Regulatory Framework & Tax Incentives


The Government of the Republic of the Philippines has implemented a liberal program of fiscal and non-fiscal incentives to attract foreign capital and technology that complement local resources. Under the Omnibus Investments Code of 1987 (Executive Order 226), investors may enjoy certain incentives when investments are made in preferred areas found in the current Investment Priorities Plan (IPP).

Issued by the Philippine Board on Investments (BOI) annually, the IPP is a list of priority investment areas eligible for tax incentives in consulation with related government agencies and the private sector. Even if the activity is not listed in the IPP, an enterprise may still be entitled to incentives as long as at least 50% of production is for export (in the case of Filipino-owned enterprises), or at least 70% of production is for export (if majority foreign-owned enterprises or those with more than 40% foreign equity). In certain instances as indicated in the IPP, the BOI may completely or partially limit the incentives available to export products.

Under Book I of the Omnibus Investments Code, BOI-registered enterprises are given incentives in the form of tax exemptions and concession, as follows:

  • Income tax holiday – exemption from corporate income tax for four years (non-pioneer projects) or six years (pioneer projects)
  • Duty-free importation of capital equipment
  • Additional deduction for labor expese equivalent to 50% of the wages of additional skilled and unskilled workforce
  • Tax and duty-free importation of breeding stocks and genetic materials
  • Tax credit on domestic breeding stocks and genetic materials
  • Simplified customs procedures for the importation of equipment, spare parts, raw materials and supplies / exports of processed products
  • Unrestricted use of consigned equipment
  • Employment of foreign nationals in supervisory, technical or advisory positions
  • Exemption from taxes and duties on imported spare parts


Important Local Regulations

Foreign nationals are not allowed to own land in the Philippines as the Constitution limits land ownership Filipino citizens or companies that are at least 60% owned Filipinos. Foreign investors can viably lease commercial lands in the Philippines for a maximum of 75 years under Republic Act 7652. Intellectual property is protected under Republic Act 8293.


Local Incentives

The Provincial Government of Isabela offers a sensible package of incentives to investors, as well as unique inducements to businessmen in unique circumstances. These include the free use of the real properties of the Provincial Government, exemption from payment of basic real property tax for the first five years, and assistance in labor recruitment and arbitration. Current locators have established their businesses in Isabela also because of the Provincial Government’s high absorptive capacity, assuring them of the readiness of the Isabeliños for the investment as well as of the sustainability of the business environment they have chosen.