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Tax Incentives

Tax Incentives in the Philippines for Local and Foreign Businesses

Filipino and non-Filipino investors can avail of tax incentives and other benefits under any investment laws in the Philippines if they register their businesses with the government agencies mandated to administer them or if they engage in areas of investments that are prioritized by the government.

The major laws that provide for the administration of tax and non-tax incentives to local and foreign enterprises in the Philippines are the Omnibus Investments Code of 1987 (Executive Order No. 226) and the Special Economic Zone Act of 1995 (Republic Act No. 7916).

Executive Order (EO) 226 was enacted to help promote the entry of foreign direct investments into the country and encourage investors to venture capital on industries and business activities considered as priority areas of development. The Board of Investments (BOI) is the government agency mandated to register companies for incentive purposes under EO 226. Businesses can register with the BOI if they meet the eligibility requirements and engage in activities enumerated in the Investment Priorities Plan (IPP) – which is an annual list of industries and areas of investments eligible for BOI incentives.

Republic Act (RA) 7916, on the other hand, authorizes the establishment of economic zones (ecozones) in strategic locations throughout the country to attract foreign investments into these areas and help develop their local industries and boost employment. Most of these ecozones are under the supervision of the Philippine Economic Zone Authority (PEZA). Companies that are interested in availing tax and non-tax incentives from PEZA are required to locate their businesses inside one of these zones or engage in PEZA’s preferred list of business activities to be eligible.

Eligibility Requirements for Registration to Avail Incentives


Filipino-owned enterprises are eligible to register for BOI incentives if they engage or propose to engage in an activity listed in the current IPP. They can engage in any domestic-oriented activity included in the IPP regardless if it is considered as a pioneer project or not.  

Domestic foreign corporations (those that are 100% foreign-owned) can avail of incentives if they engage in pioneer projects and satisfy any of these qualifying requirements:

  • at least 70% of services or products are for export, or
  • proposed projects are to be undertaken in areas that are listed as less developed areas (LDAs) by the BOI

These enterprises are obliged to attain 60% Filipino ownership within thirty (30) years from registration unless they export or are planning to export 100% of their production.

For enterprises that intend to engage in non-pioneer projects, foreign ownership is limited to 40%, unless the enterprise will export more than 70% of its annual production.

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


Foreign corporations can apply for tax incentives from PEZA if they meet the eligibility requirements. To be eligible, they must establish their business locations in any of PEZA’s economic zones or engage in the list of activities that are qualified for PEZA incentives, such as the following:

List of Incentives for Local and Foreign Businesses in the Philippines


Provided under EO 226, BOI-registered companies in the Philippines are entitled to numerous tax and non-tax incentives such as but not limited to the following:

Tax Incentives

  • income tax holidays
    • six (6) years for projects with pioneer status and for projects located in a Less
      Developed Area (LDA)
    • four (4) years for new projects with non-pioneer status
    • three (3) years for expansion/modernization projects
  • duty exemption on imported capital equipment, spare parts, and accessories
  • exemption from wharfage dues and export tax, duty, impost, and fees
  • tax exemption on breeding stocks and genetic materials
  • tax credits on imported raw materials
  • tax and duty-free importation of consigned equipment
  • additional deduction for labor expense

Non-Tax Incentives

  • employment of Foreign Nationals
  • simplification of customs procedures for imported products
  • importation of consigned equipment
  • privilege to operate a bonded manufacturing/trading warehouse (subject to custom rules and regulations)


PEZA-registered companies are entitled to tax exemptions and other benefits including but not limited to the following:

  • all incentives under EO 226
  • preferential final tax of five percent (5%) of gross income in lieu of all national and local taxes; after the income tax holiday period (alternatively, this incentive may be waived by the registered enterprise subject to certain conditions)
  • tax and duty-free importation of capital equipment, spare parts, raw materials, and supplies, which are needed in the registered activity
  • tax credits for exporters using local materials as inputs under RA 7844 or the Export Development Act of 1994
  • value-added tax (VAT) rating on local purchases of goods and services, including land-based telecommunications, electric power, and water bills
  • exemption from expanded withholding tax

Assess your eligibility for tax incentives in the Philippines

The Philippine government provides tax incentive programs to local and foreign investors that express interest in setting up businesses in the country. Our team of business consultants and lawyers can facilitate your application for tax incentives and maximize the number of incentives you can enjoy.