Tax incentives · PEZA & BOI
Export-oriented and priority-sector businesses in the Philippines can register for an income tax holiday, a 5% tax in place of almost everything after it, and relief on duties and VAT. The incentives are real and they are large. What decides whether you get them is whether your activity, your premises and your commitments line up before you apply.
Or call 0917 631 8876 — Mondays to Fridays, from our Makati office.
PEZA
Philippine Economic Zone Authority
Gate: Location. Registers enterprises that will operate inside a proclaimed economic zone.
The route most export-oriented businesses take. Manufacturing estates, IT parks and accredited buildings each carry their own zone status, and which you can use depends on what you do inside it.
See what PEZA asks forBOI
Board of Investments
Gate: Activity. Registers enterprises carrying on an activity listed in the Strategic Investment Priority Plan.
The route for projects that cannot sit in a zone, or should not. Registration attaches to what you do rather than where you do it, which makes it the answer for anything tied to a site, a resource or a market.
What you get
Both agencies grant the same shape of benefit. Understanding that shape is what lets you work out, in advance, what registration is actually worth to you.
No income tax on the registered project at all. How long it runs depends on your activity's tier under the Strategic Investment Priority Plan, on where the project sits, and on whether you export or serve the domestic market — so we confirm the period against your project rather than quote a range.
A flat 5% on gross income earned from the registered project, in place of all national and local taxes. Simple to administer and predictable — it tends to suit businesses with high margins and modest deductible costs.
You stay on the regular rate but claim additional deductions on specified costs — power, labour, training, research and development, and domestic input among them. It tends to suit cost-heavy operations, and it rewards exactly the spending an export operation already does.
This choice is arithmetic. Which option is worth more depends entirely on your own cost structure, and the gap between them is often large. We model both against your figures before you commit, because the election is not something to revisit casually.
Running through both stages
On imports and on local purchases of goods and services used directly and exclusively in the registered project.
Capital equipment, raw materials, spare parts and accessories brought in for the registered project.
Employment of foreign nationals in supervisory, technical and advisory positions, within the registered terms.
We will read your activity against the current priority plan and the zone rules and give you a straight answer — including when the answer is no.
Side by side
The benefits are largely the same. The difference is what you have to be, and where you have to be, in order to hold them.
| PEZA | BOI | |
|---|---|---|
| What it registers on | Your location — operating inside a proclaimed economic zone | Your activity — carrying on something the SIPP lists |
| Premises | Must be inside an accredited zone, park or building | Anywhere, subject to the activity's own rules |
| Typical fit | Export manufacturing, IT-BPO, shared services, offshoring | Priority projects, including domestic-market activities on the plan |
| Income tax holiday | Yes, for a period set by tier and location | Yes, for a period set by tier and location |
| After the holiday | 5% special corporate income tax, or enhanced deductions | 5% special corporate income tax, or enhanced deductions |
| VAT and duty relief | On imports and qualifying local purchases for the project | On imports and qualifying local purchases for the project |
| Ongoing reporting | To PEZA, against the commitments you registered | To the BOI, against the commitments you registered |
| Main constraint | You have to be willing and able to sit in a zone | Your activity has to be on the current priority plan |
Incentive periods are set by tier, location and market orientation, and they were amended by CREATE MORE. Any fixed range you read elsewhere may not be the one that applies to your project — we confirm yours before you plan around it.
The file
Since Memorandum Circular 2021-47, applications to PEZA are lodged through its Electronic Application Registration System rather than over a counter, and the contents of the file are set out in the implementing rules of the CREATE Act. The list below is that file.
It is worth reading in two halves, because they are not the same kind of document.
PEZA registration — documentary requirements
Per the CREATE implementing rules, Rule 6
SEC or DTI Certificate of Registration
Whichever applies to your vehicle. The entity has to exist before the project can be registered.
BIR Certificate of Registration
Tax Identification Number
General company information
Capitalisation and ownership structure
Read against the Foreign Investment Negative List. Registration does not lift an equity cap on your activity.
Authorised business representative details
Latest audited financial statements
Where the company has them. A newly incorporated entity will not.
Location, contacts and activity representative
Description, classification and type of activity
This is what is matched against the priority plan and the zone's own scope. Describe the activity, not the industry.
Set-up timetable for the project or activity
Committed investment capital and related details
Committed is the operative word. This is a number you will be held to.
Facility and utility requirements
Projected financial performance
Projected sales, raw materials and production
Projected employment, by type
Employment undertakings are reported against annually. Optimism here is expensive later.
Articles of Incorporation and By-Laws
Board resolution naming the authorised signatory
Project brief
Anti-Graft Certificate
Project feasibility study
Part B is not paperwork. It is your undertaking. Investment capital, employment and production in Part B are projections when you file them and commitments once you are registered — they are what your annual reports are measured against, and shortfalls are what put an incentive at risk. Applicants who treat Part A as the serious half have it exactly the wrong way round. We would rather register you against numbers you can hold than against the most flattering ones the form will accept.
