May 2026 Articles - Suits the C-Suite

25 May 2026

Benjamin N. Villacorte

From risks to opportunities: Building a resilient business in a changing climate

In brief:Climate-related risks are causing significant disruptions across global markets, supply chains, and regulatory landscapes, urging businesses to incorporate long-term risk assessments into their operational planning.Organizations leveraging climate-informed planning, such as climate risk assessment and scenario analysis, gain an advantage by uncovering new growth avenues.To enhance resilience, a Just Transition approach helps businesses recognize climate frameworks that promote consistent risk disclosure and long-term strategic alignment.“Businesses that leverage climate insights to mitigate these risks and turn them into competitive advantages will be best positioned to thrive in an uncertain future."The global energy crisis, driven by disruptions in the Middle East, has exposed vulnerable fuel-dependent economies to price spikes and volatility, with the Philippines particularly affected due to its reliance on imports for crude oil and liquid petroleum products. This heavy dependence leaves the country with a limited safety net, as sudden global price increases quickly translating into higher domestic energy costs and broader economic pressure.Simultaneously, recurring summer heat waves are compounding these risks. The Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) has reported dangerous heat index levels of 42°C to 51°C in 2026, increasing health risks and straining daily life. The energy crises and extreme heat are examples of a wider global pattern in recent years, where challenges are becoming increasingly complex and interconnected. One need only look at the news for a surge of developments on global tariffs, artificial intelligence, global pandemics, geopolitical conflict, and ongoing supply chain disruptions.These realities were highlighted in the recent SGV thought leadership forum, “Transforming Risk into Strategic Advantage,” held on 6 May 2026, where industry leaders discussed how businesses can convert emerging risks into drivers of long-term value.Climate change serves as one of — if not the biggest — drivers of volatility, but it is not yet well-integrated into strategic planning. Just as geopolitical and supply chain disruption create uncertainty, climate change introduces volatility that is unsuitable for a predictable and stable investment environment.By understanding emerging risks, companies can build resilience while creating long-term competitive advantages. Businesses that leverage climate insights to mitigate these risks and turn them into competitive advantages will be best positioned to thrive in an uncertain future.How climate-related risks shape business outcomesClimate-related risks disrupt global markets, supply chains, and regulations. They are most visible in extreme weather events, such as extreme flooding, droughts, and strong typhoons, which heavily affect local industries infrastructure and communities The Philippines has ranked among the most climate-vulnerable countries for 16 consecutive years, earning a rank by the Climate Risk Index as the 7th most affected country by storms, floods, and heatwaves. Its economic impact shows that the projected cumulative damage in the country’s Gross Domestic Product (GDP) will increase from 7.6% in 2030 to 13.6% in 2040. There are also growing climate policy risks. Governments are introducing stricter rules on carbon reporting, emissions, and sustainability. These regulatory shifts increase compliance costs, risk of penalties, and potential misalignment in supply chains, particularly when sourcing from carbon-intensive countries.The global value chain, from which the Philippines relies on heavily for our primary and intermediate goods, is also highly exposed to these hazardous climate risks. These climate-induced challenges compound existing economic and geopolitical pressures, heightening overall operational risks. Current resilience frameworks often lack climate-specific metrics and targets, making it difficult to incorporate long-term risk assessments into short-term operational planning.Climate change risk impact to the Filipino people cannot be ignored. Extreme exposure to flooding, heat waves, extreme typhoons, and economic vulnerability from changing labor and consumption demands due to the energy transition, must be considered for businesses in their strategic decision making.Turning climate insights into competitive advantageWhile climate-related risks are deemed material to companies, the transition toward a low-carbon, resilient economy opens up valuable opportunities. Companies are recognizing climate transparency not just as a regulatory obligation but as a powerful strategic advantage.Enhanced visibility across value chains enables organizations to identify operational vulnerabilities, assess risks, and respond quickly to emerging disruptions. By investing in climate data and disclosure, businesses can stay ahead of regulatory changes and meet rising investor expectations. Demand for climate-aligned reporting is