President Ferdinand Macos Jr. passed the CREATE MORE bill, which aims to stimulate economic recovery by reducing corporate tax (CIT) rates from 25% to 20% for both local and international companies under the Enhanced Deductions Regime (EDR).<\/p>\n\n\n\n
The CREATE MORE bill is designed to stimulate economic growth in the Philippines by reducing corporate income tax (CIT) rates, offering other fiscal incentives, and
streamlining the process of availment to further improve the ease of doing business in the country.<\/p>\n\n\n\n
By offering extended tax holidays, lower corporate tax rates, and value added tax (VAT) incentives, the bill lowers the effective tax for many companies. <\/p>\n\n\n\n
Infra, Telco, BPOs, Manufacturing, and Tourism are potentially the top beneficiaries. Our recommended stocks includes: SM, JFC, MONDE, SMPH, ALI, MBT, BDO, AP,
CNVRG.<\/p>\n\n\n\n
Among the key features of the CREATE MORE law:<\/p>\n\n\n\n
From having the highest CIT rate at 25%, the country now offers among the lowest at 20% vs. 23% average for ASEAN with Singapore being the lowest at 17%.<\/p>\n\n\n\n
The approval of the law is positive for export-oriented and investment-heavy companies — Consumer, Telco, Infra, Tourism and BPOs. However,
impact on Banks and Telcos will be more limited given that these sectors already enjoy some preferential\/lower tax rates.<\/p>\n\n\n\n
Overall, the new tax law could boost EPS growth by 2% to 16% for our coverage universe. Note that our current 8,500 PSEi target over 12-months assumes earnings growth of 12% for 2024 for the index members.<\/p>\n\n\n\n
Still, while the market is sure to applaud the lower tax rate, the likely question that will arise is \u201cHow will the govt recover the foregone revenues due to lower taxes?\u201d The hope is that the more competitive tax rate could attract more direct investments into the country. That would widen the tax base plus there are trickle-down effects expected as well into related\/ancillary industries.<\/p>\n\n\n\n