The recently-approved CREATE MORE Bill, which institutionalizes up to 50-percent work-from-home (WFH) arrangements for registered business enterprises (RBEs), is expected to affect the office space market, according to real estate services and investment management company Colliers.
The Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill will also impact the IT-business process management sector, said Colliers director of office services Kevin Jara.
“Now awaiting the president’s approval, we believe that the clarity provided under CREATE MORE on key issues such as VAT exemption, zero-rating, and WFH arrangements offers investors greater regulatory stability and transparency, which are crucial in making the country a viable destination to set up business,” Jara said.
The bill, approved by the bicameral conference committee early this month, aims to lower taxes on domestic and foreign companies to 20 percent from 25 percent, eliminate value-added tax (VAT) on essential services, and allow large domestic enterprises to receive VAT zero-rating, exemption and duty exemptions.
Colliers said the policy shift would make the Philippines a more attractive location for businesses, leading to increased foreign direct investments and economic growth.
Jara outlined potential scenarios that RBEs, particularly those in the outsourcing sector, might face.
Firms that transitioned from the Philippine Economic Zone Authority (PEZA) to the Board of Investments (BOI) in 2023 might be required to have their employees return to the office to maintain their tax incentives unless specific exemptions are provided in the implementing rules and regulations, he said.
Once the provision is enacted, RBEs that reduced office footprint may now need to take up office space again to fulfill the onsite work requirement set by their respective investment promotion agencies, while firms registered under BOI, which does not administer economic zones and free ports, may continue to avail up to 100-percent WFH arrangements.
The law aligns with the government’s goal of attracting investments and creating jobs. While the full impact on the office market is yet to unfold, it’s anticipated that this change will influence how companies utilize their office spaces, Jara said.
