Prior to the enactment of R.A. No. 11534, also known as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which took effect on 11 April 2021, different laws provided special tax regimes to enterprises registered with various Investment Promotions Agencies (IPAs), such as the Philippine Economic Zone Authority (PEZA), Subic Bay Metropolitan Authority (SBMA), and the Board of Investments (BOI). The incentives were intended to attract more investments in the Philippines.

 

Accordingly, CREATE introduced uniform incentives for Registered Business Enterprises (RBEs) engaged in export-oriented and priority domestic-oriented activities—the focus of which is on the activity and not on the entity.

 

To avail of the incentives especially given to BOI-registered entities, a business—provided that it is qualified under relevant laws—must, first and foremost, register with the Philippine BOI. This article will discuss certain entities qualified to register with the BOI and provide guidelines on how to register therein.

 

Who Are Qualified to Register with the BOI

 

For an applicant to qualify for BOI registration, the new applicant’s proposed business activity must be listed in the Strategic Investment Priorities Plan (SIPP) per Section 296 of the National Internal Revenue Code of 1997, as amended by the CREATE Act, which is currently grouped into three tiers. The tier would determine the extent of incentives to be extended to the RBEs, further taking into consideration the combination of both location and industry priorities per SIPP.

 

Incentives per the SIPP include income tax holidays (ITH), exemption from local taxes and fees, preferential 5 percent corporate income tax (CIT), enhanced deductions (EH), and the choice of tax regime. Typically, an incentive will have 4 – 7 years of ITH before transitioning to 5 – 10 years of either EH or CIT. Investors can elect whether to claim EH or CIT if engaged in export activities.

 

Moreover, in accordance with Memorandum Order No. 61, which approved the 2022 SIPP, Tier I retains the activities listed on the 2020 IPP such as environment or climate change-related projects, healthcare and disaster risk reduction management services, mass housing, charging/refueling stations for alternative energy vehicles, industrial waste treatment, and telecommunications.

 

Tier II includes activities that promote the country’s industrial value chains and are deemed critical in promoting green ecosystems.  Tier III includes activities projected to accelerate and transform the economy through the application of research and development, as well as activities involving the production of equipment, parts, and services that embed new technologies, and the commercialization of research and development output.

 

Overview of BOI Registration by a Corporation

 

Once qualified to be registered with the BOI, an enterprise must undergo the process of registration.

 

The BOI Guidebook provides for an extensive discussion on the registration requirements per BOI.

 

The Board of Investments

 

With regard to the process of registration with the BOI, the following details from the Guidebook are insightful:

 

The Philippine Board of Investments is an attached agency of Department of Trade and Industry (DTI) responsible for promoting investments in the Philippines. As the lead industry promotion agency (IPA) in the Philippines, BOI offers guidance to local and foreign investors in doing business in desirable areas of economic activities in the country.

 

List of incentives under Republic Act No. 11534 s. 2020, otherwise known as the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE):

 

For exporters’ activities:

Location/Industry Tiers	Tier I (no. of years)	Tier II (no. of years)	Tier III (no. of years)
National Capital Region (NCR)	4 ITH + 10 ED / SCIT	5 ITH + 10 ED / SCIT	6 ITH + 10 ED / SCIT
Metropolitan areas or areas contiguous and adjacent to NCR	5 ITH + 10 ED / SCIT	6 ITH + 10 ED / SCIT	7 ITH + 10 ED / SCIT
All other areas	6 ITH + 10 ED / SCIT	7 ITH + 10 ED / SCIT	8 ITH + 10 ED / SCIT

 

For domestic market activities:

Location/Industry Tiers	Tier I (no. of years)	Tier II (no. of years)	Tier III (no. of years)
National Capital Region (NCR)	4 ITH + 5 ED	5 ITH + 5 ED	6 ITH + 5 ED
Metropolitan areas or areas contiguous and adjacent to NCR	5 ITH + 5 ED	6 ITH + 5 ED	7 ITH + 5 ED
All other areas	6 ITH + 5 ED	7 ITH + 5 ED	8 ITH + 5 ED

ITH – Income Tax Holiday
ED – Enhanced Deductions
CIT – Special Corporate Income Tax

 

BOI Registration

 

Qualified business enterprises that will invest in priority areas/activities listed in the SIPP may avail themselves of the services provided by the BOI. The IPP, approved by the President, identifies the investment areas eligible for incentives under the CREATE Act and Omnibus Investments Code of 1987.

 

The following documentary requirements are enumerated under the Guidebook:

 

1. ) Accomplished, signed and duly notarized BOI Application Form, available at the Project Evaluation and Registration Divisions of each Industry Services;
2. ) Google Map, indicating the applicant’s existing project/s (if any) located near the proposed site. Sketches not acceptable;
3. ) Business Model - Schematic diagram/model of the activity being registered (clearly indicate how the proponent will earn revenues and make profit);
4. ) Manufacturing Process (indicate which equipment to be used for each process; (FOR MANUFACTURING PROJECTS);
5. ) Financial Projections with breakdown of Cost of Sales and Manufacturing Expenses (at least 5 years projection), (in Excel format); (NOT REQUIRED FOR MICRO PROJECTS);
6. ) Audited Financial Statements (for the last 3 years if applying for expansion and modernization; required for New if there is an existing similar project in another location);
7. ) SEC Registration with Articles of Incorporation and By-Laws, including amendments (if any); DTI Certificate of Registration (if applicable);
8. ) Latest SEC General Information Sheet (if applicable); if stockholders are corporations, copy of their latest SEC GIS;
9. ) Board Resolution (1) Authorizing officer to transact, execute and sign in behalf of the applicant enterprise; (2) that the firm has no action or proceeding against the project and the investment is pending in the Supreme Court, the Court of Appeals or any other tribunal or government agency [x x x]; and
10. ) Other requirements/endorsement that the specific sector of activity may require.

