PEZA & CREATE MORE vs Vietnam MPI: 2026 Manufacturing Tax Incentives Benchmark
For Chief Financial Officers, Tax Directors, and Corporate Investment Committees, statutory tax holidays are a cornerstone of 10-year capital budgeting. While Vietnam has historically dominated China+1 narratives under Ministry of Planning and Investment (MPI) Decree 31/2021/ND-CP, the Philippines’ landmark CREATE MORE Act (enacted 2024–2026) has established Southeast Asia’s longest fiscal incentive runway.
Where Vietnam caps maximum incentives at 15 years, the Philippines provides up to 27 years of total fiscal incentives (up to 7-year Income Tax Holiday + up to 20-year Special Corporate Income Tax at 5% Gross Income Earned), paired with statutory 0% VAT on domestic supply chain purchases.
Head-to-Head Tax Matrix: CREATE MORE vs Vietnam Decree 31
| Fiscal & Tax Provision | Vietnam (Decree 31 / MPI) Bac Ninh · Hai Phong · Binh Duong | Philippines: Tier-3 (Mindanao) Max 27 YrsPHIVIDEC · Panabo / CREATE MORE | Philippines: Tier-1/2 (Luzon) Calabarzon · Clark · Subic |
|---|---|---|---|
| Standard CIT Rate | 20% | 20% (Reduced from 30%) | 20% |
| Income Tax Holiday (ITH) | Up to 4 Years (100% exempt) | Up to 7 Years (100% exempt)(Regional Tier-3 bonus) | 4 to 6 Years |
| Post-ITH Tax Regime | 50% CIT Reduction (9–11 yrs)(Effective 5% or 10% rate) | 5% SCIT on GIE (Up to 20 yrs)(Replaces all national/local taxes) | 5% SCIT (Up to 14–17 yrs) or Enhanced Deductions |
| Total Combined Runway | Max 15 Years(Steep cliff to 20% CIT) | Max 27 Years (7 ITH + 20 SCIT)(+12 Yrs Longer than VN) | Max 20–24 Years |
| VAT on Local Purchases | 8% – 10% Standard(Must claim via refund process) | 0% VAT Rating(Statutory zero cash lock-up) | 0% VAT Rating |
| Capital Equipment Duty | 0% Duty Exemption | 0% Duty Exemption | 0% Duty Exemption |
Strategic Tax Teardown: Why CREATE MORE Reshapes Factory ROI
Runway Length
The 27-Year Lifecycle vs Vietnam’s 15-Year Cliff
Under Decree 31, once a Vietnamese facility reaches Year 16, it reverts to the standard 20% CIT rate. In contrast, Philippine Tier-3 enterprises in Mindanao (PHIVIDEC, Hijo) enjoy a 7-year ITH followed by 20 years of 5% SCIT—delivering 12 additional years of preferential tax shielding.
Cash Flow Protection
0% Domestic VAT vs Vietnam Refund Delays
The CREATE MORE Act explicitly mandates 0% VAT on local goods and services directly attributable to registered export activities. In Vietnam, foreign investors frequently report 6-to-18-month VAT refund delays from provincial tax bureaus, tying up millions in operating working capital.
Enhanced Deductions
100% Additional Power & R&D Deductions
Enterprises opting for the Enhanced Deductions regime under CREATE MORE receive an additional 100% deduction on power expense, a 50% additional deduction on direct labor expense, and a 100% additional deduction on domestic R&D—substantially lowering effective taxable income for automated facilities.
OECD GMT Compliance
Navigating Global Minimum Tax (Pillar Two)
As both Vietnam and the Philippines implement the 15% Qualified Domestic Minimum Top-up Tax (QDMTT) for multinationals with global revenues >€750M, pure tax holidays face statutory top-ups. Under GMT, non-tax cost fundamentals—such as Mindanao’s $35–$75/m² land leases and low utility rates—become the primary drivers of factory profitability.
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- ASEAN Manufacturing Location Comparisons Hub
Request a Pro-Forma Tax Holiday & Effective Tax Rate (ETR) Model
Evaluate normalized 10-to-25-year effective tax rate projections, SCIT cash flow modeling, and 0% domestic VAT savings for your facility under CREATE MORE vs Vietnam Decree 31.