Generally, under Book I of E.O. 226 or the Omnibus Investments Code of 1987, a qualified enterprise may enjoy certain benefits and incentives provided it invests in preferred areas of investments enumerated in the Investment Priorities Plan (IPP). The plan is issued annually by the BOI and contains the list of areas of investments eligible for government incentives.

Upon registration with BOI, a qualified enterprise is entitled to the following fiscal and non-fiscal incentives:

Fiscal Incentives

  • Income tax holiday;
  • Exemption from taxes and duties on imported spare parts;
  • Exemption from wharfage dues and export tax, duty, impost and fees;
  • Modified duty rate for capital equipment by virtue of E.O. 313 (Modified by E.O. 528);
  • Tax credits; and
  • Additional deductions from taxable income.

Non-fiscal Incentives

  • Employment of foreign nationals;
  • Simplification of customs procedures;
  • Importation of consigned equipment; and,
  • The privilege to operate a bonded manufacturing/trading warehouse subject to custom rules and regulations.

Renewable Energy Incentives

Renewable Energy resources include Geothermal, Hydropower, Biomass and Ocean, Solar and Wind. Projects utilizing these resources may enjoy applicable incentives or privileges over a number of years.

Developers of Renewable Energy facilities, including hybrid and cogeneration systems using both RE sources and conventional energy, for both power and non power applications, may enjoy the following incentives upon certification by the DOE under the Renewable Energy Bill (as approved by Bicameral in October 2008).

  • Income tax holiday for seven years;
  • Duty-free importation of RE machinery, equipment and materials including control and communication equipment;
  • Special realty tax rates on equipment and machinery not exceeding 1.5% of their original cost less accumulated normal depreciation or net book value;
  • Net operating loss during the first 3 years from the start of commercial operation which had not been previously deducted from gross income shall be carried over as deduction from gross income for the next 7 consecutive taxable years immediately following the year of such loss (NOLCO);
  • Corporate tax rate of 10% on its net taxable income after 7 years of ITH;
  • Accelerated depreciation of plant, machinery and equipment may be applied if the project fails to receive an ITH before full operation;
  • 0% Value-Added Tax rate on the sale of fuel or power generated. Zero rated VAT on purchases of local supply of goods, properties and services needed by RE developers in the development, construction and installation of its plant facility as well as the exploration and development of RE resources and its conversion into power;
  • Tax exemption from carbon credits;
  • Cash incentive of Renewable Energy developers for Missionary Electrification. A cash generation-based incentive per kilowatt hour equivalent to 50% of the universal charge for the power needed to service missionary areas chargeable against the universal charge for missionary electrification;
  • Tax credit on domestic capital equipment and services;
  • Exemption from universal charge;
  • Option to pay transmission and wheeling charges of on a per kilowatt-hour basis at a cost equivalent to the average per kilowatt-hour rate of all other electricity transmitted through the grid.

Manufacturers, fabricators and suppliers of locally produced RE equipment and components duly recognized and accredited by the DOE may avail of the following incentives under section 21 of the Renewable Energy Bill (as approved by Bicameral in October 2008).

  • Tax and duty free importation of components, parts and materials necessary for the manufacture and/or fabrication of RE Equipment and components made after obtaining DOE approval for such importation;
  • Tax credit on domestic capital components, parts and materials purchase made from DOE-accredited local manufacturers;
  • Income tax holiday for 7 years from the date of recognition/accreditation;
  • Zero-rated value added tax on transactions with local suppliers of goods, properties and services.

Incentives for farmers certified by DOE that are engaged in the plantation of biomass resources such as, but not limited to jatropha, coconut and sugarcane:

  • Duty-free importation;
  • Exemption from Value Added Tax on all types of agricultural inputs, equipment and machinery and spare parts.

Tax rebate for the purchase of RE Components

Tax rebate for all or part of the tax paid for the purchase of RE equipment for residential, industrial or community as prescribed by DOF.