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The Philippines Tax Regime and the Pillar Two GloBE Rules

The Philippines Tax Code was substantially amended in the 2021 Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

In this article, we look at the potential impact of the Pillar Two GloBE Rules for MNEs operating in the Philippines. 

Corporate Tax Rates

Section 27 of the Philippines Tax Code provides that the standard rate of corporate income tax is 25%. 
 
A reduced rate of 20% applies to resident companies with net taxable income not exceeding 5 million pesos and with total assets not exceeding 100 million pesos.
 
However, under the tax incentive regime (see below), qualifying resident companies are subject to a corporate tax rate of 5% on gross income for 10 years after the expiry of the tax holiday under Section 294 of the Tax Code.  

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Picture of Lee Hadnum

Lee Hadnum

Lee is a qualified Chartered Accountant and Chartered Tax Adviser. A former Senior Tax Analyst at Bloomberg Tax, Lee began his career in Ernst & Young's Entrepreneurial Services department and has 20 years of international tax planning experience. Lee's books have been recommended by The Times, The Guardian and The Telegraph.

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