rising, signaling a shift toward using transparency as a measure of long-term resilience. The 2025 EY Global Climate Action Barometer reflects this momentum: nearly 80% of companies now link environmental metrics to executive incentives, and most have or are developing climate action plans. However, 65% of firms with net-zero targets lack actionable transition plans, and fewer than half have validated targets through the Science Based Targets initiative (SBTi). These actionability gaps carry financial consequences: climate inaction can cost companies up to 15% of annual revenue, compared to 8% for those taking proactive measures. However, many organizations have yet to fully incorporate this perspective into decision-making. The report shows that climate-related disclosures are still not being fully leveraged to inform strategy and capital allocation. Capital markets are increasingly pricing these risks. Research by MSCI shows that a company’s exposure to, and management of, financially material sustainability-related risks directly affects its overall risk profile and influences access to equity and debt financing. Companies with higher resilience to sustainability-related risks (measured through stronger MSCI ESG Ratings) consistently exhibit lower costs of capital across equity and debt instruments. This negative correlation highlights that transparency, credible planning, and effective risk management are increasingly rewarded by investors and lenders.As countries advance their low-carbon transitions, regulatory frameworks are encouraging businesses to invest in emissions reduction, renewable energy, and sustainable practices. Companies that align effectively with these frameworks can also gain competitive advantages through enhanced efficiency, lower energy costs, and reduced greenhouse gas emissions. For instance, mapping the carbon intensity of supply chains helps firms avoid regulatory penalties and comply with emerging international policies such as the European Union (EU) carbon border adjustments mechanisms (CBAMs).The SEC Memorandum Circular No. 16, series of 2025 mandates publicly-listed companies (PLCs) and large non-listed companies (LNLs) to locally adopt IFRS S1 and S2 through the Philippine Financial Reporting Standards (PFRS) on Sustainability Disclosures starting in FY2026, with limited extensions of transition reliefs. This regulation includes the Sustainability Reporting Guidelines and Roadmap that encourage sustainable business practices and align company disclosures with international standards to attract environmental, social, and governance (ESG)-focused investors in the national capital market.Organizations that integrate climate insights into strategy, through risk assessments, scenario analysis, and resilient operations, are better positioned to capture growth opportunities and strengthen long-term competitivenessIn this dynamic environment, climate transparency transcends compliance to become a key driver of transformation and competitive differentiation.Towards a “just transition” approachIn building a resilient future for the Filipino people, a “just transition” is slowly being integrated as the foundation of companies in their long-term business strategies. As a framework, a just transition prioritizes equity, fairness, and inclusion as businesses navigate the shift to a low-carbon economy. It ensures that this does not adversely impact stakeholders or communities, but instead generates social and economic benefits. For companies, embracing a just transition means aligning climate readiness with responsible business practices, ensuring resilience efforts contribute to broader objectives.Embedding climate risk assessment into strategyTo enhance resilience, businesses are increasingly adopting international standards and climate frameworks that promote consistent risk disclosure and long-term strategic alignment. Key actions include leveraging scenario analysis to map supply chain vulnerabilities evaluating exposure to extreme physical climate and energy transition risks, integrating climate science data into planning and fostering cross-sector partnerships. These measures enable companies to align climate resilience with operational continuity and regulatory compliance, positioning themselves for sustained competitiveness.Beyond reporting, organizations must embed climate considerations across enterprise-wide processes. This involves integrating climate data into strategic planning, capital allocation, and product innovation. In practice, climate metrics can guide site selection and business continuity planning, allowing climate insights to move from being siloed ESG initiatives into core business capabilities. By integrating climate into strategy, companies can mitigate risk and capitalize on new opportunities. As climate risks become increasingly systemic and uncertain, climate assessment and scenario analysis tools become indispensable for insulating against an increasingly volatile business environment.Benjamin N. Villacorte is the Sustainability Services Leader of SGV & Co.This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

