A.      Board of Investments (BOI)

An enterprise registered with the BOI, pursuant to the 1987 Omnibus Investments Code (Executive Order No. 226) is entitled to, among others, the following incentives subject to certain terms and conditions:

 

·         Income Tax Holiday (ITH)

BOI-registered enterprise shall be exempt from the payment of income tax reckoned from the scheduled start of commercial operations, as follows:

¾           New projects with a pioneer status for six (6) years;

¾           New projects with a non-pioneer status for four (4) years;

¾           Expansion projects for three (3) years, the exemption of which, as a general, is limited to incremental sales revenue/volume;

¾           New or expansion projects in less developed areas (LDAs) for six (6) years, regardless of status;

¾           Modernization projects for three (3) years, the exemption of which, as a general rule, is limited to incremental sales revenue/volume.

 

·         Tax credit on raw materials, supplies and semi-manufactured products (for export producers only);

 

·         Additional deduction from taxable income for labor expense (cannot be simultaneously enjoyed with the ITH incentive);

 

·         Additional deduction from taxable income for necessary and major infrastructure works (cannot be simultaneously enjoyed with the ITH incentive);

 

·         Exemption from wharfage dues and export tax, duty, import and fees.

 

·         Modified Duty Rate for Capital Equipment by virtue of E.O. No. 528

Since June 17, 2006, BOI registered enterprises of good standing with project registered as new or expanding under the Omnibus Investments Code of 1987 may import machinery, equipment, spare parts and accessories that are subject to zero percent (0%) duty for export-oriented enterprises and one (1%) duty for domestic-oriented enterprises. The products fall under Chapters 40, 59, 68, 69, 70, 73,76, 82, 83, 84, 85, 87, 89, 90, 91 and 96 of the Tariff and Custom Code of the Philippines.

 

The capital equipment incentive provided under E.O. No. 313 (Modifying the Nomenclature and the Rates of Imported Duty on Certain Imported Articles under Section 104 of the Tariff and Customs Code of 1978, as amended) shall be availed of by a registered enterprise for a period of five (5) years from its effectivity, or until June 16, 2011.

 

Certain non-fiscal incentives are also available to the registered enterprise, among which are: (a) employment of foreign nationals; (b) guaranteed repatriation of foreign investments and earnings thereon; and (c) importation of consigned equipment for an unlimited period subject to the posting of re-export bond.

 

B.      Philippine Economic Zone Authority (PEZA)

PEZA offers the following Investment Incentives for Ecozone Developers/Operators:

 

·         Income Tax Holiday

¾     4 years for IT Parks/ Buildings located outside of Metro Manila;

¾     6 years for manufacturing located in less developed area;

 

·         Provision of vital off-site infrastructure facilities;

 

·         Option to pay a special  5% tax on Gross Income earned, in lieu of all national and local taxes;

 

·         Permanent resident status for foreign investors and immediate family members;

 

·         Employment of foreign nationals;

 

·         Assistance in the promotion of economic zones to local and foreign locator enterprises;

 

For Ecozone and IT Locators, the following incentives could be extended:

·         Income Tax Holiday (ITH)

¾     New registered pioneer firms

–        Six (6) years from commercial operation;

¾     New registered non-pioneer firms

–        Four (4) years from commercial operation;

¾     Expanding Firms

–        Three (3) years from commercial operation of the expansion;

¾     After the ITH period, the option to pay a special 5% tax on Gross Income, in lieu of all national and local taxes;

·         Exemption from duties and taxes on imported capital equipment, spare parts, supplies, raw materials;

·         Tax Credit on Domestic Breeding Stock and Genetic Materials – an ecozone export enterprise which purchases breeding stocks and genetic materials form a domestic producer shall be entitled to a tax credit evaluation to 100% of the value of national internal revenue taxes and customs duties that would have been waived on the breeding stocks and genetic materials had these items been imported;

 

·      Domestic sales allowance equivalent to 30% of total sales;

 

·      Exemption from wharfage dues and export taxes, imposts and fees;

 

·      Employment of foreign nationals;

 

·      Simplified import and export procedures;

 

·      Other incentives under Executive Order No. 226 (Omnibus Investment Code of 1987), as may be determined by the PEZA Board.

 

Enterprises allowed to operate within the Subic Bay Freeport (SBF) shall, in lieu of paying all other taxes, pay a final tax of 5% of gross income provided their income form local (non-export) sales shall not exceed 30% of their income from all sources.

 

Enterprises locating within the Clark Special Economic Zone (former American Airbase at Clark Field) and Poro Point Special Economic and Freeport Zone (formerly Wallace Air Station and its adjoining areas) are granted incentives similar to those given to the SBF enterprises.

 

Five other special economic zones are were created under separate special laws. These are the Cagayan Special Economic Zone Authority (CESA), Zambaonga Economic Zone Authority (ZEZA), Authority of the Freeport Area of Bataan (AFAB), and Tourism Infrastructure and  Enterprise Zone Authority (TIEZA) and Aurora Special Economic Zone. The incentives granted to those that will locate in these ecozones are similar to the incentives granted to PEZA ecozone.