As we start out a new year, we look back at a period defined by the acceleration, with the culmination of reforms years in the making, such as the rollout of Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) incentives, the Capital Markets Efficiency Promotion Act (CMEPA), and the operalisation of digital tax compliance through Value-Added Tax (VAT) on digital services and e-invoicing.
These developments didn’t happen overnight: they are the result of a modernisation roadmap that began with the Comprehensive Tax Reform Program in 2017, and continued through landmark laws such as Tax Reform for Acceleration and Inclusion (TRAIN), CREATE, Real Property Valuation and Assessment Reform Act (RPVARA), and the Ease of Paying Taxes (EOPT) Act, setting the stage for a more efficient and equitable tax system.
This journey toward acceleration wasn’t without its challenges. Implementation delays, legislative bottlenecks, a shifting political landscape and compliance hurdles tested the pace of reform, reminding us that modernisation is an ongoing process: not a one-time event.
Heading into 2026, the focus shifts to full digital compliance, expanded tax measures, and sustained collaboration between government and taxpayers to keep the momentum going. Let’s look back and evaluate the progress we’ve made, and what lies ahead for the Philippine tax landscape.
Delivering on promises
Around the same time last year, we anticipated a wave of changes that would build on the momentum of 2024’s landmark reforms: the EOPT Act, VAT on digital services, and CREATE MORE. 2025 delivered on many of those promises. This year marked the operationalisation of VAT on digital services, and the rollout of CREATE MORE’s refined incentives framework. Alongside these, the Bureau of Internal Revenue (BIR) continued its digitalisation drive, pushing e-invoicing closer to full implementation and issuing guidelines to streamline compliance.
Another major development was the CREATE MORE Act, which refined the incentives framework introduced under the CREATE Act in 2021. Rather than introducing a new paradigm, CREATE MORE focused on improving compliance, transparency, and competitiveness. It expanded VAT zero-rating for services directly tied to registered business enterprises and strengthened digital reporting requirements. These changes are significant because they align investment incentives with performance and accountability, ensuring that tax benefits drive real economic growth.
Digitalisation also took centre stage in 2025. The VAT on Digital Services Law, signed in late 2024, became operational this year, requiring foreign digital service providers to register and remit VAT. This measure addresses the growing digital economy and levels the playing field between local and overseas providers. Alongside this, the BIR began rolling out mandatory electronic invoicing (e-invoicing) for large taxpayers, exporters, and businesses enjoying incentives. While full compliance has been extended to December 2026, the initial implementation in 2025 signals a major shift toward real-time reporting and transparency in tax administration.
Complementing these were reforms under the CMEPA, which standardised tax rates on passive income such as interest, dividends, and capital gains. This simplification reduces complexity in financial transactions and encourages investment in capital markets. Additionally, the extension of the estate tax amnesty provided relief to taxpayers settling long-standing obligations, promoting voluntary compliance and easing administrative burdens. Together, these measures point towards a clear direction: a tax system that is simpler, more accessible, and increasingly digital.
Compliance on the horizon
Despite the progress made this year, implementation hurdles slowed the pace of reform. The BIR faced technical and readiness issues in rolling out mandatory e-invoicing, prompting an extension of the compliance deadline to December 2026. Similarly, while VAT on digital services became operational, onboarding foreign providers and ensuring smooth compliance required additional guidance and monitoring.
Looking ahead, 2026 will be a critical year for tax modernisation. Full digital compliance is expected to take centre stage, with e-invoicing expanding to cover a broader range of taxpayers. The Department of Finance (DOF) will implement the new law which is the Enhanced Fiscal Regime for the Large-Scare Metallic Mining Act (RA No. 12253) in 2026. The DOF is also pushing for new revenue measures, including proposed increase of excise tax on sweetened beverages, excise taxes on single-use plastics and junk food, and possible extension of the estate tax amnesty, alongside continued efforts to harmonise passive income taxation. These initiatives aim to boost revenue collection and support fiscal consolidation.
As early as the start of this year, essential for businesses and individuals alike to stay informed and be proactive in navigating this increasingly digital and dynamic tax environment. Taxpayers, let’s embrace these shifts—keep abreast of regulatory updates and engage with trusted advisors to ensure readiness as we head into another successful year.
As published in The Manila Times, dated 07 January 2026
