Tax Incentives for Corporations Philippines: A 2025 Guide

 "The Philippines gave away an estimated ₱1.12 trillion in tax incentives and exemptions to a select group of 3,150 companies from 2015 to 2017." – Department of Finance

Tax incentives for corporations Philippines remain a cornerstone of the country's strategy to attract investment, boost competitiveness, and drive economic growth. Whether you’re a multinational eyeing expansion or a local enterprise seeking to scale, understanding the evolving landscape of tax incentives for corporations Philippines is critical for making informed, strategic decisions.


Why Tax Incentives Matter

Tax incentives for corporations Philippines are not just financial perks-they are policy tools designed to stimulate investment in priority sectors, encourage job creation, and foster innovation. With Southeast Asia’s investment climate growing more competitive, these incentives are more important than ever for companies evaluating where to deploy capital7810.


Key Types of Tax Incentives for Corporations Philippines

Income Tax Holiday (ITH)

The Income Tax Holiday is a flagship incentive, granting full or partial exemption from corporate income tax for a set period-typically 4 to 6 years, with possible extensions for businesses in less-developed areas or priority sectors157. This incentive is especially attractive for manufacturing, agribusiness, and export-oriented enterprises registered with agencies like the Board of Investments (BOI) or the Philippine Economic Zone Authority (PEZA).


Special Corporate Income Tax (SCIT)

Corporations operating within special economic zones, such as those accredited by PEZA, can opt for the Special Corporate Income Tax-a reduced rate of 5% on gross income in lieu of all other national and local taxes, usually for up to 10 years157. This provides a predictable, lower tax burden and is a major draw for export-focused businesses.


Enhanced Deductions Regime (EDR)

The CREATE and CREATE MORE Acts have introduced and expanded the Enhanced Deductions Regime, allowing companies to claim additional deductions for key expenses:

  • Up to 150% of direct labor expenses

  • Up to 200% of training costs for Filipino workers

  • Deductions for R&D, power, and domestic input costs911

These deductions are performance-based, rewarding companies that invest in people, innovation, and local supply chains.


VAT and Duty Exemptions

Registered businesses may enjoy value-added tax (VAT) zero-rating or exemptions on importation and local purchases directly related to their registered activities. Duty exemptions on capital equipment, raw materials, and spare parts are also available, significantly reducing operational costs.


Tax Credits

Corporations can claim tax credits on imported raw materials and certain local purchases, further lowering their effective tax rates.


Recent Reforms: CREATE and CREATE MORE Acts

Lower Corporate Income Tax Rates

The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, passed in 2021, slashed the regular corporate income tax rate from 30% to 25% for large firms and to 20% for small and medium enterprises. The newly signed CREATE MORE Act (RA 12066) introduces a 20% CIT rate for Registered Business Enterprises (RBEs) under the Enhanced Deductions Regime, making the Philippines more competitive regionally.


Broader Eligibility and Transparency

The CREATE MORE Act expands eligibility for tax incentives to a wider range of registered business enterprises, both local and foreign, under a more transparent, performance-based system. The Fiscal Incentives Review Board (FIRB) now oversees approvals for large-scale or high-value investments, ensuring incentives are targeted and aligned with national priorities.


How to Qualify for Tax Incentives for Corporations Philippines

Registration with Investment Promotion Agencies

To access tax incentives for corporations Philippines, companies must register with the relevant Investment Promotion Agency (IPA), such as BOI, PEZA, or regional boards. The application process involves submitting a business plan aligned with the government’s Strategic Investment Priority Plan (SIPP).


Compliance and Reporting

Incentives are time-bound and performance-based. Companies must comply with reporting requirements and demonstrate that they meet job creation, investment, and innovation targets to retain their benefits.


Actionable Steps for Decision-Makers

  • Assess Eligibility: Review your business activities against the SIPP and IPA guidelines.

  • Choose the Right Incentive: Compare the benefits of ITH, SCIT, and EDR based on your sector, location, and growth plans.

  • Prepare Documentation: Gather all necessary financial and operational documents for IPA registration.

  • Consult Experts: Engage with local tax professionals to navigate the application and compliance process.

  • Monitor Compliance: Establish robust internal controls to ensure ongoing eligibility and maximize your incentive package.


Conclusion

Tax incentives for corporations Philippines are more than just fiscal relief-they are strategic levers for growth, innovation, and global competitiveness. With recent reforms making incentives more accessible and targeted, now is the time for businesses to explore these opportunities and position themselves for success.

Ready to dive deeper? Learn more about tax incentives for corporations Philippines and how your business can benefit from the latest reforms.

Stay ahead. Stay compliant. And let the Philippines’ dynamic tax incentives for corporations Philippines work for you!

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