
• Grants additional deductions to registered business enterprises (RBE) such as a 100 percent additional deduction for power expenses and costs related to trade fairs, exhibitions, and trade missions;
• Extends VAT exemption on importation and VAT zero-rating on local purchases for registered business enterprises;
• Extends VAT exemption on importation and VAT zero-rating to existing export enterprises for goods and services directly attributable to their registered projects or activities
• Allows duty exemption for capital equipment, raw materials, spare parts, and accessories directly attributable to registered projects or activities, including those used for administrative purposes;
• Imposes 2 percent registered business enterprises’ local tax (RBELT) in lieu of any and all taxes to be collected by investment promotion agencies (IPAs);
• Expands the functions of the FIRB to include policy-making, oversight, regulatory, and quasi-judicial roles in the administration and grant of tax incentives;
• Delegates authority to the Department of Finance (DOF) to determine the terms and conditions for the grant of enhanced deductions; and
• Allows registered business enterprises in the IT-BPO sector to implement work-from-home arrangements for up to 50 percent of their workforce.

Among the multiple differences between HB 9794 and SB 2762 are the provisions on who grants these tax incentives to companies, and the grant of a Special Skills Visa for foreign workers. In HB 9794, IPAs have the authority to grant a select number of tax incentives for registered projects or activities, while the FIRB monitors the cancellation, suspension, or withdrawal of these incentives. In SB 2762, the FIRB has the authority to grant or deny tax incentives, while IPAs administer these incentives under the supervision and guidelines of the FIRB.

Meanwhile, the provision about the grant of a Special Skills Visa is only available in the House version. A Special Skills Visa can be issued by IPAs to foreign nationals possessing highly specialized skills necessary or strategic for registered business enterprises.

Likelihood of Passage

CREATE MORE Act is one of the priority measures targeted to be passed into law before or by June 2024. It was also mentioned during President Ferdinand Marcos Jr.’s State of the Nation Address (SONA) this 2024. However, it is increasingly likely that the measure will be subject to a lengthy deliberation at the bicameral conference committee due to the differences between the existing House and Senate drafts that will need to be reconciled.

Stakeholders such as the American Chamber of Commerce of the Philippines are also supportive of this measure, with Executive Director Ebb Hinchliffe stating: “It’s got most of the provisions we wanted — to help improve the work from home situation and to improve the elimination of red tape are some of it.”