The BOI, under the Omnibus Investments Code (or Executive order 226), encourages investments through tax exemption and other benefits in preferred areas of economic activity specified by the BOI in the Investment Priorities Plan (IPP). The IPP, formulated annually by the BOI, lists the priority activities for investments. It contains a listing of specific activities that can qualify for incentives under Book 1 of the Code. Foreign companies setting up outsourcing operations in the Philippines is recommended to register with the BOI.
The BOI provides tax breaks and other incentives to registered businesses that meet either one of the eligibility requirements:
- A business that is more than 40% foreign-owned, or 100% foreign owned enterprises, that engage in projects classified in the IPP as pioneer. The company must be engaged in activities identified as investment priorities, or those which promote the general economic development of the Philippines.
- Business that exports at least 70% of their total production or undertake projects in less-developed areas of the country as identified by the BOI.
These enterprises are obliged to attain 60% Filipino ownership within 30 years from registration unless they export or will be exporting 100% of their production. For enterprises engaged in non-pioneer projects, foreign ownership is limited 40%, unless the enterprise will export more than 70% of its annual production.
Tax incentives for an eligible BOI registered company include:
- 3-8 year income tax holidays (4 years for new projects without pioneer status and 6 years for projects with pioneer status)
- Exemption from Taxes and Duties on Imported Spare Parts
- Exemption from Wharfage Dues and Export Tax, Duty, Impost, and Fees
- Tax Exemption on Breeding Stocks and Genetic Materials
- Tax Credits
- Additional Deductions from Taxable Income
Application Process for BOI:
- Submission of a notarized application indicating the outline of projects, how the activity relates to those listed in the Investment Priorities Plan, the production capacity geared to export, the capital structure of the enterprise, and the nationality of its investors.
- Submission of a feasibility report, containing five-year projected financial statements
For more information, you can visit the official BOI website (http://www.boi.gov.ph/).