Tax Incentives

Tax Incentives Application Services for Foreign Enterprises in the Philippines

We assist foreign companies on their Tax Incentives Application with PEZA, BOI, CEZA, TIEZA, and other similar agencies in the Philippines. We help them assess their eligibility for their chosen agency and process the application requirements to ensure availment of tax incentives.

The Philippine government grants regulatory powers to agencies like the Philippine Economic Zone Authority (PEZA) and the Board of Investments (BOI) to administer tax incentives to qualified enterprises. These incentives include tax holidays, tax exemptions, tax credits, and tax and duty-free importation of capital equipment. 

To be eligible for tax incentives from PEZA, foreign companies are required to locate their office in one of its Special Economic Zones (SEZs). BOI, on the other hand, requires foreign companies to engage in areas of investment prioritized by the government. 

Options Available to Foreign Companies for Availing Tax Incentives in the Philippines

Philippine Economic Zone Authority (PEZA)

Foreign enterprises engaged in export manufacturing, IT service export, tourism, and similar business activities can register their company with PEZA. As a general requirement, foreign enterprises seeking to register with PEZA must locate their business in any of its Special Economic Zones (SEZs) and be classified as an export-oriented enterprise (i.e., 100% of its products/services must be for export). However, depending on certain conditions, PEZA may approve the sale of up to 30% of total products/services to the domestic market.

Tax Incentives Offered by PEZA

PEZA-registered enterprises can enjoy numerous tax incentives, which include but are not limited to the following:

  • income tax holiday (ITH) of 4 to 7 years (as provided under RA 11534)
  • preferential final tax of 5% of gross income in lieu of all national and local taxes (after the ITH period)
  • tax and duty-free importation of capital equipment, spare parts, and accessories
  • tax credits for exporters using local materials (as provided under RA 7844)
  • exemption from expanded withholding tax
  • additional deduction for labor expenses
  • employment of foreign nationals in supervisory, technical, or advisory positions

PEZA Registration Requirements

The requirements for registering with PEZA are as follows (additional requirements may be required for some industries):

  • SEC Certificate of Registration
  • Articles of Incorporation and By-Laws
  • Board Resolution of a duly authorized company representative/signatory
  • Project Brief
  • Anti-Graft Certificate
  • Project Feasibility Study

Foreign companies engaging in economic activities listed in the Foreign Investments Negative List (FINL) are not allowed to register with PEZA. It is also important to note that approval of application and the specific incentives that PEZA will grant is on a case-to-case basis.

Board of Investments (BOI)

Fully foreign-owned companies engaging in export-oriented activities (70-100% export), including outsourcing and offshoring, can register with BOI. Those engaging in other industries can also register with BOI if their business activities are among the priority areas for development of the government or included in BOI’s investment priorities plan (IPP). Additionally, foreign enterprises can be eligible for BOI incentives if they set up their office in one of the areas listed by BOI as Less Developed Areas (LDAs).

Tax Incentives Offered by BOI

Some of BOI’s tax incentives are similar to those offered by PEZA, which include the following:

  • ITH of 4 to 7 years (as provided under RA 11534)
  • duty exemption on imported capital equipment, spare parts, and accessories
  • exemption from wharfage dues and export, tax, duty, impost, and fees
  • tax credits on imported raw materials
  • tax and duty-free importation of consigned equipment
  • additional deduction for labor expenses
  • employment of foreign nationals in supervisory, technical, or advisory positions

BOI Registration Requirements

If eligible, foreign enterprises must submit the following to BOI to apply for incentives:

  • SEC Certificate of Registration
  • Articles of Incorporation and By-Laws
  • Audited financial statement (feasibility study that contains projected financial reports for the next 5 years)
  • Income tax return for the past 3 years (if applicable)
  • Board resolution of a duly authorized company representative/signatory
  • Project report (a report that contains activities listed or related to those listed in the IPP)

Companies that want to engage in the following business activities are recommended to register with BOI:

Cagayan Economic Zone Authority (CEZA)

Foreign companies engaged in gaming, recreational, and tourism-related business activities (such as online gaming, amusement, gambling, and sports facilities) can register their business with CEZA.

CEZA-registered enterprises are entitled to avail of tax incentives provided by PEZA, including zero-rating for articles admitted by CEZA under legal permit. Under Philippine laws, CEZA has the power to issue online gaming licenses to qualified enterprises.

CEZA Registration Requirements

To apply for tax incentives with CEZA, the following requirements must be submitted:

  • SEC Certificate of Registration
  • Articles of Incorporation and By-Laws
  • Project Feasibility Study
  • Evidence of intended enterprise’s physical location within the Cagayan Special Economic Zone and Freeport
  • List of assets and other properties

Tourism Infrastructure and Enterprise Zone Authority (TIEZA)

Foreign enterprises engaged in tourism-related activities (such as travel and tour agencies, restaurants, spas, theme parks, and galleries) within the Tourism Enterprise Zone (TEZ) can register their business with TIEZA. To be eligible, the main purpose of their business must be to attract local and foreign tourists to travel to and in the Philippines. Other tourism enterprises can also avail of TIEZA incentives provided that their tourism activities are included in the IPP.

Tax Incentives Offered by TIEZA

TIEZA-registered enterprises will be eligible for the same incentives granted by PEZA, including:

  • Tax deduction equivalent to a reasonable percentage (not exceeding 50% of the cost of environmental protection or cultural heritage preservation activities, sustainable livelihood programs for local communities, and other similar services)
  • Protection from requisition of property in cases of war or national emergency
  • Repatriation of investment (in the currency in which the investment was originally made)
  • Entitlement to avail a work visa or a Special Investor’s Resident Visa

TIEZA Registration Requirements

To be eligible, foreign-owned tourism enterprises must submit the following:

  • SEC Certificate of Registration
  • Articles of Incorporation and By-Laws
  • Company Profile (containing basic data/information on its technical, financial, marketing, and management capability to undertake the proposed project)
  • Board resolution of a duly authorized company representative/signatory
  • Vicinity map
  • Proof of land ownership and/or long-term lease agreement/s for a period of not less than 25 years in the area of the proposed TEZ
  • Endorsement letter from the National Historical Institute (NHI) in the case of Cultural and Heritage Tourism Zone, from the Department of Health (DOH) in the case of Health and Wellness Tourism Zone; or from Philippine Retirement Authority (PRA) in the case of retirement villages/communities

Tax Incentives in the Philippines FAQs

What are the different tax incentives available to foreign companies in the Philippines?

Depending on the type of business to register, foreign entities seeking to set up operations in the Philippines can avail of tax incentives from several special government agencies, including:

  1. Philippine Economic Zone Authority (PEZA)
  2. Board of Investments (BOI)
  3. Cagayan Economic Zone Authority (CEZA);
  4. Tourism Infrastructure and Enterprise Zone Authority (TIEZA); and many others.

What is the purpose of tax incentives in the Philippines?

The main purpose of tax incentives in the Philippines is to attract foreign investors to set up operations in the Philippines and generate local jobs in key areas of development.

Who is eligible for tax incentives in the Philippines?

The eligibility criteria for availing tax incentives in the Philippines depends on the agency administering the incentives, i.e., for PEZA, foreign investors must locate their business in a PEZA-accredited zone to be eligible; for BOI, foreign investors must engage in business in any of the priority areas of development of the government to be eligible.

Determine your eligibility for tax incentives in the Philippines

We will help you acquire access to tax incentive programs that are applicable to your enterprise, from tax breaks and tax holidays to employment of foreign nationals.

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