18 May 2026

Elvin N. Mercader

From threat to thrust: Turning technology risk into strategic advantage

In brief:Technology risk has evolved into an enterprise leadership challenge, as decisions on governance, execution, cybersecurity, third party ecosystems, and AI increasingly determine whether digital investments deliver value or erode trust.Technology risks are interconnected and lifecycle based, with gaps in governance cascading into execution failures, cybersecurity exposure, third party dependency, and amplified AI accountability risks.The goal of technology risk management is confidence—not control, enabling responsible innovation, resilient operations, and sustained trust in an increasingly complex digital environment.“Leading organizations embed risk awareness into strategy, execution, and oversight — recognizing that confidence, not control, is the objective."Organizations that treat technology risk as a strategic input — rather than a compliance exercise — gain speed, resilience, and trust. Drawing on insights from the recent SGV thought leadership forum, “Transforming Risk into Strategic Advantage,” held on 6 May 2026, this perspective reflects how leading organizations are reframing risk as a driver of value. These benefits materialize only when leadership explicitly positions risk as an enabler of value, embeds risk into strategy and delivery, and applies governance mature enough to provide clarity rather than friction. Under these conditions, organizations gain speed not by reducing rigor but by making risk timely, proportional, and relevant to business decisions.The paradox of digital transformationAs digital capability becomes a competitive differentiator, organizations are accelerating the adoption of new platforms, delivery models, and intelligent technologies. However, a critical leadership question persists: Are technology decisions truly driving advantage — or quietly increasing enterprise risk?While technology enables growth, it also introduces operational, regulatory, and ethical complexity. In many organizations, innovation has outpaced the maturity of governance, risk oversight, and organizational readiness. This creates a central paradox: technology is adopted to increase speed and resilience, yet unmanaged risk slows momentum and erodes trust. Artificial intelligence (AI) intensifies this challenge by amplifying long‑standing concerns around cybersecurity, data quality, ethics, and accountability. Technology risk is no longer technical — it is a strategic leadership issue.Crucially, these risks do not occur independently. They form a connected system where weaknesses in one area cascade across the enterprise. When managed intentionally, this complexity becomes a source of advantage.Technology governance: Alignment and decision qualityTechnology governance is often mistaken for bureaucracy. In practice, it ensures digital ambition translates into business value.Without strong governance, priorities compete, costs rise, and leadership confidence diminishes — particularly as organizations introduce multiple platforms, vendors, and emerging technologies. Effective governance aligns digital investments with strategy, clarifies expected benefits, and embeds risk considerations early in decision making. When enterprise architecture is reduced to documentation, it adds little value. When used as a strategic decision lens, it helps leaders make informed portfolio trade‑offs, identify platform rationalization opportunities, and understand the implications of scaling, integration, or acquisitions before costs and complexity become entrenched. In complex transformation environments, decision quality improves when organizations use structured governance reviews to evaluate how technology decisions, investments, and risks are overseen. The goal is insight, not additional layers of control — ensuring clarity on accountability, priorities, and exposure tied to business outcomes. Where governance lacks coherence, execution risk quickly follows.Technology implementation: Value realizationEven the strongest strategies fail without disciplined execution. Across large‑scale transformation programs, execution challenges most often emerge when requirements lack clarity, data readiness is underestimated, access controls are not designed upfront, and users are insufficiently prepared for change.These gaps drive workarounds, low adoption, and delayed value realization. Leadership oversight becomes effective when assurance is applied at key inflection points — before go‑live to surface design and control risks while change is still feasible, and after implementation to confirm that execution, controls, and benefits align with business intent. This shift requires assurance teams to engage earlier and operate with greater business fluency, which enables faster escalation, fewer go‑live surprises, and clearer accountability for executive sponsors.Cybersecurity: Trust and resilienceCybersecurity