The CREATE MORE Act Unpacked: How the Philippines' Most Ambitious Investment Incentive Law Gives Foreign Investors Up to 27 Years of Tax Breaks

Introduction: The Most Consequential Investment Law Since CREATE

When President Ferdinand R. Marcos Jr. signed Republic Act No. 12066 into law on November 24, 2024, the business community greeted it with unusual optimism. After years of the Philippines trailing regional competitors in investment incentive generosity, the CREATE MORE Act — formally titled the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Act — proposed something genuinely different: incentive durations stretching up to 27 years, a preferential 20% corporate income tax rate under the Enhanced Deductions Regime (EDR), and a streamlined approval architecture that distinguished between ordinary projects and the kind of mega-investments that transform an economy.

Eighteen months later, in October 2026, the practical machinery of CREATE MORE is now fully operational. The Fiscal Incentives Review Board (FIRB) has published its consolidated rules. The 2026–2028 Strategic Investment Priority Plan (SIPP) — approved by President Marcos reportedly in mid-2026 — has been aligned with the CREATE MORE framework. And the first cohort of foreign investors have begun to claim the benefits that the law promises.

But the law is complex, and the complexity is where investors lose money. CREATE MORE does not automatically confer benefits. It creates a system of conditional entitlements that require proper registration, correct activity classification, ongoing compliance maintenance, and — critically — the avoidance of the conduct that will trigger incentive revocation. Foreign investors who treat CREATE MORE’s incentives as a given, rather than a conditional grant, have found themselves facing retroactive tax assessments at the worst possible moment.

This article is written for foreign investors — corporate groups, private equity managers, and individual entrepreneurs — who want a precise, lawyer-grade understanding of the CREATE MORE Act as it operates in 2026. It covers the law’s legal architecture, the full incentive menu, the SIPP classification system, the bifurcated FIRB-IPA approval process, the compliance obligations, and the conduct rules that must not be violated.

Part I: The Legal Architecture — What CREATE MORE Amended and Why

1.1 The Legislative Lineage: CREATE (2021) and CREATE MORE (2024)

The CREATE MORE Act does not operate in isolation. To understand its structure, foreign investors must first understand the legislative sequence that produced it.

Republic Act No. 11534, the CREATE Act, took effect on April 24, 2021. Its principal achievement was the standardization of incentive regimes across all of the Philippines’ 14 Investment Promotion Agencies (IPAs), including the Board of Investments (BOI), the Philippine Economic Zone Authority (PEZA), the Clark Development Authority (CDA), and the Subic Bay Metropolitan Authority (SBMA). Prior to CREATE, each IPA had operated under separate legal authorities with inconsistent incentive structures, durations, and compliance requirements — a patchwork that confused investors and created regulatory arbitrage but also inconsistent enforcement.

CREATE unified the incentive framework by establishing:

• A standard Income Tax Holiday (ITH) period of 4–7 years depending on project type and location;
• A default post-ITH regime of the Special Corporate Income Tax (SCIT) at 5% on gross income in lieu of all national and local taxes; and
• An Enhanced Deductions Regime (EDR) as an alternative to SCIT, allowing registered enterprises to claim enhanced deductions from taxable income.

However, CREATE was widely criticized for being insufficiently competitive. Neighboring jurisdictions like Vietnam and Indonesia were offering longer holiday periods and more generous deduction structures. Foreign investors began publicly noting that the Philippines’ incentive menu, while improved, still fell short of what regional competitors were offering to the same kind of capital-intensive, export-oriented investments.

The CREATE MORE Act was enacted to address that gap — and in several respects, it went further than most analysts expected.

1.2 The Constitutional and Statutory Basis

CREATE MORE derives its authority from Section 28(4) of Article VI of the 1987 Constitution, which authorizes Congress to provide tax exemptions or incentives for “purposes of general welfare and national development.” It builds upon the framework established by the Omnibus Investments Code of 1987 (Executive Order No. 226), the CREATE Act (RA 11534), and the Foreign Investment Act (RA 11647, as amended).

The FIRB, which administers CREATE MORE’s incentive framework, was itself created under CREATE and is composed of representatives from the Department of Finance (DOF), the Bureau of Internal Revenue (BIR), the National Economic and Development Authority (NEDA), and the relevant IPA. Under CREATE MORE, the FIRB’s jurisdiction has been expanded to cover mega-investments above the ₱15 billion threshold, as discussed below.

Part II: The Bifurcated Approval System — IPA vs. FIRB

2.1 The ₱15 Billion Threshold: The Central Dividing Line

One of the most practically significant features of CREATE MORE — and one that is frequently misunderstood by foreign investors — is its bifurcated approval structure. Under Section 294 of the National Internal Revenue Code as amended by CREATE MORE, the approval authority for registered projects is determined by a single variable: the investment capital.

