Skip to main content
← The Operating Manual/Chapter 06 · Country Playbooks
Country PlaybookSoutheast Asia
Country ReferenceSoutheast Asia

Philippines

CREATE MORE Act (RA 12066) — 25%→20% RBE rate, 50% WFH for PEZA. Mercury banned in 2024 — the workaround matters.

The Cross-Border Founder Operating Manual · Philippines playbook

The Philippines runs the largest English-speaking BPO and IT-BPM industry in the world — $38B in 2024 revenue, 7% YoY growth. The CREATE MORE Act signed in November 2024 cut the RBE income tax rate from 25% to 20%. The defining 2024 fact for cross-border founders: Mercury banned Philippines-resident accounts. The workaround is the same as Pakistan — and it shapes the entire operational stack.

Entity

The standard Philippines vehicle is a domestic corporation registered with the Securities and Exchange Commission (SEC). Cost PHP 10–35K ($180–630), 4–8 weeks. Minimum capitalization for a foreign-owned IT/software entity is PHP 5M ($90K) under the Foreign Investments Negative List, though PEZA-registered enterprises can negotiate lower.

For tech founders, the more interesting path is PEZA (Philippine Economic Zone Authority) registration:

  • IT-BPM, software development, and KPO are eligible export-service activities.
  • PEZA-registered entities operate in Special Economic Zones (~400 zones nationwide; many are virtual / building-based, not geographic).
  • Income tax incentives (see below).
  • WFH allowance — historically capped, expanded under CREATE MORE.

Alternative incentive route: Board of Investments (BOI) registration for non-PEZA entities under priority sectors. CREATE MORE expanded BOI WFH to 100%, vs PEZA's 50%.

For a US-bound founder, the standard architecture is: Delaware Inc parent → Philippines domestic corp (PEZA-registered). 100% foreign ownership permitted in PEZA-eligible activities.

Tax — the CREATE MORE Act

CREATE MORE Act (Republic Act 12066), signed November 11, 2024. The major reforms:

  • Reduces RBE (Registered Business Enterprise) income tax from 25% to 20% for export-oriented IT-BPM, software, and KPO sectors.
  • 50% WFH for PEZA-registered entities (vs. previous tighter caps).
  • 100% WFH for BOI-registered entities under priority sectors — a structural advantage for distributed-team builders.
  • Local business tax exemption for BPOs for 7–17 years depending on PEZA tier.
  • Income tax holiday options of 4–7 years on top of the preferential rate (depending on activity and location).

For a typical IT-BPM or software-export company, the effective tax rate after Income Tax Holiday + Special Corporate Income Tax (SCIT) lands at 5% on gross income during the SCIT period, then 20% RBE rate thereafter. The combined trajectory is competitive with Vietnam's Decree 320/2025 rates and significantly better than India or Pakistan standard CIT.

The IT-BPM industry hit $38B in 2024 revenue (+7% YoY) — the Philippines has the deepest English-speaking, US-time-zone-overlapping engineering and ops talent pool in the world. The CREATE MORE WFH expansion (50% PEZA / 100% BOI) was a direct policy response to talent flight to remote-USD competitor companies.

Hiring engineers

Manila / Cebu 2025 market for software engineers:

  • Junior (1–3 yr): PHP 25–50K/month (~$450–900)
  • Mid (3–6 yr): PHP 50–100K/month (~$900–1,800)
  • Senior (6+ yr): PHP 80–200K/month (~$1,400–3,600)

Statutory:

  • SSS (Social Security) — 9.5% employer + 4.5% employee, capped at PHP 30K monthly compensation
  • PhilHealth — 4.5% employer + 4.5% employee (split), capped at PHP 100K
  • Pag-IBIG (HDMF) — 2% employer + 2% employee, capped at PHP 5K
  • 13th-month pay — mandatory, ~8.33% of base salary annually
  • Service Incentive Leave — 5 days/year mandatory after 1 year

Realistic fully-loaded cost: gross salary × 1.20–1.28. The 13th-month requirement is the easy-to-miss cost — budget it.

Banking

The Mercury ban on Philippines-resident accounts (2024) is the defining operational fact. Same workaround as Pakistan:

  1. Keep a Mercury, Brex, or Chase US business account with a non-Philippines-resident director or US-resident signatory.
  2. Receive customer payments into the US account.
  3. Wire to Philippines corporate account against bank documentation.

Philippines-side banking: BDO, BPI, Metrobank, UnionBank, HSBC Philippines. UnionBank is the most foreign-investor-friendly for tech companies. HSBC for international correspondent strength.

Realistic timeline for Philippines corporate account: 4–8 weeks. AML/KYC requirements moderate.

Pitfalls

Stories

Wins. Mynt (GCash) — fintech super-app, ~$5B valuation 2023, Series E led by KKR. PayMongo (payments infrastructure, Y Combinator W19, Series A 2024). Kumu (livestream + creator economy, raised $73M Series C). Sprout Solutions (HR SaaS), First Circle (SME lending), Edge Tutor (edtech).

The pattern: fintech and consumer plays scale via deep domestic Filipino market (113M people, mobile-first, remittance-heavy economy). Software-export plays leverage the US time-zone-overlap advantage and English fluency.

The IT-BPM industry's $38B scale means the Philippines is also the premier offshore-engineering destination for non-Filipino founders — many BearPlex, Kalibrr, Salt & Light, and similar service businesses are built around Manila and Cebu engineering teams.

The recommended Philippines-to-Delaware stack

For deeper context: Chapter 1 (incorporation), Chapter 2 (banking — Mercury bans), Chapter 3 (transfer pricing).

Notes & sources

  1. DV Philippines — CREATE MORE Law
  2. Philippine Economic Zone Authority (PEZA)
  3. Board of Investments (BOI)
  4. Bangko Sentral ng Pilipinas
  5. IT & Business Process Association of the Philippines (IBPAP)