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BusinessPEZA Incentives: How the CREATE MORE Act Boosts Foreign Investment in the Philippines

April 1, 2025
Home » PEZA Incentives: How the CREATE MORE Act Boosts Foreign Investment in the Philippines

For decades, the Philippine Economic Zone Authority (PEZA) has been a linchpin in the nation’s efforts to draw foreign investment, offering an array of tax breaks and operational perks within its special economic zones to stimulate economic vitality. The recent enactment of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act in late 2024 has reshaped these PEZA incentives, making them even more appealing to international businesses while aligning with the Philippines’ fiscal objectives. This legislation enhances the allure of tax incentives in the Philippines, positioning the country as a prime destination for global firms seeking growth in Southeast Asia. This article delves into the mechanics of PEZA incentives under the CREATE MORE Act, unpacking their benefits, eligibility requirements, and application intricacies to illuminate why they matter for foreign investors aiming to tap into this dynamic market.

Who Can Tap Into PEZA Incentives?

Before reaping the rewards of PEZA incentives, foreign investors must establish their eligibility under a framework refined by the CREATE MORE Act. Building on the groundwork laid by the CREATE Act of 2021, this updated law sets clear parameters to ensure that incentives support export-driven and priority industries. Here’s a detailed rundown of the qualification criteria:

  • Export Orientation: At least 70% of production must target international markets to unlock full tax benefits.
  • Location Requirement: Operations must be in designated PEZA or special economic zones.
  • Sector Alignment: Qualifying industries include manufacturing, IT-BPO services, agribusiness, and sustainable energy ventures.
  • PEZA Enrollment: Firms must register with PEZA and adhere to its operational and reporting standards.
  • Investment Thresholds: Minimum capital investments may be mandated to demonstrate commitment depending on the project’s scope.

Falling short on these benchmarks—such as insufficient export focus—can bar companies from accessing PEZA’s tax exemption perks, underscoring the need for strategic planning from the outset.

Advantages of PEZA Incentives

The backbone of PEZA’s appeal is its robust tax and fiscal incentives, which the CREATE MORE Act has optimized to keep the Philippines competitive globally. These benefits slash costs and elevate returns, making PEZA zones a haven for profit-minded investors. Below are the standout advantages:

  • Income Tax Holiday (ITH): New entrants enjoy a full exemption from corporate income tax for four to seven years, tailored to project type.
  • Reduced Tax Rate: After the ITH, a 5% special corporate income tax (SCIT) on gross income replaces the usual 25% rate.
  • VAT Waiver: Zero-rated VAT applies to local purchases and imports of machinery, materials, and inputs.
  • Customs Duty Relief: Imports of production-related equipment and parts enter duty-free, easing financial burdens.
  • Local Tax Breaks: Exemption from municipal taxes and fees—excluding certain actual property levies—further trims expenses.

These tax benefits in the Philippines offer a potent mix of savings and predictability, especially for industries with high upfront costs, such as technology and industrial manufacturing.

Impact of the CREATE MORE Act on PEZA Incentives

The CREATE MORE Act marks a significant evolution for PEZA incentives, refining the CREATE Act’s framework to bolster investor confidence while addressing earlier critiques of diminished generosity. This legislative tweak enhances the Philippines’ standing as a foreign investment hub. Here’s how it reshapes PEZA’s offerings:

  • Longer ITH Windows: Strategic projects, such as those in clean energy or advanced tech, may secure up to eight years of tax holidays.
  • Faster Approvals: Streamlined PEZA incentives application processes cut through administrative red tape.
  • SCIT Adjustments: The 5% tax rate gains broader applicability, with phased transitions for pre-existing registrants.
  • Remote Work Flexibility: IT-BPO firms can maintain tax perks with up to 50% of staff working remotely, reflecting modern workplace trends.
  • Cost-Saving Deductions: New allowances for energy expenses and employee training amplify financial relief.

These enhancements ensure that PEZA tax rates and exemptions remain a compelling draw, giving foreign investors stability and adaptability in a shifting global economy.

CREATE Act vs. CREATE MORE Act Comparison

To fully grasp the CREATE MORE Act’s value, contrasting it with the original CREATE Act reveals how PEZA incentives have evolved to serve foreign investors better. While the 2021 law streamlined incentives, it sparked concerns over reduced benefits—prompting the CREATE MORE Act’s recalibration. Here’s a comparative breakdown:

  • Tax Holiday Length: The CREATE Act limited ITH to four to seven years; CREATE MORE extends it for high-priority sectors.
  • Post-ITH Taxation: Both maintain the 5% SCIT, but CREATE MORE offers smoother transitions for legacy firms.
  • Workforce Policies: CREATE Act restricted remote work benefits; CREATE MORE embraces hybrid setups.
  • Processing Efficiency: CREATE MORE simplifies approvals, outpacing the CREATE Act’s more cumbersome system.
  • Industry Emphasis: CREATE MORE targets cutting-edge fields like AI and green tech, expanding beyond CREATE’s narrower focus.

