A. BOI Incentives

An enterprise registered with the BOI pursuant to the 1987 Omnibus
Investments Code (Executive Order or EO 226) is entitled to, among
others, the following incentives subject to certain terms and conditions:

Fiscal Incentives

i. Income tax holiday (ITH) for six years for pioneer firms and generally
four years for non-pioneer firms. If a non-pioneer firm is located in a
less developed area, it shall generally be entitled to six years ITH. Firms
locating within Metro Manila shall not be granted ITH unless they are:

  • Within a government industrial estate;
  • Service-type projects with no manufacturing facilities;
  • Power generating plants; or
  • Exporters with expansion projects.

ii. Tax credit on raw materials, supplies, and semi-manufactured products
iii. Additional deduction from taxable income for labor expense (cannot
be simultaneously enjoyed with the ITH incentive)
iv. Duty-free importation of capital equipment, spare parts and
accessories until 10 May 2017
v. Additional deduction from taxable income for necessary and major
infrastructure works (cannot be simultaneously enjoyed with the ITH
incentive)

 

Non-fiscal Incentives
Certain non-fiscal incentives are also available to registered enterprises,
among which are: employment of foreign nationals; guaranteed
repatriation of foreign investments and earnings thereon; and importation
of consigned equipment for an unlimited period subject to posting of a reexport bond.
B. PEZA Incentives
The Special Economic Zone Act of 1995, as amended, mandates the PEZA
to operate, administer, manage, and develop Special Economic Zones or
ecozones.
Business enterprises operating within ecozones shall be entitled to the ITH
incentives mentioned above. PEZA-registered exporters likewise enjoy tax
and duty exemption on importations of capital equipment, raw materials,
and other merchandise directly needed in their registered operations.
Moreover, after availment of the ITH incentive, PEZA-registered enterprises
shall be subject to a final tax at a preferential rate of 5% of their gross
income earned, in lieu of all other taxes, local and national. Information
Technology (IT) companies are entitled to similar incentives if they are
registered locators in an IT ecozone.
C. Other incentives
Three other special economic zones were created under three separate
special laws. These are the Cagayan Special Economic Zone, the
Zamboanga City Special Economic Zone, and the Aurora Special Economic
Zone. In 2009, Congress passed a law converting the previously established
Bataan Economic Zone to the Freeport Area of Bataan. In 2010, the Aurora
Economic Zone has been expanded and developed to become the Aurora
Pacific Economic and Freeport Zone. Business enterprises locating in these
ecozones are granted incentives similar to those granted to PEZA ecozone
enterprises.

Enterprises operating within declared freeports/special economic zones
under Republic Act (RA) 7227, as amended by RA 9400 (i.e., Subic Bay
Freeport, Clark Freeport, Morong Freeport, John Hay Freeport, and Poro
Point Freeport) shall, in lieu of paying other taxes, pay a final tax of 5% of
gross income provided their income from the domestic market, i.e., sales
to customers located within the customs territory or outside the ecozone,
shall not exceed 30% of their income from all sources.