Fiscal Incentives

Fiscal incentives includes the following:

  • Income Tax Holiday
  • Exemption From Taxes And Duties On Imported Spare Parts
  • Exemption From Wharfage Dues And Export Tax, Duty, Impost And Fees
  • Tax Exemption On BreedingStocks And Genetic Materials
  • Tax Credits
  • Additional Deductions from Taxable Income.
  1. Income Tax Holiday (ITH)
    1. BOI-registered enterprise shall be exempt from the payment of income taxes reckoned from the scheduled start of commercial operations, as follows:
      1. New projects with a pioneer status for six (6) years;
      2. New projects with a non-pioneer status for four (4) years;
      3. Expansion projects for three (3) years. As a general rule, exemption is limited to incremental sales revenue/volume;
      4. New or expansion projects in less developed areas (LDAs) for six (6) years, regardless of status;
      5. Modernization projects for three (3) years. As a general rule, exemption is limited to incremental sales revenue/volume.
         
    2. The ITH is limited in the following cases:
      1. Export traders may be entitled to the ITH only on their income derived from the following:
        • Export of new products, i.e. those which have not been exported in excess of US$100,000 in any of the two (2) years preceding the filing of application for registration, or
        • Export to new markets, i.e., to a country where there has been no recorded import of a specific export product in any of the two (2) years preceding the filing of the application for registration.
      2. Mining Activities
        • The exploration and development of mineral resources are not entitled to an ITH;
        • Mining and/or quarrying without mineral processing is not entitled to an ITH;
        • Mining and processing of aggregates is not entitles to ITH.
           
    3. New registered pioneer and non-pioneer enterprises and those located in LDAs may avail themselves of a bonus year in each of the following cases:
      1. the indigenous raw materials used in the manufacture of the registered product must at least be fifty percent (50%) of the total cost of raw materials for the preceding years prior to the extension unless the Board prescribes a higher percentage; or
      2. the ratio of total imported and domestic capital equipment to the number of workers for the project does not exceed US$10,000 to one (1) worker; or
      3. the net foreign exchange savings or earnings amount to at least US$500,000 annually during the first three (3) years of operation. In no case shall the registered pioneer firm avail of the ITH for a period exceeding eight (8) years.
  1. Exemption From Taxes And Duties On Imported Spare Parts
    A registered enterprise with a bonded manufacturing warehouse shall be exempt from customs duties and national internal revenue taxes on its importation of required supplies/spare parts for consigned equipment or those imported with incentives.
     
  2. Exemption From Wharfage Dues And Export Tax, Duty, Impost And Fees
    All enterprises registered under the IPP will be given a ten (10) year period from the date of registration to avail of the exemption from wharfage dues and any export tax, impost and fees on its non-traditional export products.
     
  3. Tax Exemption On BreedingStocks And Genetic Materials,
    Agricultural producers will be exempted from the payment of all taxes and duties on their importation of breeding stocks and genetic materials within ten (10) years from the date of registration or commercial operation.
     
  4. Tax Credits
    1. Tax credit on tax and duty portion of domestic breeding stocks and genetic materials. A tax credit equivalent to one hundred percent (100%) of the value of national internal revenue taxes and customs duties on local breeding stocks within ten (10) years from date of registration or commercial operation for agricultural producers.
       
    2. Tax credit on raw materials and supplies A tax credit equivalent to the national internal revenue taxes and duties paid on raw materials, supplies and semi-manufacture of export products and forming part thereof shall be granted to a registered enterprise.
       
  5. Additional Deductions from Taxable Income.
    1. Additional deduction for labor expense (ADLE) For the first five (5) years from registration, a registered enterprise shall be allowed an additional deduction from taxable income equivalent to fifty percent (50%) of the wages of additional skilled and unskilled workers in the direct labor force. The incentive shall be granted only if the enterprise meets a prescribed capital to labor ratio and shall not be availed simultaneously with ITH. This additional deduction shall be doubled if the activity is located in an LDA.
       
    2. Additional deduction for necessary and major infrastructure works. Registered enterprises locating in LDAs or in areas deficient in infrastructure, public utilities and other facilities may deduct from taxable income an amount equivalent to the expenses incurred in the development of necessary and major infrastructure works. The privilege, however, is not granted to mining and forestry-related projects as they would naturally be located in certain areas to be near their sources of raw materials.