Memorandum Circular 2021-47 brought registration with the investment promotion agencies onto a common footing and moved PEZA applications into its Electronic Application Registration System. The practical consequence is that an incomplete file is visible as incomplete immediately — which is helpful, provided you were not relying on assembling the rest while it sat in a queue.
Memorandum Circular 2021-48 requires enterprises in the zones below — new and existing — to register with the PEZA Information System on Compliance to Environmental Standards. It sits alongside your registration rather than inside it, and it is a separate thing to keep current.
PEZA can ask for more depending on your activity and the zone, and the circulars are amended from time to time. We confirm the current list against your specific application rather than work from a checklist copied off a web page — including this one.
What we do
The application is the visible part. The value is in what happens before it and in what has to keep happening after it.
We read your activity against the current Strategic Investment Priority Plan and against the zone rules, and tell you plainly if the answer is no. That is a real outcome of this step, and a cheaper one than a refused application.
PEZA or BOI, and what each would be worth against your own cost structure — including whether the special corporate income tax or enhanced deductions is the better second stage for you.
For PEZA, the incentive is tied to where you sit. We identify accredited buildings and zones that fit your activity, your headcount and your budget before you sign anything.
The application and its documentation, then the reporting the incentive is conditional on. Incentives are lost through reporting failures far more often than through anything dramatic.
The questions that decide whether an application is worth making — answered without the parts that move between administrations.
They qualify you on different grounds. PEZA registers enterprises that will operate inside a proclaimed economic zone, so location is the gate. The Board of Investments registers enterprises carrying on an activity listed in the Strategic Investment Priority Plan, wherever they sit. An export-oriented business that is willing to take space in an accredited zone usually looks at PEZA first; a project that cannot or will not sit in a zone, but does something the SIPP lists, looks at the BOI. Some businesses qualify under either, and then the answer depends on your premises, your market and what you intend to claim.
For PEZA, yes — that is the whole basis of the registration. The zone can be a manufacturing estate, an IT park or an accredited building, and which one you can use depends on your activity. For the BOI, no: registration attaches to the activity rather than the address. This single difference decides the route for a large share of the businesses that ask us.
An existing company can apply, but the incentives attach to a registered project, not to the company as a whole. That means the qualifying activity has to be identifiable and its revenues, costs and assets have to be separable from anything else you do. Businesses that have been trading for a while are often better served by registering a new entity or a clearly delineated project than by trying to retrofit an existing operation.
Income tax on the registered project, and only that. It does not excuse you from withholding tax on salaries and on payments to suppliers, from your duties as a withholding agent generally, from documentary stamp tax, or from filing. Businesses are caught by this more often than by anything else on this page: they treat the holiday as a general exemption, stop filing, and accumulate penalties on obligations the incentive never touched.
Yes, in full. A registered enterprise files its returns, keeps its books, has its financial statements audited and reports to its investment promotion agency on the commitments it registered against. The reporting is arguably heavier than an ordinary company's, not lighter — the incentive is conditional, and the reports are how the condition is demonstrated.
You move to the second stage of the incentive, and there is a choice in it: the special corporate income tax, a flat 5% on gross income earned in place of national and local taxes, or the enhanced deductions regime, which keeps you on the regular rate but allows additional deductions on specified costs such as power, labour, training, research and domestic input. Which one is better is an arithmetic question about your own cost structure, and it is worth modelling rather than guessing.
It depends on three things: the tier your activity falls under in the Strategic Investment Priority Plan, where the project is located, and whether you are an export enterprise or serving the domestic market. The periods were set by the CREATE Act and amended again by CREATE MORE, so a figure quoted on an older page may no longer be the one that applies to you. Send us the activity and the location and we will confirm the current period for your project rather than a headline range.
In most export-oriented activities, yes. Registration with PEZA or the BOI does not override the Foreign Investment Negative List, though — the equity cap on your activity, if there is one, still applies, and incentives do not buy you past it. Where an activity is capped, the compliant route is genuine Filipino participation, not a nominee arrangement.
Yes, and this is the part that deserves attention before you apply rather than after. Incentives are granted against commitments — the activity, the export ratio where one applies, employment and investment undertakings, and the reporting that evidences them. Failing to meet what you registered against, or failing to report it, can mean suspension, cancellation and assessment for the tax that was not paid. It is why we would rather register you against commitments you can actually hold than against the most optimistic ones.
Tell us what the business does and who it sells to. We will come back with whether the activity is on the priority plan, which agency fits it, what the incentive period would be for a project like yours, and what it is likely to be worth.
If your activity is not on the plan, or the zone requirement does not work for you, we will say so at this stage. An application that was never going to succeed costs you months, and we would rather spend that conversation now.