Companies doing business in the Philippines can get tax breaks and other non-fiscal incentives from the Philippine Economic Zone Authority (PEZA) and the Board of Investments (BOI).

Below is a glimpse of the perks that are in store for you:

• PEZA-registered export companies can take advantage of a corporate income tax exemption for four to seven years, depending on the nature of the project.
• PEZA can also help facilitate the issuance of special visas with multiple entry for foreign investors and their immediate family.
• BOI-registered companies can benefit from expedited customs procedures for the importation of equipment and materials.
• BOI-registered businesses purchasing breeding stocks and genetic materials from domestic sources can get a substantial tax credit.

However, these incentives aren’t guaranteed for all.

Are you wondering if your business qualifies?

Here are the common reason why companies might not qualify for PEZA or BOI registration.

Content Summary

✅ Your company’s business address can make or break your PEZA/BOI registration.

✅ There’s a plethora of business activities where foreign ownership is restricted or outright prohibited.

✅ PEZA/BOI application is often a long and stringent process. Missing one or two items can delay or derail everything.

✅ If PEZA or BOI is out of the question, there are other investment promotion agencies you can explore in the Philippines, like CEZA and SBMA.

✅ Although this won’t grant PEZA/BOI accreditation, you can get an employer of record so you don’t need to register a local entity in the Philippines.

1. You’re eyeing the wrong location

First and foremost, PEZA incentives are location-dependent. To qualify, your business must be physically located within a PEZA-designated economic zone or IT park.

Special economic zones or “ecozones” are specially accredited to ensure high-quality infrastructure. They are often managed by private developers who have passed PEZA’s rigorous standards.

According to PEZA, ecozones may contain any or all of the following:

• Industrial Estate (IE) – A tract of land with provisions for basic infrastructure and utilities, with or without standard factory buildings and community facilities for the use of a community of industries.
• Export Processing Zone (EPZ) – A special form of industrial estate located physically and/or administratively outside the customs territory and mainly focused on export production.
• Free Trade Zone – An isolated, policed area adjacent to a port of entry (e.g. seaport, airport) where imported goods may be unloaded for immediate transhipment or stored, repacked, sorted, mixed, or otherwise manipulated.
• Tourist / Recreational Center – An area within the ecozone where tourist accommodation facilities such as hotels, apartelles, tourist inns, pension houses, resorts, sports, recreational facilities are present.

This ecozones list, updated as of June 30, 2024, shows several accredited locations throughout the Philippines. You’ll find IT centers, manufacturing parks, tourism areas, and more in cities from Metro Manila all the way to Davao City.

To know for sure if your company can qualify, check out PEZA’s economic zone locator.

2. Your business activity isn’t on the priority list

BOI’s Strategic Investment Priority Plan (SIPP) lists business activities deemed critical to national development. If your business doesn’t fall within these sectors, you won’t be eligible.

This comprehensive investment roadmap is reviewed every three years.

As of writing, BOI plans to release the 2025-2028 SIPP within the first half of 2025, once feedback from public consultations over the SIPP draft are incorporated.

The previous 2022-2025 SIPP focused on the sectors of renewable energy, manufacturing (especially semiconductors and electronics), agriculture, infrastructure, and export-oriented services.

3. Foreign ownership restrictions may apply to your line of business

Certain business activities in the Philippines are restricted or even prohibited to foreign entities under the Foreign Investments Negative List (FINL).

For example, mass media and retail businesses with paid-up capital under US$2.5 million are off-limits to foreign majority ownership.

For a comprehensive summary of the most recent 12^th Regular FINL, check out our previous blog post on FAQs About Business Registration in the Philippines.

If the nature of your business clashes with these restrictions, not only are PEZA/BOI benefits out of reach, but you may also face challenges registering your business in the Philippines altogether.

4. Your company isn’t exporting enough

PEZA offers a slew of perks to export-oriented businesses, but there is typically a key requirement where the application hits a snag — at least 70% of output must be exported.

Similarly, for BOI, export orientation also plays a key role. If you’re a foreign-owned company with more than 40% foreign equity, and want to take advantage of the BOI perks, you’ll need to export at least 70% as well.

However, if your mainly serving the domestic Philippine market, you won’t qualify for many of the incentives that benefit exporters.

