Registration of Enterprises:
THE OMNIBUS INVESTMENTS CODE OF 1987
(Executive Order No. 226)
- Integrates the basic laws on investments,
BOARD OF INVESTMENTS
clarifying and harmonizing their provisions to
encourage and guide domestic and foreign
• The Board shall be responsible for the
investors.
regulation and promotion of investments
in the Philippines as well as the
implementation of the provisions under
this Code.
• composed of seven (7) governors:
the Secretary of DTI,
three (3) Undersecretaries of DTI
to be chosen by the President,
and
three (3) representatives from
other government agencies and
the private sector.
Qualifications of Governors:
o at least thirty (30) years old
o of good moral character &
o of recognized competence in
different fields
BOOK I
INVESTMENTS WITH INCENTIVES
Who can qualify for incentives under EO 226?
Persons or entities that engage in the priority
areas of investment under the Investment
Priorities Plan may avail of the incentives
provided under the Code upon registration with
the Board of Investments.
Qualifications:
1. If the applicant for incentives is a natural person or individual, he must be a citizen of the Philippines.
If the applicant is a partnership or any other association, it must be organized under Philippine laws and
at least sixty percent (60%) of its capital must be owned and held by Philippine nationals; or in case of a
corporation or a cooperative, it is organized under Philippine laws and that at least sixty per cent (60%)
of the capital stock outstanding and entitled to vote is owned and held by Philippine nationals and at
least sixty per cent (60%) of the members of the Board of Directors are citizens of the Philippines.
*If it does not possess the required degree of ownership, the following must be established:
proposes to engage in a pioneer project whose available measured capacity cannot
be readily and adequately filled by Philippine nationals; or, is exporting at least
seventy per cent (70%) of its total production
obligates itself to attain the Philippine Nationality within thirty (30) years from the
date of registration (a registered enterprise which exports one hundred percent
(100%) of its total production need not comply with this requirement)
that the pioneer it will engage in is not reserved by the Constitution or other laws of
the Philippines for Philippine citizens and corporations only
(2) The enterprise applicant is engaged or proposing to engage in either:
- a preferred project listed or authorized in the current Investment Priorities Plan within a
reasonable time to be fixed by the Board
*if preferred project not listed- at least fifty percent (50%) of its total production is for export or it
is an existing producer which will export part of production;
- the sale abroad of export products bought by it from one or more export producers;
- in rendering technical, professional or other services or in exporting television and motion pictures
and musical recordings made or produced in the Philippines directly or through a registered trader.
(3) The applicant is capable of operating on a sound and efficient basis; and
(4) To install an adequate accounting system or to establish a separate corporation for each preferred
project undertaken
The following incentives are available to a BOI-registered enterprise:
1. Tax Exemptions
a. Income Tax Holiday (ITH)
o New projects with a pioneer status for six(6) years;
o New projects with a non-pioneer status for (4) years;
o Expansion projects for three (3) years, limited to incremental
sales revenue/volume as a general rule;
o New or expansion projects in less developed areas ("LDAs") 3 for
six (6) years, regardless of status; and,
o Modernization projects for three (3) years, limited to incremental
sales revenue/volume, as a general rule.
b. A registered enterprise with a bonded manufacturing warehouse shall
be exempt from customs duties and national internal revenue taxes on its
importation of required supplies/spare parts for consigned equipment or
those imported with incentives.
c. Exemption from wharfage dues and export tax, duty, impost and fees
for exports of non-traditional export products.
d. For agricultural producers, exemption from the payment of all taxes
and duties on their importation of breeding stocks and genetic materials.
2. Tax Credits
a. For agricultural producers, tax credit equivalent to one hundred
percent (100%) of the value of national internal revenue taxes and
customs duties on domestic breeding stocks and genetic materials.
b. Tax credit equivalent to the national internal revenue taxes and
duties paid on raw materials, supplies and semi-manufacture of export
products and forming part thereof.
3. Additional Deductions form Taxable Income
a. 5-years additional deduction for labor expense,
equivalent of fifty percent (50%) of the wages of
additional skilled and unskilled workers in the direct
labor force. This incentive shall be granted only if the
enterprise meets a prescribed capital to labor ratio and
shall not be availed simultaneously with ITH.
b. Registered enterprises locating in LDAs or in areas
deficient in infrastructure, public utilities and other
facilities may deduct from taxable income an amount
equivalent to the expenses incurred in the development
of necessary and major infrastructure works. This
privilege is not granted to mining and forestry-related
projects.
4. Non-fiscal Incentives
a. Employment of foreign nationals in supervisory,
technical or advisory positions for five (5) years form
date of registration. The position of president, general
manager and treasurer of foreign-owned registered
enterprises or their equivalent shall however not be
subject to the foregoing limitations.
b. Simplification of customs producers for the
importation of equipment, spare parts, raw materials
and supplies and export of processed products.
c. Importation of consigned equipment for a period of 10
years from date of registration, subject to posting of a
re-export bond.