This comparison illustrates how the CREATE MORE Act benefits foreign investors by restoring PEZA’s edge while adapting to contemporary business needs.

Navigating the Application Process with BusinessRegistrationPhilippines.com

Securing PEZA incentives under the CREATE MORE Act demands a rigorous application process that can overwhelm unprepared investors. The complexity of compliance and potential pitfalls make expert support invaluable. Here’s the step-by-step guide and why BusinessRegistrationPhilippines.com’s role is critical:

  • Project Blueprint: Develop a comprehensive proposal detailing the venture’s economic impact and alignment with PEZA goals.
  • PEZA Registration Filing: The PEZA board must receive an application with business plans, financial forecasts, and operational details.
  • Supporting Documentation: Provide corporate records, environmental clearances, and evidence of investment commitments.
  • Review and Decision: PEZA evaluates the submission over 30 to 60 days, with possible requests for clarification.
  • Operational Rollout: Post-approval, set up within a PEZA zone and meet export or production benchmarks.

The maze of requirements—from precise documentation to regulatory nuances—poses significant challenges. BusinessRegistrationPhilippines.com, a trusted PEZA incentives application services leader, simplifies this journey. Our team ensures compliance, accelerates approvals, and mitigates risks, offering foreign investors a lifeline through this intricate process. Given the stakes and sophistication involved, partnering with BusinessRegistrationPhilippines.com is a prudent choice for success.

Wrapping Up

PEZA incentives, revitalized by the CREATE MORE Act, stand as a powerful catalyst for foreign investment in the Philippines, blending substantial tax relief with a progressive policy framework. These perks, from extended income tax holidays to duty-free imports and faster approvals, make PEZA zones a magnet for international firms across manufacturing, IT, and emerging sectors. The CREATE MORE Act’s upgrades—rooted in the CREATE Law Philippines—signal the government’s resolve to nurture a business-friendly environment while meeting global standards. The benefits of PEZA incentives are undeniable for foreign investors, yet their realization hinges on navigating a labyrinth of eligibility rules and procedural demands. With the right approach and support, these incentives unlock many opportunities in one of Asia’s most promising markets.

Is Assistance Available? 

BusinessRegistrationPhilippines.com is here to steer investors through the PEZA incentives maze. Reach out today to schedule an initial consultation with one of our experts. 

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For decades, the Philippine Economic Zone Authority (PEZA) has been a linchpin in the nation’s efforts to draw foreign investment, offering an array of tax breaks and operational perks within its special economic zones to stimulate economic vitality. The recent enactment of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act in late 2024 has reshaped these PEZA incentives, making them even more appealing to international businesses while aligning with the Philippines’ fiscal objectives. This legislation enhances the allure of tax incentives in the Philippines, positioning the country as a prime destination for global firms seeking growth in Southeast Asia. This article delves into the mechanics of PEZA incentives under the CREATE MORE Act, unpacking their benefits, eligibility requirements, and application intricacies to illuminate why they matter for foreign investors aiming to tap into this dynamic market.

Who Can Tap Into PEZA Incentives?

Before reaping the rewards of PEZA incentives, foreign investors must establish their eligibility under a framework refined by the CREATE MORE Act. Building on the groundwork laid by the CREATE Act of 2021, this updated law sets clear parameters to ensure that incentives support export-driven and priority industries. Here’s a detailed rundown of the qualification criteria:

  • Export Orientation: At least 70% of production must target international markets to unlock full tax benefits.
  • Location Requirement: Operations must be in designated PEZA or special economic zones.
  • Sector Alignment: Qualifying industries include manufacturing, IT-BPO services, agribusiness, and sustainable energy ventures.
  • PEZA Enrollment: Firms must register with PEZA and adhere to its operational and reporting standards.
  • Investment Thresholds: Minimum capital investments may be mandated to demonstrate commitment depending on the project’s scope.

Falling short on these benchmarks—such as insufficient export focus—can bar companies from accessing PEZA’s tax exemption perks, underscoring the need for strategic planning from the outset.

Advantages of PEZA Incentives

The backbone of PEZA’s appeal is its robust tax and fiscal incentives, which the CREATE MORE Act has optimized to keep the Philippines competitive globally. These benefits slash costs and elevate returns, making PEZA zones a haven for profit-minded investors. Below are the standout advantages:

  • Income Tax Holiday (ITH): New entrants enjoy a full exemption from corporate income tax for four to seven years, tailored to project type.
  • Reduced Tax Rate: After the ITH, a 5% special corporate income tax (SCIT) on gross income replaces the usual 25% rate.
  • VAT Waiver: Zero-rated VAT applies to local purchases and imports of machinery, materials, and inputs.
  • Customs Duty Relief: Imports of production-related equipment and parts enter duty-free, easing financial burdens.
  • Local Tax Breaks: Exemption from municipal taxes and fees—excluding certain actual property levies—further trims expenses.

