CREATE MORE Act 2026: What the New Tax Incentives Mean for Foreign Investors

Republic Act 12066, signed in 2024 and in effect entering 2026, made meaningful changes to how Philippine investment incentives work — and for foreign investors evaluating the Philippines against other Southeast Asian markets, the numbers now look significantly more competitive.

Background: CREATE, then CREATE MORE

The CREATE Act (RA 11534, 2021) lowered the standard corporate income tax from 30% to 25% and restructured incentives managed by Investment Promotion Agencies (IPAs). CREATE MORE (RA 12066) built on that, addressing complaints from investors about incentive predictability and administrative friction.

The key changes under CREATE MORE:

• Confirmed and clarified the 5% Special Corporate Income Tax (SCIT) on gross income for qualifying Registered Business Enterprises (RBEs)
• Extended the maximum incentive period for export enterprises and domestic strategic activities
• Streamlined IPA coordination through the Fiscal Incentives Review Board (FIRB)
• Introduced enhanced deductions during the transition period as an alternative to SCIT

The 5% SCIT — what it actually means

The SCIT of 5% on gross income replaces:

• The standard 25% corporate income tax (on net income)
• Local business taxes
• Most other national and local impositions covered by the incentive

For an export-oriented business with healthy gross margins, the SCIT is almost always the better choice compared to the standard regime. A BPO or IT services company earning ₱100 million in gross revenues pays ₱5 million in SCIT — versus potentially ₱25 million (25% × net income) at standard rates, plus local taxes on top.

The catch: SCIT applies to gross income, not net. For businesses with very thin margins or high cost structures, model both scenarios before choosing.

Enhanced deductions — the alternative path

As an alternative to SCIT, CREATE MORE qualifying enterprises can elect enhanced deductions during an Income Tax Holiday (ITH) and post-ITH period:

• 50% additional deduction on training expenses
• 100% additional deduction on certain R&D and labour expenses
• Enhanced deductions on power, domestic inputs, and capital expenditure

This option suits companies with significant reinvestment needs where a gross-income tax would be punitive relative to net margins.

Who can access CREATE MORE incentives

Incentives are accessed through registration with an Investment Promotion Agency (IPA):

• PEZA (Philippine Economic Zone Authority) — for companies locating in economic zones or IT parks
• BOI (Board of Investments) — for companies in priority sectors not requiring zone location
• AFAB, SBMA, CDC, and other zone authorities — for specific geographic areas

The eligible activities are defined in the Strategic Investment Priority Plan (SIPP), which covers export manufacturing, IT-BPM services, infrastructure, green energy, and a growing list of priority domestic activities.

Minimum capital and FINL rules still apply — CREATE MORE incentives layer on top of the standard incorporation requirements, not in place of them.

Practical implication for foreign founders

If your business is export-oriented or in an IT/BPM category, CREATE MORE changes the effective tax rate from 25% (plus local taxes) to a flat 5% on gross income. For a business planning to operate from a PEZA-registered building or economic zone, this is the default incentive path worth modelling before you finalise your structure.

It also means that Philippine BPO, IT services, and export manufacturing ventures are significantly more competitive on after-tax return than the headline 25% CIT rate suggests.

The interaction with structure choice

Not every entity type or business activity qualifies. A company operating purely in the domestic market without IPA registration remains on the standard 25% (or 20% for qualifying small companies) CIT. The incentive question is therefore part of the entity and location decision, not an afterthought.

Chamberlain advises on structure from the start — entity type, IPA registration eligibility, and incentive regime — so your setup reflects your actual tax position, not just the path of least resistance. Book a consultation or see /business-registration to start the conversation.