How the CREATE Act Transforms Offshoring for New Zealand Businesses in the Philippines

Pierre Paul Collins

Nov 21, 20242 min read

A banner image with the title "CREATE Act" in bold white text on a blue background, followed by the subtitle "Corporate Recovery and Tax Incentives for Enterprises" and "Republic Act No. 11534." The background features a modern cityscape with tall glass skyscrapers and faint outlines of parked cars beneath the text.

The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, formally known as Republic Act No. 11534, positions the Philippines as a premier offshoring destination for New Zealand businesses. By lowering corporate taxes, simplifying compliance, and tailoring industry-specific incentives, it offers unparalleled opportunities for cost savings, operational efficiency, and sustainable growth. For Kiwi companies looking to optimise costs, foster innovation, and expand globally, the CREATE Act amplifies the advantages of offshoring to the Philippines, making it a strategic choice for long-term success.

New Zealand businesses have long recognised the Philippines as a top choice for offshore outsourcing, thanks to its talented workforce, cultural compatibility, and economic viability. Now, with the enactment of the CREATE Act, the Philippines has elevated its appeal. By reducing corporate tax rates and offering enhanced fiscal incentives, this transformative legislation creates new opportunities for Kiwi companies to optimise costs and drive innovation in a competitive global market.

1. Lower Corporate Taxes for Cost Efficiency

A visual representation of the impact of the CREATE Act on corporate income tax rates. Two pie charts are shown. The first pie chart illustrates pre-CREATE Act corporate tax rates, highlighting 30% for large enterprises. The second pie chart shows reduced tax rates post-CREATE Act: 25% for large enterprises and 20% for small and medium enterprises (SMEs). Both charts are set against a faint background image of parked cars in front of a commercial building.

The CREATE Act reduces corporate income tax from 30% to 25% for large enterprises and 20% for small and medium enterprises (SMEs). For New Zealand businesses outsourcing services like IT, customer care, or back-office functions, these changes translate directly into reduced operational expenses.

2. Streamlined Compliance and Performance-Based Incentives

The Act simplifies tax policies, replacing cumbersome processes with clear, transparent guidelines. New performance-based incentives include tax holidays, deductions for labour and research investments, and VAT exemptions. For Kiwi enterprises, this means easier compliance and greater flexibility to reinvest savings into growth and innovation.

3. Industry-Specific Perks

The CREATE Act prioritises high-growth sectors like technology, manufacturing, and renewable energy. Businesses in these industries can access generous incentives, such as zero-duty on imported capital equipment and VAT zero-rating for export services. For New Zealand firms in the tech and green industries, this alignment provides both financial and strategic advantages.

4. Encouraging Sustainable Practices

Sustainability is at the heart of the CREATE Act, with specific incentives rewarding eco-friendly initiatives. For New Zealand businesses prioritising environmental responsibility, this creates avenues to invest in green projects, such as renewable energy or sustainable agriculture, while benefiting from fiscal support.

5. Strengthening New Zealand-Philippines Economic Ties

With bilateral trade between New Zealand and the Philippines nearing pre-pandemic levels, the CREATE Act reinforces the Philippines’ role as a reliable economic partner. It fosters foreign direct investment and aligns with New Zealand’s strategic focus on collaboration within South-east Asia, particularly in tech-driven and sustainability-focused industries.

6. A Step Forward in Addressing Investor Concerns

The CREATE Act mitigates historical investment challenges such as high energy costs and bureaucratic complexity. For instance, tax deductions for power expenses ease the burden on energy-intensive operations, making the Philippines more competitive for Kiwi businesses.

The CREATE Act represents a bold shift in the Philippines’ economic strategy, prioritising global investment and aligning with the needs of progressive businesses. For New Zealand enterprises, this is a rare opportunity to capitalise on reduced taxes, targeted incentives, and simplified regulations while benefiting from the Philippines’ skilled workforce and robust infrastructure.

Kiwi companies seeking global scalability and sustainability can rely on the Philippines as a dependable offshoring partner. By embracing the CREATE Act’s reforms, New Zealand businesses can secure cost efficiencies, drive innovation, and establish a resilient presence in a thriving market.