sits at the intersection of trust, continuity, and executive accountability. Leaders must confidently answer whether critical assets are protected, vulnerabilities are understood, and incidents are manageable.When treated as a constraint, security slows innovation. When embedded early into digital design — rather than bolted on late — it introduces predictable friction upfront, reducing disruptive rework, incidents, and loss of confidence downstream. Clear ownership, asset visibility, security by design principles, and zero trust approaches allow scale while reinforcing trust.Cyber resilient organizations strengthen confidence through cybersecurity program assessments complemented by vulnerability testing and penetration validation, enabling executives to prioritize based on business impact rather than technical noise.Third party risk: Ecosystem resilienceModern transformation depends on ecosystems of vendors and partners. While these relationships enable speed and specialization, they also introduce dependency and exposure. Third party risk is no longer confined to procurement or compliance; it is an enterprise resilience issue, as critical operations, data, and decision making increasingly depend on a concentrated ecosystem of cloud, SaaS, and AI providers. As dependencies deepen, executives must consider exit and substitution risk — how quickly operations, data, or AI capabilities could be transitioned if a key vendor fails or changes terms.AI: Readiness and accountabilityAI has moved from experimentation to expectation. While it offers significant productivity gains, many initiatives fall short due to insufficient readiness rather than technical limitation.The greatest AI risk is not algorithm failure — it is unclear accountability when outcomes go wrong. Risk varies significantly across AI use cases — from predictive decision support to fully autonomous action — requiring boards and executive leadership to adjust oversight and accountability as automation increases.Before scaling AI, leaders must assess governance maturity, data reliability, workforce preparedness, and incident readiness. AI governance readiness assessments help clarify oversight, ownership, and escalation across the AI lifecycle, providing boards and executives with the confidence to scale responsibly.A strategic framework for reframing technology riskAcross these domains, a clear pattern emerges: technology risks are interconnected and lifecycle based. Governance, implementation, cybersecurity, third party risk, and AI are enterprise drivers of both value and risk—not separate conversations.Across complex digital environments, three imperatives consistently separate confident decision making from reactive risk management:1. Integrate risk intelligence into digital strategy to make intentional trade offs without sacrificing trust.2. Manage risk across the full technology lifecycle, enabling early detection and decisive response.3. Shift from control to confidence, ensuring innovation scales responsibly.These principles are operationalized through targeted assessments across governance, execution, security, third party ecosystems, and AI, providing leadership with continuous visibility and confidence. The starting point is not more controls, but better visibility. Organizations that progress most effectively begin by establishing a single, enterprise view of technology risk and focusing leadership attention on the areas where gaps in ownership, execution, or trust could materially impact outcomes.Confidence, not controlOverseeing technology risk is no longer a technical responsibility — it is a core executive mandate. Leading organizations embed risk awareness into strategy, execution, and oversight, recognizing that confidence, not control, is the objective.Leaders are increasingly challenged to reflect on whether they have a single, integrated view of technology risk across the entire lifecycle, ensuring that risks are not assessed in isolation but understood holistically. Equally important is identifying where decisions may be occurring without sufficient visibility into downstream risk or clear accountability, as these blind spots can amplify exposure and weaken governance. Leaders must also consider which initiatives would be most vulnerable if trust in security, data integrity, or third party resilience were suddenly compromised, recognizing that the strength of these critical foundations can directly determine whether key programs continue forward or stall under pressure.Technology risk leadership does not slow organizations down. It enables leaders to move faster with intent without sacrificing resilience, trust, or value. For today’s executives, the question is no longer whether technology risk should be addressed, but how deliberately it is shaped into strategic advantage.Elvin N. Mercader is a Technology Risk Senior Director of SGV & Co.This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