• Projects with investment capital of ₱15 billion or below: Approved by the relevant IPA (BOI, PEZA, or another registered IPA) under their standard procedures.
• Projects with investment capital above ₱15 billion (approximately $250 million USD): Approved by the FIRB directly, which may grant enhanced or “super” incentives beyond what the standard IPA framework provides.

This distinction matters enormously for foreign investors because it fundamentally changes the negotiation dynamic. A foreign manufacturing group planning a ₱10 billion subsidiary in the Philippines works within the standard IPA framework. A foreign technology company planning a ₱20 billion data center campus goes before the FIRB — and the FIRB has discretion to grant more generous terms, longer holidays, and additional non-fiscal incentives that an IPA cannot unilaterally provide.

2.2 FIRB Super Incentives for Mega-Projects

For projects above ₱15 billion, the FIRB has authority under CREATE MORE to grant incentive packages that exceed the standard CREATE MORE menu. These “super incentives” can include:

• Extended Income Tax Holidays beyond the standard 4–7 year periods, potentially extending to 10 years or more depending on project classification, location, and strategic value;
• Customized post-ITH regimes combining elements of SCIT and EDR in configurations tailored to the specific investment;
• Import duty exemptions on capital equipment, raw materials, and spare parts beyond the standard CREATE framework;
• VAT incentives including VAT exemption on qualifying imports and VAT zero-rating on qualifying local purchases;
• Non-fiscal incentives including expedited business registration, dedicated government liaison services, and preferential access to public infrastructure.

The State Department’s 2026 Investment Climate Statements: Philippines notes that CREATE MORE introduced incentives of “up to 27 years of tax incentives and tax deductions, depending on project classification and approval” — the 27-year figure representing the outer bound achievable under FIRB-approved super incentive packages for the most strategically valuable mega-projects.

Foreign investors pursuing mega-projects should engage specialized counsel early in the planning phase, before filing with the FIRB, because the terms of super incentive packages are often negotiated — and the negotiating position is stronger when the investor has completed thorough feasibility analysis and can demonstrate genuine commitment.

Part III: The 2026–2028 SIPP — What Activities Qualify

3.1 The Three-Tier Structure

CREATE MORE does not grant incentives to every investment in the Philippines. Incentives are available only to projects that fall within a qualifying activity designated under the current SIPP. The 2026–2028 SIPP, approved by President Marcos reportedly in mid-2026, organizes qualifying activities into three tiers:

Tier I covers industries addressing basic needs and national sustainability. Activities include:

• Modern agriculture and agro-processing
• Manufacturing of essential goods
• Healthcare and hospital infrastructure
• State-of-the-art construction and ecological zone development
• Waste-to-value, carbon capture, and circular economy activities
• Infrastructure and logistics

Tier II targets strategic activities strengthening national resilience, food security, and industrial value chains. Activities include:

• Defense and national security services
• Desalination infrastructure
• Electric vehicle charging infrastructure
• Sustainable aviation fuel production
• Critical mineral processing
• Digital infrastructure and data centers

Tier III focuses on advanced science, technology, and innovation. Activities include:

• Artificial intelligence and quantum computing
• Cybersecurity infrastructure
• Hydrogen and advanced nuclear energy
• Advanced research and development
• High-end electronics and semiconductor manufacturing

3.2 The Export Orientation Requirement

For fully foreign-owned enterprises, the most significant qualifying condition is the export performance requirement. Under the 2026 SIPP and the State Department’s 2026 Investment Climate Statements, foreign-owned enterprises must export at least 70% of their total goods or services to qualify for the standard BOI incentive packages. This represents a higher bar than the 50% export threshold applicable to Filipino-owned enterprises — a distinction that reflects the government’s policy of ensuring that foreign capital genuinely contributes to the country’s export capacity rather than primarily serving the domestic market while enjoying fiscal incentives designed for export-oriented industries.

Domestic-market enterprises — those selling primarily within the Philippines — face different qualifying conditions and generally receive shorter ITH periods and less generous post-ITH packages. A foreign investor planning a Philippine subsidiary to serve the domestic market will therefore receive fewer CREATE MORE benefits than one planning an export-oriented manufacturing or services operation.

Part IV: The Incentive Menu — ITH, SCIT, and EDR Explained

4.1 Income Tax Holiday (ITH)

The ITH exempts a registered enterprise from paying corporate income tax for a specified period. Under the 2026–2028 SIPP and CREATE MORE, the standard ITH durations are:

These periods represent the standard ITH. As noted above, the FIRB has authority to extend ITH periods for mega-projects above ₱15 billion.

