CREATE MORE Tax Incentives for RHQs and ROHQs

September 3, 2025

Thanks to its strategic location, tax incentives, and cost-effective English-proficient workforce, the Philippines remains a popular base for multinational corporations managing their Asia-Pacific operations. Two common structures for this purpose are Regional Headquarters (RHQs) and Regional Operating Headquarters (ROHQs). Both have historically enjoyed fiscal and non-fiscal incentives, making the country an attractive regional hub.

However, the CREATE Act and CREATE MORE have reshaped the landscape, particularly affecting ROHQs. Businesses considering an ROHQ structure in 2025 must understand how to take advantage of tax incentives under these recent rules.

Understanding RHQs and ROHQs Under Philippine Law

RHQs and ROHQs are governed primarily by Republic Act No. 8756 (1999).

Regional Headquarters (RHQs)
- Act as cost centers for multinational corporations.
- Do not generate income locally; instead, they handle administrative, coordinating, or supervisory functions.
- Because they are non-income-generating, they are exempt from corporate income tax.
- Additional incentives include:
  - Exemption from most local taxes
  - VAT exemption on local purchases
  - Duty-free importation of training materials, equipment, and certain motor vehicles (with BOI approval)
Regional Operating Headquarters (ROHQs)
- May provide qualifying services to affiliates, subsidiaries, or branches within the region.
- Unlike RHQs, they can generate income but only on services provided to affiliates, subsidiaries, or branches. They cannot directly sell goods and services to other Filipino entities.
- Historically enjoyed a preferential 10% income tax rate (abolished under CREATE).
- Incentives included:
  - Exemptions from most local taxes
  - Import privileges for eligible materials and equipment

RHQs are largely unaffected by recent changes since they do not generate income and are exempt from most taxes. However, ROHQs that generate income from their services must be aware of recent changes.

Impact of the CREATE Act and CREATE MORE on ROHQ Taxation

The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, enacted in 2021, was one of the most significant tax reforms in recent decades. While its primary focus was to streamline incentives for Registered Business Enterprises (RBEs), it also had a direct impact on ROHQs:

The 10% preferential income tax rate previously granted to ROHQs was abolished effective January 1, 2022.
ROHQs are now subject to the regular corporate income tax (RCIT) of 25% or the minimum corporate income tax (MCIT), whichever applies.
RHQs remain unaffected, continuing to enjoy exemptions under RA 8756.

This change made ROHQs far less attractive than before. However, the passage of CREATE MORE (RA 12066, 2024) reshaped the incentive landscape by enhancing benefits for RBEs. While ROHQs are no longer entitled to preferential rates, companies operating ROHQs may still avail of incentives by registering a separate RBE for their income-generating activities. Under CREATE MORE, RBEs can:

Pay a reduced 20% corporate income tax (down from 25%) when availing of the Enhanced Deductions Regime (EDR).
Enjoy expanded deductions, including up to 150% of R&D expenses, 100% of power expenses, and additional training and labor expense allowances.
Qualify for VAT zero-rating on local purchases related to registered projects.
Benefit from a simplified local tax regime, with LGU business taxes capped at 2% of gross income (RBELT).

In short, while the standalone ROHQ structure lost its tax edge, businesses can still leverage CREATE MORE’s modernized incentives by registering an RBE with the BOI, PEZA, or another Investment Promotion Agency.

The Need for a Separate RBE

RHQs and ROHQs cannot directly register as RBEs under CREATE or CREATE MORE. Suppose a multinational corporation wants to benefit from the fiscal incentives under CREATE or CREATE MORE. In that case, it typically needs to set up a separate RBE entity (such as a PEZA- or BOI-registered subsidiary).

RBEs usually take the form of either a domestic corporation or a branch office of a foreign corporation. This RBE can then handle income-generating or export-oriented activities, while the RHQ or ROHQ continues its specialized role.

In practice, many multinationals maintain both structures:

An RHQ/ROHQ for administrative or regional oversight functions.
A separate RBE to qualify for incentives tied to income-generating activities.

This dual structure allows companies to maximize tax benefits while maintaining a regional hub in the Philippines.

