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Investing in the Philippines through the Board of Investments: A Quick Guide

Board of Investments

The Philippines is touted as one of the fastest-growing countries in Asia in the world1. In fact, in 2023, it had the highest economic growth rate among its neighbors in Southeast Asia2. Recently passed legislation further opened various sectors of its economy to foreign ownership3, thus, the Philippines is highly acclaimed as a prime investment destination in the coming years.

Foreign investors keen on investing in the Philippines are advised to seek assistance from one of the government’s Investment Promotion Agencies (“IPA/s”) who are tasked to promote and facilitate foreign investments in the country. One such IPA is the Bureau of Investments (“BOI”), an attached agency of the Department of Trade and Industry under the Office of the President.

The process of investing in the Philippines begins by deciding which corporate organizational structure an investor desires. This includes establishing a single proprietorship, partnership, corporation, branch office, representative office, regional headquarters, or regional operating headquarters.

Here are some key steps for foreign investors to invest in the Philippines and qualify for fiscal incentives:

  1. Determine the Eligibility: Foreign investors need to ensure that their proposed investment falls under the priority or strategic investment areas identified through the BOI’s Strategic Investment Priority Plan4 Some of these priority sectors include Clean Energy, Electric Vehicle Manufacturing, Information Technology, and Infrastructure among others.
  2. Comply with Foreign Ownership Restrictions: Certain industries in the Philippines have foreign ownership restrictions. Foreign investors are advised to consult with the latest Foreign Investment Negative List5 to check if their intended investment complies with ownership regulations.
  3. Register with IPAs such as the BOI: Foreign investors must then register their investment projects with the BOI to begin the process of availing fiscal incentives. The BOI provides assistance with the formation of the domestic business entity and its compliance with both national and local regulatory compliance.
  4. Apply for Financial Incentives through the Appropriate Agency: Depending on the amount of investment being brought to the Philippines, a foreign investor has two ways to apply for and avail of fiscal incentives6: If the total investment capital is One Billion Pesos and below, incentives may be granted by the IPA the investor registered with. If it is above the said amount, it is the Fiscal Incentives Review Board that shall review and grant the application for incentives. These incentives include: Income Tax Holidays, Special Corporate Income Tax rate, Enhanced Tax Deductions, Duty Exemption, and/or, Value-Added Tax Exemption and/or Zero-Rating for registered export enterprises.7
  5. Comply with Reportorial Requirements: Once the investment project is approved and operational, foreign investors must comply with reportorial requirements set by the BOI. This includes submitting annual performance reports and financial statements, among others.

It is vital for foreign investors to seek the services of a corporate lawyer who can navigate the complex requirements of the BOI in order to successfully invest in the Philippines and qualify for incentives to support their business growth and expansion.

Written by: Anthony Loreso Aguillo

  1.   Rajiv Biswas, Philippines amongst world’s fastest growing emerging markets, available at https://www.spglobal.com/marketintelligence/en/mi/research-analysis/philippines-amongst-worlds-fastest-growing-emerging-markets-mar23.html (accessed on 12 July 2024). ↩︎

  2.   Jon Canto, Frauke Renz & Vicah Villanueva, The Philippines Economy in 2024: Stronger for Longer? available at https://www.mckinsey.com/ph/our-insights/the-philippines-economy-in-2024-stronger-for-longer (accessed on 12 July 2024). ↩︎

  3.   Republic Act No. 11659 or the Amendments to the Public Service Act. ↩︎

  4.   Memorandum Order No. 61, Office of the President, Approving the 2022 Strategic Investment Priority Plan. ↩︎

  5.   Executive Order No. 175, s. 2022, Office of the President, Promulgating the Twelfth Foreign Investment Negative List. ↩︎

  6.   Republic Act No. 11534, the CREATE Act. ↩︎

  7.   Fiscal Incentives Review Board, What Incentives Are Available?, available at https://firb.gov.ph/incentives-available/ (accessed on 12 July 2024). ↩︎

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