According to the World Bank, the Philippines is one of the most dynamic economies in the East Asia and the Pacific region. With increasing urbanization, a growing middle-income class, and a large and young population, the Philippines’ economic dynamism is rooted in strong consumer demand supported by vibrant labor market and robust remittances. For these and many other reasons, The Philippines should be indeed in the list of your next business destinations.
The Philippines has a network of 19 ‘Investment Promotion Agencies’, or IPAs, that are tasked to formulate and develop strategies to position the country as among prime destinations for investments, each one having distinct functions and offering incentive packages. One of these IPAs, called Board of Investment, issues every two years an investment priorities plan as required under the Omnibus Investments Code of 1987; this is a list of eligible businesses that the Board of Investment has identified as preferred activities and would help sustain economic growth and drive infrastructure development. To encourage investors, the Board of Investment allows companies to apply for fiscal and non-fiscal incentives. Fiscal incentives refers to income tax holiday, duty exemption on imported capital equipment, spare parts and accessories, exemption from wharfage dues and export tax, duty, impost, and fees, tax exemption on breeding stocks and genetic materials, tax credits on imported raw materials, tax and duty-free importation of consigned equipment, additional deduction for labor expenses. Non-fiscal incentives refer to employment of Foreign Nationals, simplification of customs procedures for imported products, importation of consigned equipment and privilege to operate a bonded manufacturing/trading warehouse. To name some preferred activities from the latest investment priorities plan: all qualified manufacturing activities including agro-processing, commercial production of agricultural, fishery and forestry, energy, strategic services such as IC Design, industrial waste treatment, healthcare services including drug rehabilitation, infrastructure and logistics, exports activities and activities in support of exporters.
Besides the Omnibus Investments Code of 1987, the other major laws that provide incentives for certain categories of business are the Bases Conversion and Development Act of 1992, The Special Economic Zone Act of 1995, Tourism Act of 2009, Export Development Act of 1994 and other Special Economic Zones’ acts.
Any corporation established inside the free zone/eco-zones or engaged in the list of eligible activities specified on the Special Economic Zone Act of 1995, may apply for tax incentives from the Philippine economic zone authority. Eligible activities refer to export manufacturing, IT enterprise, medical tourism activity, agro industrial enterprise, logistic and warehousing services and any related business.
Incentives are also given to exporters that earns at least 50% of their revenue from the sale of their products or services abroad for foreign currency (Export Development Act of 1994) and business related to tourism (the Tourism Act of 2009).
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