08 May 2026

Aris C. Malantic

Reimagining the finance function: Turning risk foresight into strategic insight

In brief:Finance must evolve from a compliance-driven function into a strategic partner that translates risk into value.Organizations need a risk strategist mindset to navigate a non-linear, accelerated, volatile, and interconnected (NAVI) environment.Targeted transformation across accounting excellence, finance operations, the financial statement close process, and the financial planning and analysis (FP&A) will enable the finance function to drive sustainable growth.“In a world where multiple challenges must be addressed simultaneously, those who succeed will not be those who manage risk the best, but those who understand it deeply enough to use it as a catalyst for growth."In today’s business landscape, C-suite leaders are navigating what can best be described as the “Age of And,” a period in which organizations must address multiple, simultaneous challenges while still delivering growth. This convergence of demands is driven by rapid, non-linear changes in the business environment, creating overlapping and interconnected risks that require agile response in parallel.At the center of this complexity sits the finance function. Traditionally viewed as a steward of financial reporting and compliance, finance is now uniquely positioned to become a strategic nerve center — capturing, processing, analyzing, and interpreting enterprise-wide data. The critical question for today’s leadership is no longer whether finance should transform, but how it can transform risk foresight into meaningful financial insight.The new risk reality: Navigating a NAVI risk environmentC-suite leaders are increasingly operating in what can be described as a NAVI risk environment — non-linear, accelerated, volatile, and interconnected. Risks are no longer isolated; they cascade across functions, geographies, and value chains.Philippine C-suite leaders were made aware of the urgency of this shift through insights shared at the recent SGV thought leadership forum titled “Transforming Risk into Strategic Advantage,” held on 6 May 2026. Regulatory compliance risk emerged as the top concern (24%), followed by market risk (18%) and third-party risk (17%). These priorities reflect a business environment where regulatory pressures continue to intensify, market conditions remain unpredictable, and reliance on extended ecosystems introduces new vulnerabilities.At the same time, emerging external forces are reshaping strategic agendas. Advances in quantum computing are expected to introduce more complex cybersecurity and data privacy challenges (37%), while regulatory fragmentation across jurisdictions (31%) complicates compliance strategies. Additionally, the increasing frequency and severity of climate-related disruptions (25%) underscore the growing importance of sustainability and resilience in financial decision-making.For Philippine organizations — many of which are deeply integrated into global value chains — these risks are amplified by regional regulatory diversity, evolving digital infrastructure, and heightened exposure to climate events.From risk management to risk strategyDespite the growing complexity, many organizations continue to approach risk management with traditional, compliance-driven mindsets. These legacy approaches are characterized by “check-the-box” practices, static frameworks, and limited innovation. While such methods may ensure baseline compliance, they are insufficient to address the dynamic and interconnected risks of today’s environment.A shift toward a risk strategist mindset is therefore imperative.Risk strategists go beyond mitigation. They align risk management with overall business strategy to ensure that risk considerations inform key decisions at the highest levels. They leverage risk insights to unlock value, rather than simply prevent loss.Moreover, they embed a culture of innovation and accountability within the risk function, incentivizing teams based on business outcomes rather than compliance metrics alone.This transformation places finance in a pivotal role. As a function with end-to-end visibility across financial and operational data, finance is uniquely positioned to integrate risk considerations into strategic planning, performance management, and capital allocation.Reimagining the finance functionTo thrive in this evolving risk landscape, finance leaders must reimagine their function across four critical transformation areas:Accounting Excellence. Accounting remains the foundation of financial integrity, but it must evolve to reflect emerging risks and complexities. Finance teams should proactively assess the potential impact of new financial reporting standards, such as PFRS 18, and ensure that their chart of accounts