INCENTIVES FOR FOREIGN INVESTORS (PHILIPPINES)

Below are some of the major laws in the Philippines that make various incentives available for foreign
investors:

 Special Economic Zone Act of 1995 (Republic Act No. 7916) by the Philippine Economic Zone
Authority (PEZA)
- Foreign companies engaging in the export industry in the Philippines, including
outsourcing and offshoring business operations, are eligible to register with PEZA.

If eligible, they will be entitled to:

o Income tax holidays (ITH) valid for 4, 5, or 6 years.
o 5% tax on gross income (in lieu of all national and local taxes)
o exemption from expanded withholding taxes
o tax and duty-free importation of capital equipment
o tax credits for exporters using local materials
o special visa privileges, and many more

To apply for tax incentives from PEZA, foreign companies and investors must locate their
business in any of PEZA’s Special Economic Zones (SEZs) or engage in the list of activities
qualified for PEZA incentives

 Omnibus Investments Code of 1987 (Executive Order No. 226) by the Board of Investments
(BOI)
- Operates under the authority of the Department of Trade and Industry (DTI)
- Foreign enterprises engaged in the Business Process Outsourcing (BPO) industry,
including IT and shared services, are eligible to register their business with the BOI.

If eligible, they will be entitled to:

o Income tax holidays (ITH) 4 to 8 years

o exemption from local business taxes for 4 to 6 years (for pioneer and non-pioneer
industries, subject to different requirements)
o tax exemption from wharfage dues
o tax and duty-free importation of consigned equipment
o tax credits on imported raw materials
o special visa privileges, and many more.

To apply for tax incentives from BOI, foreign companies and investors must engage in BOI’s
pioneer projects under the Investment Priorities Plan (IPP)
  Cagayan Special Economic Zone Act of 1995 (Republic Act No. 7922) by the Cagayan Economic
Zone Authority (CEZA)
- Foreign companies tourism-related activities, sports and recreation-related activities
are qualified to register their business with the CEZA.

If eligible, they will be entitled to:

o Income tax holidays valid (ITH) for 4 to 6 years.

o 5% tax on gross income (in lieu of all national and local taxes)
o tax and duty-free importation of capital equipment
o zero-rating for articles admitted to the Cagayan Special Economic Zone and Freeport
(CSEZFP) under legal permit
o tax credits
o special visa privileges, and many more.

To apply for tax incentives from CEZA, foreign companies and investors must locate their
business in the Cagayan Special Economic Zone and Freeport (CSEZFP) or engage in any of the
lists of activities eligible for CEZA incentives.

 The Tourism Act of 2009 (Republic Act No. 9593) by the Tourism Infrastructure and Enterprise
Zone Authority (TIEZA)
- Foreign companies engaging in tourism-related activities with the main purpose of
attracting as many visitors as possible to travel to and in the Philippines are qualified to
register their business with the TIEZA.

If eligible, they will be entitled to:

o Income tax holidays (ITH)

o 5% on gross income. They will also have
o tax exemption from customs duties and
o special visa privileges.

To apply for tax incentives from TIEZA, foreign companies must locate their business in a
Tourism Enterprise Zone (TEZ) and register with TIEZA or engage in tourism activities included
in the Investment Priorities Plan (IPP) of BOI.

Reference:

https://incorpadvisory.in/services/international-presence/tax-incentives-in-philippines-for-foreign-
companies/