The Philippine economic team reassured Japanese investors that the proposed changes to tax incentives will address their concerns over value-added tax (VAT) refunds.
“CREATE MORE [Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy] enhances both fiscal and non-fiscal incentives while addressing key concerns of Japanese investors,” Finance Secretary Ralph Recto said in a keynote speech at the Philippine Economic Briefing (PEB) in Tokyo on June 21, 2024.
The CREATE MORE is an improved version of the CREATE Law that expands and refines fiscal and non-fiscal incentives; clarifies the rules and policies on the grant and administration of incentives; and addresses key issues affecting the country’s investment climate.
It solves Japanese investors’ long-standing concern about VAT refunds by exempting export-oriented enterprises from paying the latter.
Meanwhile, the VAT refund reforms under the CREATE MORE will also address investors’ concerns regarding the unreliability of the system, making it timely, efficient and predictable, the Department of Finance said.
It said with an enhanced VAT refund mechanism, existing and potential investors are assured of maximum enjoyment of VAT zero-rating incentives granted under the Tax Code, as amended by the CREATE Act.
The bill also provides a more attractive incentive package for registered projects or activities with an investment capital exceeding P15 billion.
The doubling of the additional power expense deduction will also help mitigate the impact of high power costs and reduce the overall cost of doing business in the Philippines, given its income tax effect, it said.
Recto said the CREATE MORE bill would bolster the country’s investment attractiveness, enticing more Japanese investors to establish roots and expand in the Luzon Economic Corridor.
The economic corridor, the first of its kind in the Indo-Pacific region, was established during the inaugural Trilateral United States-Japan-Philippines Leaders Meeting in April 2024.
“We envision CREATE MORE to give birth to more thriving economic corridors in every corner of the Philippine archipelago, with Japan taking a leading role,” Recto said.
Recto said that aside from massive infrastructure investments that the Japanese investors can participate in, the corridor is a perfect hub for those involved in cutting-edge manufacturing, semiconductor supply chains and agribusiness as this links Luzon’s major economic centers—Subic Bay in Zambales, Clark in Pampanga, Manila and Batangas.
