CREATE MORE Explained: How Tax Incentive Reforms Could Affect Investors and Local Jobs

Correcting the 2021 CREATE Act: The Legislative Framework

The CREATE MORE bill (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy) is a targeted legislative measure designed to amend the 2021 CREATE Act. During the original implementation period spanning April 2021 to December 2022, export-oriented enterprises faced severe operational disruptions. VAT refund processing dragged on for roughly three to four months, trapping critical working capital in administrative limbo.

The finance committee initially considered issuing supplemental revenue regulations to resolve these bottlenecks. They quickly discarded that approach because administrative issuances lack the legal weight to override statutory text. A full legislative amendment became necessary to clarify the VAT zero-rating ambiguities introduced by the 2021 CREATE Act, signed into law by then-President Rodrigo Duterte. The new bill functions as a corrective framework for these fiscal gray areas and streamlines the administration of corporate tax perks.

Streamlining Tax Rules for Registered Business Enterprises

Centralizing approvals at the Fiscal Incentives Review Board caused significant delays — complaints tracked by economic zone locators since the shift indicate as much. That pattern prompted a legislative push to restore local administrative authority and redefine the boundary between Investment Promotion Agency authority and Fiscal Incentives Review Board oversight.

The proposed adjustments reduce the corporate income tax rate to 20% for registered business enterprises operating under the enhanced deduction regime. Returning more authority to local agencies limits bureaucratic friction. Incentive approval steps drop from around five to two for capital investments falling below the statutory threshold. Clear-cut exemptions reduce compliance costs for locators in economic zones. Companies can then put resources into facility expansion and workforce training rather than funding dedicated teams to manage administrative overhead.

Decentralizing Capital: Tiered Incentives Beyond Metro Manila

The tiered incentive system actively drives capital away from congested urban centers. Provincial planning boards mapped out available industrial land against the proposed framework, prioritizing zones that qualify for the longest tax holidays to attract heavy manufacturing. Highly developed urban centers offer incentive durations in the range of 14 to 17 years.

Tax holidays alone cannot overcome severe infrastructure deficits. Still, the extended incentive periods of roughly 18 to 21 years for less developed regional areas provide a compelling financial anchor. Local Government Units in areas like San Fernando City, La Union use these clarified tax incentives to attract manufacturing and service industries to the provinces. Decentralized investment creates high-value job opportunities for regional workers, and that geographic shift reduces the economic necessity for urban migration, stabilizing local economies across Northern Luzon and beyond.

Preparing Supply Chains for the New Fiscal Regime

Tax compliance officers are currently auditing supply chain VAT treatments by isolating transactions from recent quarters. They identify which local purchases incurred the 12% VAT to prepare for immediate zero-rating claims once the new rules take effect. The statutory window allows roughly 60 to 90 days post-enactment for the Department of Finance and relevant agencies to draft the Implementing Rules and Regulations.

The restored VAT zero-rating provisions extend strictly to registered export enterprises whose output is entirely shipped abroad. Domestic market enterprises within the same economic zones remain subject to standard VAT on local purchases.

Export Zone Compliance Tip: Businesses should review supply chain transactions covering roughly the past 12 to 18 months to map their VAT exposure before the new regulations take effect.

Waiting for the final IRR leaves too little time to act. An exporter that has already sorted its local purchases by VAT treatment can file zero-rated claims the week the rules take effect; one that has not will spend that window reconstructing invoices instead of recovering cash.