On Monday, Philippine President Ferdinand Marcos announced a reduction in corporate taxes and introduced new fiscal incentives under a law designed to attract more foreign investments.
The new law lowers the corporate income tax from 25% to 20% and allows businesses to implement “work-from-home” options for up to half of their workforce, among other benefits.
Philippine Economy Seeks Global Competitiveness
Foreign direct investment (FDI) in the Philippines reached $6.2 billion last year, according to the United Nations Conference on Trade and Development (UNCTAD). However, this is still much lower compared to Singapore’s $159.67 billion, Indonesia’s $21.6 billion, and Vietnam’s $18.5 billion.
Many businesses point to challenges like high power costs, foreign ownership restrictions, and poor infrastructure as obstacles to investing in the Philippines.
“We have taken a decisive step toward our vision of a globally competitive, investment-driven Philippine economy,” Marcos said during a signing ceremony with lawmakers. “This law aims to attract both local and international investments, focusing on strategic industries that will shape our future.”
Tax Deductions and Incentives for Businesses
The new law also includes tax deductions for businesses already enjoying investment incentives, including a 100% coverage for power expenses. Finance Secretary Ralph Recto explained that this will significantly reduce costs for the manufacturing sector.
For businesses that were established before the new law, the government has extended perks on strategic investments, such as those related to import duties and value-added taxes, by 10 years to a total of 27 years.
However, the presidential palace’s briefing paper indicates that the law will result in a revenue loss of $100.6 million for the government over the next three years.