These tax benefits in the Philippines offer a potent mix of savings and predictability, especially for industries with high upfront costs, such as technology and industrial manufacturing.

Impact of the CREATE MORE Act on PEZA Incentives

The CREATE MORE Act marks a significant evolution for PEZA incentives, refining the CREATE Act’s framework to bolster investor confidence while addressing earlier critiques of diminished generosity. This legislative tweak enhances the Philippines’ standing as a foreign investment hub. Here’s how it reshapes PEZA’s offerings:

  • Longer ITH Windows: Strategic projects, such as those in clean energy or advanced tech, may secure up to eight years of tax holidays.
  • Faster Approvals: Streamlined PEZA incentives application processes cut through administrative red tape.
  • SCIT Adjustments: The 5% tax rate gains broader applicability, with phased transitions for pre-existing registrants.
  • Remote Work Flexibility: IT-BPO firms can maintain tax perks with up to 50% of staff working remotely, reflecting modern workplace trends.
  • Cost-Saving Deductions: New allowances for energy expenses and employee training amplify financial relief.

These enhancements ensure that PEZA tax rates and exemptions remain a compelling draw, giving foreign investors stability and adaptability in a shifting global economy.

CREATE Act vs. CREATE MORE Act Comparison

To fully grasp the CREATE MORE Act’s value, contrasting it with the original CREATE Act reveals how PEZA incentives have evolved to serve foreign investors better. While the 2021 law streamlined incentives, it sparked concerns over reduced benefits—prompting the CREATE MORE Act’s recalibration. Here’s a comparative breakdown:

  • Tax Holiday Length: The CREATE Act limited ITH to four to seven years; CREATE MORE extends it for high-priority sectors.
  • Post-ITH Taxation: Both maintain the 5% SCIT, but CREATE MORE offers smoother transitions for legacy firms.
  • Workforce Policies: CREATE Act restricted remote work benefits; CREATE MORE embraces hybrid setups.
  • Processing Efficiency: CREATE MORE simplifies approvals, outpacing the CREATE Act’s more cumbersome system.
  • Industry Emphasis: CREATE MORE targets cutting-edge fields like AI and green tech, expanding beyond CREATE’s narrower focus.

This comparison illustrates how the CREATE MORE Act benefits foreign investors by restoring PEZA’s edge while adapting to contemporary business needs.

Navigating the Application Process with BusinessRegistrationPhilippines.com

Securing PEZA incentives under the CREATE MORE Act demands a rigorous application process that can overwhelm unprepared investors. The complexity of compliance and potential pitfalls make expert support invaluable. Here’s the step-by-step guide and why BusinessRegistrationPhilippines.com’s role is critical:

  • Project Blueprint: Develop a comprehensive proposal detailing the venture’s economic impact and alignment with PEZA goals.
  • PEZA Registration Filing: The PEZA board must receive an application with business plans, financial forecasts, and operational details.
  • Supporting Documentation: Provide corporate records, environmental clearances, and evidence of investment commitments.
  • Review and Decision: PEZA evaluates the submission over 30 to 60 days, with possible requests for clarification.
  • Operational Rollout: Post-approval, set up within a PEZA zone and meet export or production benchmarks.

The maze of requirements—from precise documentation to regulatory nuances—poses significant challenges. BusinessRegistrationPhilippines.com, a trusted PEZA incentives application services leader, simplifies this journey. Our team ensures compliance, accelerates approvals, and mitigates risks, offering foreign investors a lifeline through this intricate process. Given the stakes and sophistication involved, partnering with BusinessRegistrationPhilippines.com is a prudent choice for success.

Wrapping Up

PEZA incentives, revitalized by the CREATE MORE Act, stand as a powerful catalyst for foreign investment in the Philippines, blending substantial tax relief with a progressive policy framework. These perks, from extended income tax holidays to duty-free imports and faster approvals, make PEZA zones a magnet for international firms across manufacturing, IT, and emerging sectors. The CREATE MORE Act’s upgrades—rooted in the CREATE Law Philippines—signal the government’s resolve to nurture a business-friendly environment while meeting global standards. The benefits of PEZA incentives are undeniable for foreign investors, yet their realization hinges on navigating a labyrinth of eligibility rules and procedural demands. With the right approach and support, these incentives unlock many opportunities in one of Asia’s most promising markets.

Is Assistance Available? 

BusinessRegistrationPhilippines.com is here to steer investors through the PEZA incentives maze. Reach out today to schedule an initial consultation with one of our experts.