5. You lack the required documentation or corporate structure

Both PEZA and BOI are stringent when it comes to qualification. An application to either government agency entails several requirements. Missing even one item or not adhering to their format could delay or derail your application.

For PEZA, general requirements include the following:

• PEZA Application Form
• Letter of Intent addressed to PEZA
• Company profile
• Board Resolution or Secretary’s Certificate
• SEC documentation (e.g. Certificate of Registration, Articles of Incorporation)
• Project feasibility study or business plan
• Audited Financial Statements or Statement of Capitalization
• Income Tax Return (for existing companies)
• List of equipment and raw materials
• Environmental Compliance Certificate
• Location clearance, lease contract, or land title
• Anti-Graft Certificate

For BOI, general requirements include the following:

• BOI Application Form 501
• Company profile
• Board Resolution or Secretary’s Certificate
• SEC documentation (e.g. Certificate of Registration, Articles of Incorporation)
• Project feasibility study or business plan
• Audited Financial Statements (existing companies)
• Income Tax Return (existing companies)
• Initial capitalization details with opening balance sheet (startups or new companies)
• Location clearance, lease contract, or land title
• Environmental Compliance Certificate
• Project layout or process workflow (manufacturing and services)
• Sworn Statement of Capitalization

Additional requirements may be requested depending on the proposed project and industry.

6. Your industry is saturated

In some cases, you may technically be qualified on paper but you could still face difficulties when applying for PEZA and BOI incentives. The reason?

Companies that are entering a very saturated industry (like the highly competitive business process outsourcing industry, retail, food and beverage) can experience getting de-prioritized or outright denied.

What can you do instead if you can’t qualify for PEZA/BOI registration?

Don’t fret if you’re not yet ready for PEZA and BOI incentives. Here are some alternative solutions you can consider.

1. Pursue other investment promotion agencies (IPA)

These are just a few examples of IPAs within the Philippines that you can potentially explore:

• CEZA (Cagayan Economic Zone Authority): Ideal for fintech, crypto, and offshore gaming firms. CEZA offers its own licensing and tax structures.
• SBMA (Subic Bay Metropolitan Authority):Good for logistics and manufacturing companies operating in the Subic Bay Freeport Zone.
• Authority of the Freeport Area of Bataan (AFAB): Manufacturing, logistics, and business process outsourcing operations in the Freeport Area of Bataan.
• TIEZA (Tourism Infrastructure and Enterprise Zone Authority): Tailored for tourism developments like resorts, hotels, and eco-parks.
• Philippine Guarantee Corporation (PHILGUARANTEE): Formerly the Philippine Export-Import Credit Agency, this agency offers credit guarantees to support trade and infrastructure projects across various sectors.

2. Operate as a regular domestic corporation

PEZA and BOI accreditations are nice-to-haves, not deal breakers. You can still legally set up shop without the incentives from those agencies.

While operating as a regular domestic or foreign-owned corporation means you pay regular corporate income tax (25%) and Value-Added-Tax, you’ll have more leeway in choosing where you operate and going after your target market.

What’s more, under the CREATE MORE Act, your company may qualify for reduced corporate income tax of 20%) and a slew of other perks.

3. Explore applicable tax treaties and bilateral agreements

Foreign companies can also secure protection from double taxation — as long as they’re registered in a country with an active tax treaty with the Philippines.

The Philippine government has more than 40 signed tax treaties with countries like the U.S., UK, Japan, and China.

If your company is duly registered in a country that has entered into a Double Taxation Agreement (or other similar tax treaty) with the Philippines, then you may be eligible for certain tax breaks.

4. Consider getting an Employer of Record (EOR) to test the waters

If doing business in the Philippines is a first-time endeavor, registering a local entity or company may prove cumbersome — especially if you’re unfamiliar with local business registration requirements.

Getting an EOR solves this problem. The EOR legally acts as the employer on paper and takes care of all the administrative duties (e.g., benefits, payroll tax returns).

But ultimately, you have full management control of employees hired through the EOR.

PEZA and BOI registration is a breeze with Loft

PEZA and BOI incentives are hard to pass up, but the registration process is rigorous.

With Loft, we’ll help you secure crucial tax breaks without the hassle. Plus, we can also take care of your local business registration.

Complete the form below to register your company fast and hassle-free.

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