Documentary Requirements for RHQs, ROHQs, and RBEs

Setting up an RHQ, ROHQ, or a Registered Business Enterprise (RBE) in the Philippines requires filing specific documents with the Securities and Exchange Commission (SEC) or an Investment Promotion Agency (IPA) such as the BOI or PEZA.

For RHQs and ROHQs, the primary requirements include:

Application Form from the SEC’s eSPARC online portal.
Certification by the Philippine Consulate/Embassy or the Philippine Commercial Office or from the equivalent office of the Philippine Department of Trade and Industry (DTI) in the company’s country of origin, verifying that said foreign corporation is engaged in international trade with subsidiaries, branches, or affiliates in the Asia-Pacific (APAC) region and other foreign markets. In case the equivalent of the DTI issues the certification, the same shall be authenticated by the Philippine Consulate/Embassy.
Certification from the Principal Officer of the foreign corporation verifying that it is authorized by its Board of Directors or governing body to establish an RHQ in the Philippines.
Proof of inward remittance
- USD 50,000 for RHQ (annual remittance for operational expenses)
- USD 200,000 for ROHQ (initial investment plus annual funding)
Registration Data Sheet
Endorsement or clearance from appropriate government agencies (if applicable);
Endorsement from the Board of Investments (BOI); and
Latest authenticated financial statements showing the solvency of the head office.

Foreign-issued documents must generally be authenticated through the appropriate Philippine consulate or embassy.

For RBEs (under CREATE/CREATE MORE), you’ll need:

DTI or SEC registration, whichever applies to the enterprise.
BIR Certificate of Registration.
Taxpayer Identification Number (TIN).
Letter or board resolution formally accepting the proposed terms and conditions of registration.
Sworn statement by authorized officers affirming that all representations and commitments submitted remain accurate, unless updated in writing.
Payment of any registration fees, if applicable.
Other supporting documents, depending on the IPA and your business operations (e.g., lease contract, environmental permits).
Additional documents showing you meet performance criteria if you apply for tax incentives with PEZA or BOI.

Proper documentation is important for initial approval and claiming incentives under RA 8756, CREATE, and CREATE MORE.

Step-by-Step Guide to Registering a RHQ, ROHQ, or RBE

Here are the steps to register for those looking to establish a regional hub while maximizing tax incentives:

Determine the entity type – Decide whether to establish an RHQ, ROHQ, or RBE (or a combination).
Ensure you are eligible – RHQs, ROHQs, and RBEs have different eligibility requirements for registering and availing tax incentives. Ensure you meet the criteria before applying.
Prepare documentary requirements, such as business registration papers and other documents listed in the requirements section above.
Apply with the SEC – The Securities and Exchange Commission handles the incorporation and licensing of RHQs and ROHQs.
Register with PEZA or the BOI (if incentives are sought) – RHQs and ROHQs established under RA 8756 are registered with the BOI to avail of fiscal and non-fiscal incentives. Similarly, RBEs must secure approval from PEZA or the BOI to qualify for incentives under CREATE MORE.
Secure BIR and local permits – Registration with the Bureau of Internal Revenue and applicable government agencies is still required, even if exemptions apply. Schedule a consultation with us to determine which certificates, permits, and licenses you need to ensure full compliance.
Maintain compliance – Annual reporting, audited financial statements, and ongoing proof of capitalization must be kept current.

Ensure all required documents are complete, accurate, and compliant to avoid delays or denial. Triple i Consulting can provide professional assistance in preparing your documents and guiding you through all steps of the registration process.

Final Thoughts

For multinational corporations, the Philippines continues to offer opportunities to establish regional hubs. RHQs remain attractive for non-income-generating headquarters functions due to their continued exemptions under RA 8756. ROHQs, however, have lost much of their appeal since the CREATE Act abolished their 10% preferential tax rate. Thankfully, companies can still operate an ROHQ while maximizing tax incentives by registering a RBE as a separate legal entity.

Are You Registering an RHQ, ROHQ, or RBE in the Philippines?

Setting up a corporation in the Philippines involves strict compliance and registration with multiple government agencies. It’s easy to make a mistake or miss a step, which can lead to penalties or delays in your operations.

That’s where Triple i Consulting comes in. Our team of experienced lawyers and accountants provides comprehensive support for your business, so you don’t have to stress over the paperwork.

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