CREATE MORE Act: 2026 Tax Incentives for Foreign Investors

The CREATE MORE Act (Republic Act 12066), signed into law in 2024, is the Philippine government’s most significant update to its investment incentive regime since the original CREATE Act (RA 11534) of 2021. For foreign investors evaluating the Philippines, CREATE MORE matters because it extended incentive periods, confirmed access to the 5% Special Corporate Income Tax for a broader set of registered enterprises, and introduced additional deduction options designed to make the Philippines more competitive against regional alternatives.

Background: CREATE and CREATE MORE

CREATE (RA 11534) reduced the standard corporate income tax rate from 30% to 25% (or 20% for SMEs with taxable income below ₱5 million and assets below ₱100 million), replaced the old incentive regime with a tiered SIPP-based framework, and gave the Fiscal Incentives Review Board (FIRB) oversight of all investment promotion agencies (IPAs) including PEZA and BOI.

CREATE MORE (RA 12066) built on this by:

• Extending ITH periods across all tiers and locations
• Confirming the 5% SCIT as a standard post-ITH option for export enterprises
• Expanding Enhanced Deductions and making them an explicit election alternative to the SCIT
• Strengthening incentive administration under the FIRB for consistency across IPAs

The Strategic Investment Priority Plan (SIPP)

All incentives under CREATE MORE flow through the SIPP — a tiered list of priority activities that determines which enterprises qualify and for how long. The SIPP is issued and updated by the FIRB. Activities are grouped into three tiers:

• Tier 1 — activities that contribute to economic activity with moderate strategic impact
• Tier 2 — activities with higher strategic impact (technology-intensive, high employment, critical industries)
• Tier 3 — activities considered highly desirable (frontier technology, critical infrastructure, activities in Less Developed Areas)

Higher tiers receive longer ITH periods and, in some cases, higher enhanced deduction percentages. Your SIPP tier is determined at the time of registration with your IPA (PEZA, BOI, or another accredited agency).

Income Tax Holiday (ITH)

The ITH is a full exemption from corporate income tax on income from the registered activity. Under CREATE MORE, the periods are:

The ITH runs from start of commercial operations as declared to your IPA. Activities in Less Developed Areas (as defined by NEDA) may qualify for additional years or enhanced rates under specific SIPP provisions.

Post-ITH Option 1: 5% Special Corporate Income Tax (SCIT)

After the ITH, export enterprises may pay 5% SCIT on gross income earned (GIE) in lieu of all national and local taxes (including local business tax, real property tax on machinery, and others). GIE is computed as gross sales or receipts minus allowable deductions specific to the registered activity — a narrower base than the standard net taxable income used for the 25% rate.

The 5% rate has historically been PEZA’s signature incentive. CREATE MORE formalised its availability for BOI-registered export enterprises as well, making the choice between PEZA and BOI less about incentive rate and more about location and operational considerations.

Post-ITH Option 2: Enhanced Deductions (EAED)

Enterprises that do not elect SCIT — or are not eligible for it — may use the Enhanced Deductions regime. Under EAED, the standard 25% corporate income tax applies to net taxable income, but with a set of enhanced deductions including:

• 100% additional deduction on eligible research and development expenditures
• 50% additional deduction on qualifying training and skills development expenses
• 50% additional deduction on purchases of domestic raw materials and supplies
• Accelerated depreciation on eligible capital assets
• Enhanced deduction on power costs for energy-intensive industries
• Additional deductions specified for particular activities in the SIPP

The EAED election is attractive for enterprises with significant capital expenditure, R&D programmes, or large Filipino workforces — where the enhanced deductions reduce net taxable income substantially.

Other incentives under CREATE MORE

• Duty-free importation of capital equipment, spare parts, raw materials, and supplies used in the registered activity (during the incentive period)
• VAT zero-rating on local purchases of goods and services directly attributable to the registered activity — confirmed and extended under CREATE MORE, resolving prior disputes about scope
• Domestic market enterprises under the SIPP may qualify for ITH and EAED (but not the 5% SCIT, which is for export enterprises)

What changed from CREATE to CREATE MORE

For the PEZA-specific application or BOI registration process, see the relevant pages. For help navigating which tier your activity falls under and which IPA makes sense for your structure, book a consultation with Chamberlain. Our pricing page outlines the fixed fee covering incentive registration alongside company setup.