During the ITH, registered enterprises are exempt from paying corporate income tax on income derived from the registered project. However, they remain subject to local business taxes, real property taxes, and other non-income levies — subject to the special local tax regime discussed below.

4.2 The 5% Special Corporate Income Tax (SCIT)

After the ITH period ends, qualifying export enterprises may elect to be taxed under the SCIT at 5% of gross income in lieu of all national and local taxes (including corporate income tax and local business tax), for a period of up to 10 years after the ITH. This is one of the most commercially valuable features of CREATE MORE: a 5% rate on gross income — not taxable income — represents a dramatic reduction from the standard 25% corporate income tax on net profits.

For a manufacturing operation with high gross margins, the difference between 25% of net income and 5% of gross income is substantial. For a services company with lower margins, the calculation requires closer analysis.

4.3 The Enhanced Deductions Regime (EDR)

As an alternative to SCIT, registered enterprises may elect the EDR, which was enhanced under CREATE MORE. Under the EDR:

• The corporate income tax rate is reduced to 20% (down from 25% under the regular corporate tax);
• Registered enterprises may claim enhanced deductions for qualifying expenses, effectively reducing the effective tax rate well below 20% in many cases. Qualifying enhanced deductions include:
  • Labor expense deductions — additional deductions for labor costs, incentivizing employment creation;
  • Research and development (R&D) deductions — deductions for qualified R&D expenditures;
  • Training and skills development deductions;
  • Domestic input deductions — deductions for value added by domestic suppliers;
  • Power expense deductions — additional deductions for power costs, particularly relevant for energy-intensive industries;
  • Additional depreciation allowances — enhanced depreciation deductions for buildings, machinery, and equipment.

Under CREATE MORE, local governments may still charge registered firms a Registered Business Enterprise (RBE) Local Tax of up to 2% of gross income in place of other local taxes, fees, and charges during the ITH or EDR period. This 2% local tax replaces the former array of local levies and creates a more predictable tax burden for investors planning their cost structures.

4.4 The 27-Year Maximum: How the Math Works

The much-cited “27 years of incentives” figure cited by the State Department represents the maximum achievable under CREATE MORE’s stacking structure. For a Tier III project in a qualifying least-developed location, the math is:

• ITH: up to 7 years
• SCIT or EDR period: up to 10 years
• Additional deductions and allowances: up to 10 years of enhanced tax benefits

Total: 27 years of overlapping or sequential fiscal benefits for the most strategically valuable investments.

For ordinary Tier I domestic-market projects in Manila, the effective incentive duration will be considerably shorter. The 27-year figure is not a guarantee — it is the outer bound for the most favored projects under FIRB-approved mega-investment packages.

Part V: Non-Fiscal Incentives Under CREATE MORE

CREATE MORE also introduced a range of non-fiscal incentives that, while less discussed than the tax breaks, can be equally valuable for foreign investors:

• Expedited business registration — registered enterprises may avail of streamlined registration procedures across multiple government agencies;
• Dedicated IPA liaison — a single point of contact within the IPA for all regulatory and compliance matters;
• Work-from-home flexibility — IT-BPM enterprises may have up to 50% of their workforce operating remotely without losing IPA incentive eligibility;
• Preferential access to public utilities — priority connection and service arrangements for electricity, water, and telecommunications;
• Visa facilitation — BOI and PEZA assist foreign investors and their dependents in obtaining special investor resident visas, simplifying the otherwise complex process of securing long-term Philippine residence for foreign key personnel.

Part VI: Compliance Obligations — The Conduct Rules

6.1 The Do-Not List: Conduct That Triggers Revocation

CREATE MORE’s incentive grants are conditional. They are not permanent rights — they are revocable privileges that require ongoing compliance with the law and the terms of registration. Under the implementing rules of CREATE MORE and the consolidated FIRB guidelines, registered enterprises must maintain:

• Accurate books of accounts and submit regular financial reports to the BIR and the registering IPA;
• Compliance with the SIPP activity classification — the enterprise must continue to operate in the registered activity. Diversification into non-registered activities may trigger reclassification or incentive revocation;
• Export performance thresholds — export enterprises must maintain the required percentage of exports. Failure to meet export targets can result in incentive reclassification;
• Capital investment maintenance — many incentive grants require the maintenance of a minimum level of registered capital investment. Reduction of capital below the registered threshold may trigger loss of incentives;
• Employment and training obligations — some IPA registrations carry employment and Filipino skills-development commitments.

