Business Tax Incentives in the Philippines

Tax incentives are exclusions, exemptions, or deductions from taxes that will be paid to the government. Businesses can avail of tax incentives from the government to invest more in their industries, fund sectors, or make decisions that will benefit the environment. 

In the Philippines, there are government agencies that are tasked with giving tax incentives to businesses once they register their companies and qualify for the program: The Philippine Economic Zone Authority (PEZA), the Board of Investments (BOI), the Cagayan Economic Zone Authority (CEZA), and the Tourism Infrastructure and Enterprise Zone Authority (TIEZA).

The Philippine Economic Zone Authority (PEZA), a government organization under the Department of Trade and Industry (DTI), aspires to encourage foreign investors to set up businesses in the Philippines. As such, PEZA is providing tax incentives to qualified manufacturing companies – particularly those under agro-industrial export manufacturing, agro-industrial biofuel manufacturing, and export manufacturing.

• Income tax holiday (ITH) of four (4) to seven (7) years (as stated in RA 11534)
• Hiring of foreign nationals to advisory, supervisory or technical posts
• Exemption from expanded withholding tax
• Extra deduction for labor expenses
• A final tax of five percent (5%) of gross income to replace all national and local taxes (after the ITH)
• Tax and duty-free importation of capital equipment, spare parts, and accessories
• Tax credits for exporters using local materials (as stated in RA 7844)

To be eligible for PEZA’s tax breaks and tax incentives, the business should be located in a PEZA-registered economic zone, office building, IT park, or technology park. 

• Anti-Graft Certificate
• Articles of Incorporation and By-Laws
• Filing and designation of  a representative authorized by Board Resolution
• Project Brief
• Project Feasibility Study
• SEC Certificate of Registration

Locally-owned corporations may register for BOI incentives if they are involved in an activity listed in the latest Investment Priorities Plan (IPP) of BOI. Meanwhile, companies fully owned by foreign nationals engaged in export activities, including outsourcing and offshoring, may register with BOI. Other industries, they may also register with BOI if their business activities are included in the government’s priority areas for development or included in the IPP. Finally, foreign businesses may apply for BOI incentives if their office is established in one of the Less Developed Areas (LDAs) identified by BOI. 

• Income tax holiday (ITH) of four (4) to seven (7) years (as stated in RA 11534)
• Hiring of foreign nationals to advisory, supervisory or technical posts
• Duty exemption on imported capital equipment, accessories, and spare parts
• Exemption from wharfage dues and export, tax, duty, impost, and fees
• Extra deduction for labor costs
• Tax credits on imported raw materials
• Tax and duty-free importation of transferred equipment 

• Articles of Incorporation and By-Laws
• Audited financial statement 
• Board resolution of a duly authorized company representative/signatory
• Income tax return for the past 3 years if applicable
• Project report relating to activities listed in the IPP
• Securities and Exchange Commission (SEC) Certificate of Registration
• Enterprises that want to engage in the following business activities are recommended to register with BOI:
  • Call Center or Back Office
  • Information Technology – Business Process Outsourcing (IT-BPO)
  • Knowledge Process Outsourcing (KPO)
  • Legal Process Outsourcing (LPO)
  • Outsourcing/Offshoring 
  • Staff Leasing/Augmentation

Foreign-owned companies that are engaged in tourism business activities like amusement and entertainment; and sports and recreation activities like gambling, horse racing, and online and virtual gaming at the Cagayan Economic Zone Authority may want to register their businesses with CEZA.

• Income tax holiday (ITH) of four (4) to seven (7) years (as stated in RA 11534)
• Hiring of foreign nationals to advisory, supervisory or technical posts
• Exemption from expanded withholding tax
• Extra deduction for labor expenses
• A final tax of five percent (5%) of gross income to replace all national and local taxes (after the ITH)
• Tax and duty-free importation of capital equipment, spare parts, and accessories
• Tax credits for exporters using local materials (as stated in RA 7844)
• Zero rating for articles admitted to the zone under legal permit

• Accomplished application form 
• Articles of Incorporation and By-Laws
• List of assets and other properties
• Project Feasibility Report
• Proof of the intended enterprise’s physical location within the Cagayan Special Economic Zone and Freeport
• Securities and Exchange Commission (SEC) Certificate of Registration

Foreign-owned corporations involved in tourism business activities like museums, restaurants, spas, theme parks, and travel and tour activities located within the Tourism Enterprise Zone may want to register their businesses with TIEZA.

• Income tax holiday (ITH) of four (4) to seven (7) years (as stated in RA 11534)
• A final tax of five percent (5%) of gross income to replace all national and local taxes (after the ITH)
• Tax deductions not exceeding fifty percent (50%) of the expenses paid for environmental protection or preservation of cultural heritage, sustainable livelihood programs for local communities, and similar activities. 

• Protection from requisition of property in cases of war or national emergency
• Repatriation of investment in the currency in which the investment was originally placed
• Eligibility to acquire a work visa or Special Investor’s Resident Visa (SIRV)

• Articles of Incorporation and By-Laws
• Board resolution of a duly authorized company representative/signatory
• Company Profile containing basic information on its capabilities to handle the proposed project
• Endorsement letter from the National Historical Institute (NHI) for Cultural and Heritage Tourism Zone, from the Department of Health (DOH) for  Health and Wellness Tourism Zone; or from Philippine Retirement Authority (PRA) for retirement villages/communities
• Evidence of land ownership and/or long-term lease agreement/s for not less than 25 years in the proposed TIEZ location
• Securities and Exchange Commission (SEC) Certificate of Registration
• Vicinity map

Get assistance from the experts. Contact us to inquire about tax incentives for your business. 

Business Registration Philippines is a website dedicated to helping investors, business owners, and other stakeholders establish and incorporate their enterprises. Topics range from Accounting, Finance, Human Resources, Business Process Outsourcing, Product Registration, Taxation, and more. It is a microsite of Triple i Consulting Inc.

Triple i Consulting, in cooperation with Business Registration Philippines, helps foreign-owned and locally-owned businesses register for any of the Philippine government’s tax incentive programs. With extensive knowledge and skills about the Philippine taxation system, Philippine business registration, and Philippine business incorporation with decades of combined experience, Triple i is the first ISO 9001:2008 company in the Philippines to offer business registration services to its clients. 

With a team of Philippine business strategy experts who can extend professional guidance for local and foreign investors establishing their businesses in the Philippines, Triple i and Business Registration Philippines can help your company apply for tax breaks and tax incentives from the Philippine government. 

Start saving on your corporate taxes by scheduling an initial consultation through one of the following ways:

• Contact Us Here
• Fill Out the Form Below
• Call Us at +63 (02) 8540-9623
• Email info@tripleiconsulting.com