DTI launches tax perks for garment makers
The Department of Trade and Industry (DTI) is rolling out incentives to lower operating costs for Philippine garment manufacturers amid what it described as “tighter global competition.”
These incentives are mandated by the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy, or “CREATE MORE” Act.
New projects or subsidiaries of existing garment firms may now avail of a 100-percent additional deduction on power-related expenses and a 50-percent additional deduction on direct labor costs.
Garment manufacturers that export at least 70 percent of their output may also qualify for a value-added tax (VAT) zero-rating or exemption.
These measures are expected to ease financial pressure and help preserve jobs, the DTI said.
The DTI is also studying industry proposals to reduce VAT, which currently stands at 12 percent—the highest in Southeast Asia, alongside Indonesia’s.
Industry modernization
Trade Secretary Cristina Roque said the incentives followed consultations with garment manufacturers, exporters and international buyers.
“I received direct feedback from buyers abroad that automation is no longer optional; it has become a baseline requirement in the global market,” she said.
To support modernization, the DTI plans to coordinate with government banks, such as the Land Bank of the Philippines and the Development Bank of the Philippines, to offer financing for machinery, production equipment and automation.
Additionally, the DTI is planning to expand training programs with the Technical Education and Skills Development Authority to increase the number of skilled sewers and machine technicians needed for automated garment production.
It urged garment manufacturers to engage with the Foreign Trade Service Corps, which helps link Philippine exporters with international buyers and trading companies.
Based on 2024 data from the Philippine Textile Research Institute, the country has about 70,000 workers in garment manufacturing across 999 establishments. These workers are highly concentrated in Metro Manila, Central Luzon and Calabarzon (Cavite, Laguna, Batangas, Rizal, Quezon).
Some of the Philippines’ top export markets for garments include the US, Japan, South Korea, the United Kingdom, Ireland and China.