 

Also, the procedures for registration by Micro and Small Enterprises (with project costs of PHP 15 million and below), and by Regular Projects (with project costs exceeding PHP 15 million) are likewise enumerated in the Guidebook.

 

BOI Endorsements and Other Issuances

 

1. Securing BOI Endorsement to set up a Regional or Area Headquarters (RHQ)/Regional Operating Headquarters (ROHQ)

 

The documentary requirements are as follows:

 

1. ) Covering letter addressed to Director LANIE O. DORMIENDO, International Investments Promotion Service, Board of Investments requesting for endorsement to SEC;
2. ) Application form for Registration and License to establish ROHQ/RHQ in the Philippines (SEC system generated application form);
3. ) Duly accomplished Application Form for BOI Endorsement to SEC;
4. ) Certification from the Philippine Consulate/Embassy, or the Philippine Commercial Office, or from the equivalent office of the Philippine Department of Trade and Industry in the foreign firm’s home country that said foreign firm is an entity engaged in international trade with affiliates, subsidiaries or branch offices in the Asia-Pacific Region and other foreign markets; and
5. ) Duly authenticated Certification from the principal officer of the foreign entity to the effect that the said foreign entity has been authorized by its Board of Directors or governing body to establish its ROHQ / RHQ in the Philippines.

 

It should be noted that for qualified multinational companies with two or more affiliates or subsidiaries or branches in at least two countries, all documents must be submitted to BOI-International Investments Promotion Service, and in addition to the original documents, two sets of photocopies thereof must be submitted.

 

The Guidebook provides a detailed process flow in securing the endorsement which would likely take around three days to be processed, with a processing fee of PHP 4,545.00.

 

2. Issuance of Endorsement, i.e., Certificate of Good Standing

 

In case of an application for the issuance of Certificate of Good Standing for Bureau of Customs purposes, a letter request from the firm stating the purpose of the request is necessary. The processing period for such an application is about three days, without any fees.

 

3. Issuance of Certificate of Income Tax Holiday Entitlement

 

In case of an application for the issuance of a Certificate of Income Tax Holiday Entitlement for all BOI-registered enterprises under the Omnibus Investments Code of 1987, a request form must be properly accomplished and submitted. The processing period is about five working days, with a fee of around PHP 1,500.00.

 

4. Issuance of Certificate of Non-Local Availability

 

For firms covered by certain specific laws, per the BOI Guidebook, the following are the documentary requirements:

 

1. ) Letter request from the firm stating the purpose of request;
2. ) Pro-forma invoice of items to be imported;
3. ) Latest Audited Financial Statements; and
4. ) Sworn statement that the spare parts, machinery, and equipment that will be imported is for the exclusive use of the importing entity. 

 

The application process takes about ten (10) working days, with an estimated fee of PHP 1,500.00.

 

5. Issuance of Certificate of Qualification to Import Tax & Duty-free Spare Parts & Supplies as Provided under EO 226 (The Omnibus Investments Code of 1987)

 

All BOI-registered enterprises which are still entitled to the incentives must secure a Certificate of Qualification (CQ) to Import Tax & Duty-free Spare Parts & Supplies, and thus, must submit the following documentary requirements:

 

1. ) For renewal, copy of previous CQ issued;
2. ) Copy of license to operate a CBMW/Copy of BOC Certificate stating that the applicant has filed a renewal to operate a CBMW (for firms with expired CBMW license); and
3. ) Proof of inward remittance of foreign exchange earnings.

 

The processing period is about five working days, with PHP 1,500.00 fee.

 

Note that the registration process with the BOI varies depending on the nature of the enterprise itself.

 

In general, “the enterprise applicant must fill out the application form and must make sure that all documentary requirements in the checklist are complete. Once the Project Evaluation and Registration Division (PERD) formally accepts the application, the enterprise will then pay the filing fee and wait for the Notice of Board Action. If approved, the enterprise must submit the pre-registration requirements and pay the registration fee. Thereafter, the enterprise will receive the Certificate of Registration.”

 

Summary of Approximate Processing Time and Fees

 

Processing Time	Fees
A. Registration: -Micro and Small Enterprises – 11 days; or -Regular Projects – six weeks and one day	Registration Fee: -Micro Project – PHP 3,000 (plus 1/10 of 1% of project cost, but not less than PHP 3,000 and not to exceed PHP 15,000 for new and expansion projects); or -Existing Projects – PHP 3,000.   Filing Fee: PHP 1,520 –PHP 6,060
B. Endorsements and other issuances – three days	PHP 4,545
C. Certifications -Certificate of Good Standing – three working days -Certificate of ITH Entitlement – five days -Certificate of Non-Local Availability – 10 days -Certification of Registration under EO 226/ROHQ/RHQ – three to five working days -Certification of Qualification to Import Tax & Duty-free Spare Parts – three to five working days	N/A PHP 1,500   PHP 1,500     PHP 750 per Certification     PHP 1,500

 

 

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