By Mon Abrea, CPA, MBA, MPA (Harvard) — Global Tax Policy Expert | Chief Tax Advisor, Asian Consulting Group (ACGlobal)

The Philippines is competing for global capital at a moment when investors around the world are rethinking supply chains, tax structures, energy security and geopolitical risk. In that contest, the country is bidding against regional neighbors such as Vietnam, Indonesia and Thailand, which are courting the same manufacturers and service firms diversifying their Asian footprints. The country's response cannot simply be to offer more incentives. It must offer something more valuable: credible institutions, competitive policies and a government that works.

As the Philippine Investment Mission heads to South Korea and Japan this quarter, followed by Canada, the United States and Europe in the fourth quarter, the country should be clear about what it is really selling to the world. Not just tax incentives. Not just a young workforce. Not just strategic location. It should be selling a reforming Philippines built around three measurable outcomes: MORE PAY. MORE INVESTMENTS. BETTER GOVERNMENT.

Grounds for optimism

There is reason for optimism. The Board of Investments (BOI) approved about P462 billion in projects in the first half of 2026, while the Philippine Economic Zone Authority (PEZA) approved roughly P141 billion in new and expansion projects during the same period. CREATE MORE — the Republic Act enacted in 2024 that gives registered projects longer income tax holidays and more flexible incentive options, including an enhanced deductions regime and VAT zero-rating on local purchases for registered export enterprises — and the new Strategic Investment Priority Plan, which lists the priority sectors that qualify for the strongest incentives, have further strengthened the country's investment proposition.

Through Asian Consulting Group (ACGlobal)'s Philippine Investment Mission and the global launch of “Why Invest in the Philippines? CREATE MORE Edition,” collaboration continues with the BOI, PEZA, Philippine Trade and Investment Centers and Philippine embassies abroad through business forums, CEO briefings, policy discussions, investor aftercare and tax consultations.

But incentives may get investors interested — institutions make them stay. The feedback heard from investors should therefore become part of a measurable reform program toward 2028, the year the current administration's term ends and national elections are held — a natural deadline against which progress can be judged.

1. Increase Filipino take-home pay

The proposed increase in the personal income tax exemption threshold from P250,000 — the level set for compensation earners under the 2017 TRAIN law — is welcome, but it should be the beginning rather than the end of reform. A roadmap has been proposed toward P400,000, then P800,000 and ultimately P1 million in tax-free income, with deeper relief tied to measurable improvements in revenue collection.

The principle is simple: economic growth becomes more inclusive when working Filipinos keep more of what they earn. Fiscal responsibility should not automatically mean imposing new or higher taxes on workers and compliant businesses. Tax relief can stimulate consumption, savings and investment while government improves collection elsewhere.

2. Attract investors — and make them stay

Investment promotion should not end when a project receives approval. Government must give equal importance to investor aftercare, expansion and retention. Major regulatory problems involving taxes, customs, permits, utilities or government agencies should have clear escalation mechanisms before they cause investors to defer projects or relocate. The country needs a red carpet, not red tape.

PEZA modernization should be prioritized, alongside stronger coordination among PEZA, the BOI, the Bureau of Internal Revenue (BIR), Customs and other economic agencies.

3. Modernize tax administration

Digitalization alone is no longer enough. The BIR and the Bureau of Customs should accelerate full e-invoicing, AI-enabled risk assessment, integrated government databases and automated customs and tax administration. Technology should allow government to identify high-risk taxpayers more accurately while reducing unnecessary audits of businesses that consistently comply. For honest taxpayers, modernization should mean fewer forms, fewer visits, faster transactions and greater certainty.

4. Pursue the revenues going uncollected

Enforcement should be strengthened against major tax evasion, illicit trade and unexplained wealth, rather than repeatedly increasing the burden on the easiest taxpayers to collect from. This includes appropriate reform of bank secrecy rules, subject to safeguards and due process, and a nationwide, evidence-based investigation of unexplained wealth where credible risk indicators exist.

Public officials, political dynasties, government contractors and major campaign donors should not be exempt from scrutiny when there are lawful grounds for investigation. This is not about political persecution — it is about accountability, revenue recovery and restoring public trust.

5. Make government easier to deal with

Ease of doing business is ultimately about time, predictability and accountability. The World Bank stopped publishing its Doing Business rankings in 2021 after a review found data irregularities, so investors increasingly judge governments on these practical frictions rather than on a single global scoreboard. Every unnecessary permit is a cost. Every delayed approval is a cost. Every inconsistent interpretation of regulation is effectively another tax on investment.

Do higher taxes always produce higher revenues?

This raises a broader question: do higher taxes always produce higher revenues? In a recent discussion with economist Prof. Arthur Laffer, the principle behind the Laffer Curve was revisited: tax rates and collections do not move upward indefinitely in a straight line, because taxpayers and consumers change behavior.

That is particularly relevant as policymakers consider further increases in excise taxes. Higher tobacco or vape taxes can serve legitimate health objectives, but policy cannot ignore enforcement and consumer behavior. If legal cigarettes and vape products become substantially more expensive while smuggled and illicit alternatives remain cheaper, accessible and widely available, some consumers may simply move underground. The unintended outcome could be troubling: higher statutory tax rates but weaker legitimate sales, more illicit trade and potentially less revenue than projected.

Tax policy must therefore look beyond the rate itself. Rates, enforcement, affordability, consumer behavior and illicit-market risks must be considered together.

Recovering revenue responsibly

The same logic strengthens the case for responsible income tax relief. Government can recover revenues through better voluntary compliance, e-invoicing, AI-assisted enforcement, anti-illicit trade operations and adoption of the global minimum tax and QDMTT. Under the OECD/G20 Inclusive Framework's Pillar Two rules, a 15% minimum effective tax rate applies to multinational groups with consolidated revenue of at least €750 million; where the effective rate on profits in a country falls below that floor, other implementing jurisdictions can collect the difference. A qualified domestic minimum top-up tax ensures that any top-up attributable to Philippine economic activity is collected at home — ensuring that revenues from large multinational groups attributable to Philippine economic activity are not unnecessarily collected elsewhere.

This is why tax relief and fiscal discipline are not opposing goals. The country can lower the burden on honest taxpayers and collect more from evaders; attract global investments while demanding accountability; offer competitive incentives while requiring government institutions to perform.

Several structural reform proposals are already gaining attention from the President and policymakers, including increasing take-home pay, abolishing the travel tax, reforming bank secrecy and strengthening the government's ability to collect from large multinational enterprises. That momentum should continue.

Governance is economic policy

Ultimately, good governance is economic policy. Global investors compare countries not only on tax rates but on regulatory certainty, institutional credibility, transparency and the rule of law. The strongest investment promotion strategy is therefore not another slogan or roadshow. It is a Philippines where workers keep more of what they earn, investors confidently enter and expand, major tax evaders are pursued instead of compliant taxpayers, and government becomes faster, simpler and more accountable.

The coming quarters will supply concrete yardsticks for judging that agenda: whether BOI and PEZA approvals convert into realized investments, how quickly e-invoicing and risk-based audits move from pilot to standard practice, and whether enforcement against illicit trade and evasion produces measurable recoveries.

Promote the Philippines abroad. Reform government at home. More pay. More investments. Better government.

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Mon Abrea, CPA, MBA, MPA (Harvard), is a global tax policy expert and Chief Tax Advisor of Asian Consulting Group (ACGlobal). He is the author of “Reimagining the World Without Corruption” and “Why Invest in the Philippines? CREATE MORE Edition,” and has participated in tax and investment policy dialogues with policymakers and international institutions, including the OECD and the World Bank.