accurately captures evolving business realities. System and reporting updates must also be carefully coordinated to ensure consistency, transparency, and compliance across the organization. In a fragmented regulatory environment, the ability to adapt reporting frameworks quickly is a key competitive advantage.Finance Operations. Operational efficiency is no longer sufficient; finance operations must be strategically aligned with business needs. This requires a clear understanding of which elements of the operating model require immediate attention — whether it be process standardization, organizational structure, or technology enablement. Leaders must strike a balance between complexity and proximity, ensuring that finance remains close enough to the business to provide actionable insights while maintaining standardized processes that drive efficiency. Initiatives should be prioritized based on their alignment with strategic objectives, rather than isolated operational improvements.Financial statement close process. The financial close process is often an area ripe for transformation. Many organizations continue to rely on manual processes, fragmented systems, and spreadsheet-driven workflows, which limit speed, accuracy, and scalability. A structured diagnostic approach is essential. Finance teams should assess their close processes across five foundational pillars: people, process, technology, data, and control. By mapping dependencies and identifying bottlenecks, organizations can uncover opportunities for improvement. Benchmarking against industry peers can further highlight gaps and best practices. More importantly, technology must be leveraged not merely to automate existing processes, but to fundamentally redesign them. Eliminating spreadsheets and integrating systems can significantly enhance efficiency and reduce risk.Financial planning and analysis (FP&A). FP&A is rapidly becoming the strategic core of the finance function. In a volatile environment, static planning cycles are no longer sufficient. Organizations must adopt integrated business planning approaches that enable real-time performance analysis. This requires a holistic assessment of processes, people, and data. Finance teams must enhance their capabilities in scenario planning, forecasting, and integrated reporting. At the same time, investment in talent development and governance structures is critical to ensure that teams can effectively interpret and act on insights.Data integration is particularly important. The ability to combine financial and non-financial data — from operations, supply chains, and external sources — enables more accurate forecasting and more informed decision-making.Turning financial risks into strategic advantageUltimately, the goal of finance transformation is not simply to manage risk, but to harness it as a source of strategic advantage. For C-suite leaders, this requires a concerted focus on three key priorities.First, organizations must transform finance culture and capability. This involves embedding agile mindsets, upskilling talent, and building a future-ready workforce. In the Philippine context, where talent competition remains strong, targeted development and succession planning are essential to sustaining long-term capability.Second, leaders must drive value-led strategies. This means aligning long-term vision with clear, measurable objectives across the short and medium term. Data-driven insights should reinforce decision-making, supported by strong collaboration between finance and other executive functions.Finally, leadership impact must be strengthened through robust executive dialogue and continuous learning. As risks evolve, so too must leadership approaches. Developing next-generation leaders and fostering a culture of curiosity and adaptability will be critical to staying ahead of disruption.The way forwardThe “Age of And” presents both challenges and opportunities. For finance leaders, it is a defining moment — an opportunity to redefine the role of finance from a function focused on reporting the past to one that actively shapes the future with confidence.By embracing a risk strategist mindset and investing in targeted transformation initiatives, finance can move beyond traditional boundaries. It can become a strategic partner to the business, turning risk foresight into financial insight, and ultimately, into sustainable value creation.In a world where multiple challenges must be addressed simultaneously, those who succeed will not be those who manage risk the best, but those who understand it deeply enough to use it as a catalyst for growth.Aris C. Malantic is the Assurance Growth Areas Leader and Financial Accounting Advisory Services (FAAS) Leader of SGV & Co.This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

