Understanding Tax Incentives for PEZA, BOI, and Other Registered Enterprises

The Philippines continues to attract investors through fiscal incentives that support business growth and encourage innovation. The recent presentation, “Tax Incentives of Entities Registered with PEZA, BOI, and Other Investment Promotion Agencies,” by YRA Business Solutions Corp. provided a comprehensive guide to the various privileges available under the CREATE and CREATE MORE Acts, as well as related revenue issuances.

Core Tax Incentives

Under Section 295 of the National Internal Revenue Code, registered business enterprises (RBEs) may enjoy several tax incentives depending on registration type and project activity:

• Income Tax Holiday (ITH): Exemption from income tax for a specified number of years.

• Special Corporate Income Tax (SCIT): A 5% tax on gross income earned (GIE) in lieu of all national and local taxes.

• Enhanced Deductions (EDR): Additional deductions for depreciation, labor, training, R&D, domestic input, and power expenses.

• Customs Duty Exemption: For importation of equipment, raw materials, and accessories directly used in registered activities.

• VAT Exemption and Zero-Rating: On local purchases and imports directly attributable to registered projects.

These incentives foster competitiveness among both export and domestic enterprises while ensuring compliance with national tax regulations.

Key Updates under the CREATE MORE Act

As outlined in pages 15–28, Revenue Regulations (RR) No. 7-2025 and RR No. 9-2025 refined EDR and local tax rules. Notable updates include:

• Reduced corporate income tax to 20% for qualified RBEs, effective November 28, 2024.

• Carry-forward of excess income tax payments to the next taxable year.

• Expanded deductible expenses, including reinvestment allowances, R&D, and technical training.

• Local tax rate cap at 2% of gross income in lieu of all local fees and charges.

These adjustments simplify compliance while aligning Philippine tax incentives with global best practices.

Customs and VAT Benefits

The illustrations on pages 29–40 highlighted exemptions for imported capital goods, raw materials, and spare parts, provided these are directly attributable to registered projects.

RBEs must secure prior approval from their Investment Promotion Agency (IPA) and comply with documentation requirements.

Additionally, RMC No. 66-2025 clarified that VAT Zero-Rate Certificates from IPAs now serve as the primary proof for zero-rated transactions — eliminating the need for a separate sworn declaration from buyers.

Post-Incentive Taxation and Compliance

After the incentive period expires, RBEs are required to pay regular taxes under the Tax Code and other applicable laws (page 45).

Further, the Registered Business Enterprise Taxpayer Service (Section 295-A) was introduced within the BIR to assist enterprises in meeting reporting and documentation obligations.

To retain eligibility, RMC No. 28-2022 requires RBEs to secure a Certificate of Entitlement to Tax Incentives (CETI) before filing their Annual Income Tax Return (AITR).

Key Takeaway

The Philippine tax incentive system continues to evolve, with reforms designed to promote investment while enhancing transparency and efficiency. For enterprises registered under PEZA, BOI, or other IPAs, understanding and properly availing of these incentives is key to optimizing tax savings and maintaining compliance.

As highlighted in the presentation, tax incentives are not just financial advantages — they are strategic tools that fuel innovation, expansion, and long-term business growth.