The consequences of incentive revocation are severe. When an enterprise loses its CREATE MORE incentives, it typically faces retroactive corporate income tax assessments at the standard 25% rate for the entire period of unregistered operations — plus interest and potential penalties. For a company that enjoyed 5% SCIT for several years on substantial gross income, a retroactive assessment at 25% on net profits can represent a nine-figure peso liability.

6.2 Annual Compliance Requirements

Registered enterprises must file annual compliance reports with the registering IPA. These reports typically include:

• Audited financial statements;
• Proof of continued compliance with SIPP activity classification;
• Export performance data (for export enterprises);
• Evidence of capital investment maintenance;
• Reports on employment levels and Filipino training programs.

Failure to file on time — even when the enterprise is fully compliant — can result in administrative penalties and, in repeated cases, incentive suspension.

Part VII: BOI vs. PEZA — Choosing the Right IPA

7.1 Why the Choice of IPA Matters

CREATE MORE standardized the fiscal incentive menu across all IPAs, but the practical experience of each IPA still varies significantly. Foreign investors frequently ask whether to register with BOI or PEZA — and the answer depends on several factors beyond just the fiscal package.

BOI registration is generally preferable for:

• Infrastructure and logistics projects;
• Projects located outside designated economic zones;
• Manufacturing operations in strategic industries (Tier II and Tier III SIPP activities);
• Investors who prefer to operate at arm’s length from zone-based regimes.

PEZA registration is generally preferable for:

• Export-oriented manufacturing and IT-BPM operations;
• Projects that can physically locate within a PEZA-designated economic zone;
• Companies that benefit from the no-red-tape, one-stop-shop regulatory environment that PEZA has cultivated;
• Operations that value the cluster benefits of being located alongside other export enterprises.

The State Department’s 2026 Investment Climate Statements note that PEZA has received positive feedback for “regulatory transparency, no red-tape policy, and one-stop shop services for investors.” For foreign investors establishing manufacturing or services operations for the first time in the Philippines, PEZA’s physical and procedural infrastructure can meaningfully reduce the friction of compliance.

Part VIII: Practical Guidance for the Foreign Investor

8.1 Pre-Registration Planning

The most consequential decisions in CREATE MORE planning happen before the application is filed. Foreign investors should:

1. Classify the project accurately under the SIPP — incorrect classification at the registration stage creates problems that compound over the incentive period;
2. Model the post-ITH regime choice (SCIT vs. EDR) before registering — the choice between 5% of gross income and 20% with enhanced deductions requires careful financial modeling based on projected margins and cost structure;
3. Confirm the IPA with jurisdiction — BOI, PEZA, or another IPA will depend on the project’s location and activity;
4. Assess FIRB jurisdiction if the investment capital exceeds ₱15 billion — early FIRB engagement is advisable;
5. Verify export performance feasibility — foreign-owned enterprises must commit to 70% export ratios from day one; domestic-market positioning forecloses certain incentive tiers.

8.2 Common Mistakes to Avoid

Based on our experience advising foreign investors on CREATE MORE matters, the most frequent mistakes include:

• Applying for the wrong IPA — registering with PEZA when the activity and location would have been better served by BOI;
• Incorrect SIPP tier classification — claiming Tier III benefits for an activity that falls in Tier I;
• Underestimating compliance costs — the IPA annual compliance process requires legal and accounting support that adds meaningful overhead;
• Failing to plan for post-ITH transition — the SCIT/EDR choice should be modeled years before the ITH expires, not at the last minute;
• Neglecting the 2% RBE Local Tax — some investors fail to account for this local tax during the incentive period, creating budget shortfalls.

Conclusion: An Invitation — Not an Entitlement

The CREATE MORE Act is, in our assessment, the most investor-friendly tax incentive law the Philippines has enacted in the modern era. For export-oriented manufacturers, technology companies, infrastructure developers, and investors in Tier III strategic industries, it offers incentive structures that are genuinely competitive with the Philippines’ regional peers.

But the law’s complexity is a signal, not a coincidence. The conditional nature of the grants — the conduct rules, the compliance obligations, the SIPP classification requirements, the export performance thresholds — reflects the government’s policy objective of ensuring that incentive grants produce genuine economic value, not simply windfall profits for investors who would have come anyway.

For foreign investors who approach CREATE MORE with the same rigor they bring to capital structure and market entry analysis — who classify correctly, model the regimes carefully, maintain compliance, and plan for the post-ITH transition — the law delivers substantial and lasting benefits. For those who treat it as a rubber stamp, the consequences can be severe.

As always, investors are advised to engage qualified Philippine legal counsel before filing any IPA or FIRB application. The upfront cost of proper legal advice is invariably less than the cost of a retroactive tax assessment.