04 May 2026

Meynard Sardalla

VAT zero-rating for non-IPA registered exporters

In brief:VAT zero‑rating incentive on local purchases for exporters under CREATE MORE is performance‑based. Export‑oriented enterprises must consistently meet the 70% export sales threshold to retain the incentive, as failure in one year results in loss of zero‑rating in the succeeding year.Certification, not registration, is the key trigger. Continued entitlement depends on obtaining and maintaining DTI‑EMB certification, which suppliers rely on to apply VAT zero‑rating on local purchase of export oriented enterprises.To sustain the incentive, exporters must actively monitor export performance, clearly link costs to export activities, align suppliers, and remain audit‑ready under a streamlined but enforcement‑focused regime.“VAT zero-rating on local purchases is no longer limited to PEZA- or BOI-registered enterprises. Export-oriented enterprises — including those without IPA registration — may now enjoy the same incentive, subject to strict compliance with the law and its implementing rules."For many years, VAT zero-rating on local purchases was largely associated with enterprises registered with investment promotion agencies (IPAs). IPAs refer to government entities authorized to register businesses and administer fiscal and non fiscal incentives under Philippine investment laws. Key IPAs include the Philippine Economic Zone Authority (PEZA), the Board of Investments (BOI), and similar bodies. In practice, the VAT zero-rating was commonly viewed as an incentive tied to registration status and location within economic zones.The CREATE MORE Act has fundamentally reshaped this understanding. VAT zero‑rating on local purchases is no longer reserved solely for IPA‑registered businesses. It is now also expressly available to export‑oriented enterprises (EOEs), including those that are not registered with any IPA or whose incentive periods have already lapsed.VAT zero-rating beyond IPAsCREATE MORE clearly recognizes that exporters contribute to the economy in different ways and through different business models. As such, VAT zero-rating on local purchases and VAT exemption on importations may now be enjoyed by export-oriented enterprises, even outside traditional economic zones.This does not mean, however, that VAT zero-rating has become easier to obtain.While IPA-registered enterprises often operate within structured and time-bound incentive frameworks, export-oriented enterprises availing of VAT zero-rating outside IPAs must rely almost entirely on annual performance validation and documentary compliance. The incentive is no longer anchored on registration alone, but on whether the exporter can consistently satisfy the prescribed requirements.The non-negotiable export thresholdAt the core of the CREATE MORE framework for EOEs is a clear and objective rule: at least 70% of an enterprise’s total annual production in the preceding taxable year must consist of export sales.This threshold is determinative. Failure to meet it does not merely result in technical non-compliance; it leads to the loss of VAT zero-rating in the succeeding taxable year. For many exporters, this forward-looking consequence is often underestimated, despite its direct impact on pricing, cash flow, and supplier arrangements.VAT zero-rating for EOEs is therefore not a static tax incentive but an outcome that depends on continuous compliance.A clear compliance gate: DTI-EMB certificationCREATE MORE, together with its implementing regulations, makes an important clarification: Department of Trade and Industry-Export Marketing Bureau (DTI-EMB) certification is now the operative basis for VAT zero-rating for export-oriented enterprises, not IPA registration.A CREATE MORE EOE certificate issued by the DTI-EMB confirms that the exporter has met the required export sales threshold and is eligible to enjoy VAT zero-rating on local purchases and VAT exemption on importations.Revenue Memorandum Circular No. 10-2025 reinforces this framework by providing that local suppliers are no longer required to secure prior BIR approval to apply the zero VAT rate, as long as the buyer presents a valid DTI-EMB certification. This streamlines transactions and places greater responsibility on exporters to ensure that their certifications are valid, current, and properly supported.Without DTI-EMB certification, VAT zero-rating on local purchases cannot be availed of — regardless of how export-driven the enterprise may be.DAO 25-03: What it takes to secure and maintain VAT zero-ratingDTI Department Administrative Order (DAO) No. 25-03 provides the detailed rules on how export-oriented enterprises must demonstrate compliance.The order outlines the documentary requirements, application procedures, validity period, and grounds for revocation of the EOE certificate. Exporters are required to submit financial statements, export sales data, proof of inward remittances, export documentation, and a sworn declaration that the export threshold was met in the preceding year. Crucially, the certificate is valid only for the applicable taxable year. Delays in submission, incomplete documentation, or failure to meet the export threshold may result in revocation, immediately cutting off access to VAT zero-rating on local purchases.DAO 25-03 also makes clear that certification does not eliminate audit exposure. Transactions remain subject to post-audit verification, particularly on whether purchases claimed as VAT-zero-rated are reasonably connected to export activities.Broader access, higher stakesTaken together, CREATE MORE, RMC No. 10‑2025, and DAO 25‑03 create a VAT zero‑rating regime that is more inclusive but also more exacting.Export‑oriented enterprises now have a path to VAT zero‑rating even without IPA registration, but this narrow path must be navigated carefully. Once export performance falls below the threshold or compliance lapses, the incentive is quickly lost — often with immediate financial consequences.For exporters outside IPAs, the absence of long‑term registrations means that annual compliance is the sole basis for entitlement. VAT zero‑rating becomes a privilege that must be renewed every year through performance and documentation.The real challenge: sustainabilityCREATE MORE makes VAT zero rating more inclusive, but also more demanding.Enterprises that approach compliance reactively — checking export ratios only at year end or treating certification as an administrative formality — face real risk. Once zero rating is lost, recovery is not immediate. The resulting cash flow strain can be significant, particularly for exporters with thin margins.Sustaining VAT zero‑rating on local purchases for EOEs now requires the following:Continuous monitoring of export performanceClear identification of costs supporting export activitiesTimely and complete certification submissionsStrong coordination between operations, finance, tax, and procurement teams This makes sustaining a VAT zero rating a management issue instead of just a tax compliance matter.A clear message for business leadersThe CREATE MORE framework sends a clear signal. VAT zero-rating on local purchases is no longer limited to PEZA- or BOI-registered enterprises. Export-oriented enterprises — including those without IPA registration — may now enjoy the same incentive, subject to strict compliance with the law and its implementing rules.However, broader access does not mean relaxed standards.The real challenge lies in sustaining compliance. VAT zero-rating today depends on consistent export performance, timely certification, proper documentation, and internal coordination. Enterprises that fail to meet the requirements risk losing the incentive in the succeeding year, with immediate implications on cost structures, cash flow, and commercial arrangements.Under CREATE MORE, VAT zero-rating remains a valuable incentive — but one that must be actively managed and continuously earned.Meynard Sardalla is a Senior Director from the Global Compliance & Reporting Sub-Service Line of SGV & Co.This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.