The Philippine government has expanded tax breaks to cover business process outsourcing (BPO) companies with remote work setups.
This reform follows the signing of the Implementing Rules and Regulations (IRR) of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act on February 17.
This policy shift aims to attract more foreign and local investments by offering flexible and globally competitive tax incentives. The signing ceremony was led by Finance Secretary and Fiscal Incentives Review Board (FIRB) Chair Ralph Recto and Department of Trade and Industry (DTI) Secretary and FIRB Co-Chair Ma. Cristina Aldeguer-Roque.
Addressing industry concerns
Before CREATE MORE IRR, BPO firms risked losing their tax perks if too many employees worked from home. This created a conflict as the global trend toward flexible work arrangements grew stronger, especially after the pandemic.
“This landmark reform directly addresses key industry concerns,” the IT and Business Process Association of the Philippines (IBPAP) said in a statement.
With the CREATE MORE Act, BPO companies can retain their tax benefits even if up to 50% of their workforce operates remotely. This policy acknowledges the evolving nature of work and enables firms to attract top talent by offering flexible work arrangements.
This is a game-changer for the BPO industry. The ability to maintain tax breaks while embracing remote work reduces operating costs and helps companies remain competitive in the global market.
Key benefits of the CREATE MORE Act
Enacted on Nov. 8, 2024, the CREATE MORE Act builds on the original CREATE Act by refining and expanding tax incentives. Key benefits include:
- Reduced corporate tax rate: lowers the corporate tax rate from 25% to 20%, easing the tax burden on businesses
- Simplified tax regime: allows businesses to opt for a special 5% tax on gross income
- Enhanced cost efficiency: enables companies to claim a 100% deduction on electricity expenses
- Duty-free importation: provides tax-free importation of capital equipment and raw materials
- VAT zero-rating: exempts local purchases from value-added tax, reducing operating costs
These incentives offer much-needed flexibility and cost savings, enabling the BPO industry to remain competitive while accommodating remote work arrangements.
Boosting the country’s global competitiveness
The CREATE MORE IRR strengthens the country’s investment climate and reinforces its position as a stable and competitive economic partner. “We are ready to compete. We are a dependable economic ally. We offer stability amid uncertainty,” Recto said.
The policy also enforces fiscal discipline by preventing double registration of projects and ensuring responsible incentive management. The FIRB will evaluate the impact of tax breaks to ensure they deliver more benefits than costs.
Investor sentiment has been optimistic. “Philippine shares closed higher as investors welcomed the signing of the IRR on corporate tax cuts,” said Luis Limlingan of Regina Capital.
Frederick Go, Special Assistant to the President for Investment and Economic Affairs, said they plan to inform investors about this development by March or April through a roadshow to Korea, the U.S., Japan, Europe, the Middle East, and China.
Read more Unity Communications and industry news on our main BPO News page.
Ammachchi, N. (2025, February 27). Philippines Extends Tax Breaks to Remote Work BPOs Nearshore Americas. Nearshore Americas. Retrieved March 3, 2025, from https://nearshoreamericas.com/philippines-extends-tax-breaks-to-remote-work-bpos/
