BOI Incentive Application in the Philippines: Procedure and Timelines

Applying for BOI incentives in the Philippines means seeking registration with the Board of Investments (BOI) as a registered enterprise under the Investment Incentives Act (Republic Act No. 5186). The BOI processes and approves applications for registration, imposes terms and conditions, and issues the certificate of registration once the necessary fees — which by law shall not exceed two hundred pesos — are paid. Registration is not automatic: the enterprise must be a corporation organized under Philippine law, engaged in a preferred area of investment, and meeting the nationality requirements under the law.

Who may register with the BOI

Under Section 3 of the Investment Incentives Act, a registered enterprise is a corporation that is:

• incorporated, organized, and existing under Philippine laws;
• at least sixty per cent of the capital stock outstanding and entitled to vote owned and held by Philippine Nationals, with at least sixty per cent of the members of the Board of Directors being citizens of the Philippines (except as provided in Section 19 of the Act);
• engaged in a preferred area of investment; and
• duly registered with the BOI.

The law excludes certain businesses from registration, including commercial banks, savings and mortgage banks, rural banks, savings and loan associations, development banks, trust companies, investment banks, finance companies, brokers and dealers in securities, consumers cooperatives, and credit unions — essentially organizations whose principal purpose or income source is receiving deposits, lending or borrowing money, or dealing in securities. Businesses whose exclusive or principal purpose is to provide services, or to buy goods and merchandise and resell them in substantially the same form, are likewise excluded.

Preferred and pioneer areas of investment

The BOI declares preferred areas of investment in accordance with Section 18 of the Act. These are compiled in the Investments Priorities Plan, prepared by the BOI and approved by the President upon recommendation of the National Economic Council. The plan identifies existing and prospective demand, existing production capacities, the gaps between them, the additional capacities needed, and the regions where these can be located.

A pioneer enterprise is a registered enterprise engaged in the manufacture, processing, or production — not merely assembly or packaging — of goods, products, commodities, or raw materials not yet produced in the Philippines on a commercial scale, or one that uses a design, formula, scheme, method, process, or system of production that is new and untried in the Philippines. The final product must involve substantial use and processing of domestic raw materials, whenever available.

The application process

The BOI's power to process and approve applications is set out in Section 16(c) of the Act. In practice, the transactional path runs as follows:

1. Confirm eligibility. Verify that the corporation meets the ownership and board-composition requirements, and that the proposed activity falls within a preferred area of investment under the current Investments Priorities Plan.
2. Prepare the registration application. The application covers the project, its capital structure, and the incentives sought.
3. File with the BOI. The BOI processes and approves applications, imposing such terms and conditions as it deems necessary to promote the objectives of the Act.
4. Pay the registration fees. The law caps these fees at two hundred pesos.
5. Receive the certificate of registration. The BOI issues the certificate upon payment of the necessary fees.

The Act also requires the BOI to promulgate rules and regulations necessary to implement it. These rules take effect thirty days after publication in two newspapers of general circulation in the Philippines.

Incentives available to registered enterprises

A registered enterprise engaged in a preferred area of investment may be granted incentives under Section 7 of the Act, including:

• Deduction of organization and pre-operating expenses over a period of not more than ten years beginning with the month operations start;
• Accelerated depreciation of fixed assets, at the option of the taxpayer and following BIR procedure;
• Net operating loss carry-over, allowing a loss incurred in any of the first ten years of operations to be carried over as a deduction for the six years immediately following the year of loss;
• Tax exemption on imported capital equipment, within seven years from registration, subject to conditions that include prior BOI approval before importation; and
• Tax credit on domestic capital equipment, equivalent to one hundred per cent of the compensating tax and customs duties that would have been paid had the items been imported, with a further fifty per cent credit to the domestic manufacturer.

Pioneer enterprises may enjoy additional incentives under Section 8, and registered enterprises may avail of special export incentives under Section 9 — but only after applying with the BOI, which approves the application upon proof of the required conditions, including a genuine intent to create a market abroad and an adequate accounting system segregating export from domestic operations.

Frequently asked questions

How do I apply for BOI incentives in the Philippines? File a registration application with the Board of Investments. The BOI processes and approves applications and issues the certificate of registration upon payment of the necessary fees, which by law shall not exceed two hundred pesos.

What is a registered enterprise under the Investment Incentives Act? It is a Philippine corporation, at least sixty per cent of whose voting capital stock is owned by Philippine Nationals, with at least sixty per cent Filipino directors, engaged in a preferred area of investment and duly registered with the BOI.

How long does BOI registration take? The Investment Incentives Act does not fix a specific processing period for registration applications. Timelines depend on the completeness of the application and the BOI's evaluation.

Practical takeaways

• Registration requires both corporate eligibility and activity within a preferred area of investment.
• The sixty per cent Filipino ownership and board-composition thresholds are mandatory for registered enterprises.
• BOI rules and regulations take effect thirty days after publication in two newspapers of general circulation.
• Several incentives carry conditions and deadlines — such as prior BOI approval before importing capital equipment.
• The registration fee is capped by law at two hundred pesos.

Primary sources

The rules discussed above are drawn from the following primary sources, as published in the Official Gazette and the national statute book.

• REPUBLIC ACT NO. 5186 - AN ACT PRESCRIBING INCENTIVES AND GUARANTEES TO INVESTMENTS IN THE PHILIPPINES, CREATING A BOARD OF INVESTMENTS, APPROPRIATING THE NECESSARY FUNDS THEREFOR AND FOR OTHER PURPOSES.

• REPUBLIC ACT NO. 12066 - AN ACT AMENDING SECTIONS 27, 28, 32, 34, 57, 106, 108, 109, 112, 135, 237-A, 269, 292, 293, 294, 295, 296, 297, 300, 301, 308, 309, 310, AND 311, AND ADDING NEW SECTIONS 135-A, 295-A, 296-A, AND 297-A OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.