The recently enacted CREATE MORE bill has sparked discussions about its influence on the country’s growing business process outsourcing (BPO) industry. Otherwise known as the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy bill, the CREATE MORE bill aims to lower the corporate income tax rate from 25% to 20%.
This landmark legislation boosts the country’s competitiveness as a BPO destination.
Tax reductions can attract more foreign investors and encourage local companies to expand their operations. Lower taxes mean higher profits for BPO firms, allowing them to invest in talent, technology, and infrastructure.
More tax reductions and incentives
Aside from the lower income tax, the bill provides several measures to simplify obtaining and administering tax incentives. With the introduction of the Registered Business Enterprise Local Tax (RBELT), businesses need to pay only one tax of less than 2% of their gross income instead of managing multiple taxes in different local governments.
The bill also provides companies a 100% deduction for power bills and a 50% credit for reinvestments made in the tourism sector.
These provisions reduce the administrative burden on BPO companies and expedite their access to benefits such as value-added tax (VAT) exemptions on essential services, duty exemptions for large domestic enterprises, and work-from-home arrangements.
“CREATE MORE offers enhanced and targeted incentives to further drive investment and economic recovery in the country,” said Senator Win Gatchalian, the bill’s principal author and sponsor.
Work-from-home arrangements
While beneficial to the outsourcing industry, CREATE MORE raises concerns, particularly for work setups.
The bill allows registered business enterprises (RBEs) up to 50% flexibility in work-from-home (WFH) arrangements. This cap can significantly affect how BPO organizations manage their personnel and office space needs, especially for Board of Investments (BOI)-registered businesses that used to enjoy up to 100% WFH flexibility during the pandemic.
RBEs operating outside economic zones were allowed up to 90% WFH in 2021, but it was reduced to 75% until March 2022. After several extensions, the Philippine Economic Zone Authority (PEZA) allowed 30% on-site reporting until December 2022.
Due to concerns about returning to 100% office setup, such as employee resignations and cancelations of PEZA registrations, companies were allowed to transition to BOI in 2023 and maintain a 100% WFH arrangement. While firms can keep this setup, they might need to fully register with BOI or receive penalties for not meeting the 50% on-site requirement.
As the CREATE MORE bill awaits presidential assent, industry leaders must assess its possible impact on the Philippine BPO scene and adjust their strategies to balance its benefits with evolving workplace dynamics.
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Senate of the Philippines: 19th Congress. (2024, September 9). CREATE MORE passes final Senate hurdle: Gatchalian says bill to attract more FDIs. Retrieved September 24, 2024, from https://legacy.senate.gov.ph/press_release/2024/0909_gatchalian1.asp
Cervantes, F. M. (2024, September 10). Bicam approves CREATE MORE bill. Philippine News Agency. Retrieved from https://www.pna.gov.ph/articles/1233062
Ordoñez, J. V. D. (2024, September 10). Senate approves CREATE MORE bill on third and final reading. Business World. Retrieved from https://www.bworldonline.com/top-stories/2024/09/10/620167/senate-approves-create-more-bill-on-third-and-final-reading/
Mosquera, C. (2024, September 17). CREATE-ing MORE through Work-from-Home. Grant Thornton Philippines. Retrieved from https://www.grantthornton.com.ph/insights/articles-and-updates1/lets-talk-tax/create-ing-more-through-work-from-home/
