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COMPARATIVE TAX INCENTIVES AVAILABLE TO BPO COMPANIES

REGISTERED WITH THE BOI AND THE PEZA


Particulars
Incentives in
general

BOI
The tax incentives
apply only to income
from the registered
activity/activities.
(no area specified)
Income not related to
the registered
activities shall be
subject to regular
internal revenue
taxes.

Income Tax Holiday

Special Income Tax

A BOI-registered BPO
company is generally
given a non-pioneer
status with an
income tax holiday
(ITH) of 4 years from
start of commercial
operations (SCO).

PEZA
The tax incentives
apply only in respect
of the registered
enterprises
operations within the
PEZA ECOZONE.
(area specified)
Income not related to
the registered
activities shall be
subject to regular
internal revenue
taxes.
A PEZA-registered
BPO company enjoys
the same ITH tax
incentive as a BOIregistered
outsourcing
company.
(same ITH 1st 4
years)

Under the 2011 IPP


Guidelines, a BPO
company may be
given a pioneer
status and enjoy an
ITH of 6 years from
SCO if it has a project
cost of the Philippine
peso equivalent of at
least US$5 million
(excluding cost of
land and building) to
be put during the 1st
year of operations.
(no such benefit but
with extension for
(no extension
another ? see below provided)
research)
The Omnibus
After the lapse of the
Investments Code
original or extended
(OIC) does not
ITH period, a PEZAprovide for a special
registered BPO

income tax on BOI


registered companies
after the lapse of the
ITH period.

Import Duties and


Taxes

Local Taxes, Fees and


Charges

However, in line with


the Philippine
governments policy
to encourage inward
investments, under a
current policy of the
BOI and the PEZA,
registrants under the
OIC may cancel their
BOI registration,
relocate to a PEZA
zone, and register
under PEZA Law after
the expiration of the
ITH period, in order
to avail themselves
of the special income
tax.
The exemption from
import duties and
taxes of BOIregistered companies
under the OIC has
expired. However, a
presidential issuance
was enacted to grant
BOI-registered
companies a special
rate of 0% for import
duties and taxes for
certain types of
importation and
under certain
conditions. (EO No.
528: Any
importation of capital
equipment, spare
parts and accessories
shall be subject to
0% duty.)
A BOI-registered BPO
company not located
in a special economic
zone is not exempt

company may avail


of a special tax of 5%
of its gross income,
which is paid in lieu
of all other national
and local taxes.
However, if the sales
of the PEZAregistered BPO
Company in the
Customs Territory
(i.e., Philippine
customers outside
the PEZA Ecozone)
exceed 30% of total
sales, its income
derived from such
excess shall be
subject to regular
income tax.
A PEZA-registered
BPO company is
entitled to tax-free
and duty-free
importation of capital
equipment, supplies
and materials that
are directly and
actually needed and
will be used
exclusively for the
registered
operations.

A PEZA-registered
BPO company is
exempt from local
fees, taxes and

VAT

from local fees, taxes


and charges from
local government
where its offices are
situated.
A BOI-registered BPO
company which
qualifies as an export
enterprise is entitled
to zero-rated VAT on
its sales by virtue of
its status as an
export enterprise.
A BOI-registered BPO
company is entitled
to VAT zero rating for
its purchases from
suppliers only if the
company meets
certain conditions.
These conditions
include the
requirement that the
company export
100% of its sales,
and that it be
certified as such by
the BOI.

Additional Deduction
of Labor/Training
Expense

Exemption from
Branch Profit
Remittance Tax

charges from the


local government
unit where its offices
are situated.
A PEZA-registered
BPO company enjoys
a preferential VAT
rate of 0% on its
purchases from VATregistered suppliers
from the Customs
Territory by virtue of
such registration.

The sale of goods,


property and services
by a VAT-exempt
supplier from the
Customs Territory to
a PEZA-registered
company shall be
exempt from VAT.
The sale of services
by a PEZA-registered
BPO company is
subject either to 0%
VAT if the company is
availing itself of the
ITH incentive (and is
engaged to export
sales) or to VAT
exemption if the
company is availing
of the 5% special
income tax.
A BOI-registered BPO Aside from the
company is entitled
additional deduction
to claim an additional for labor expense, a
deduction from
PEZA-registered BPO
taxable income
company is entitled
equivalent to 50% of to claim training
the wages of
expense as
additional skilled and deduction from
unskilled workers in
taxable income.
the direct labor force.
A BOI-registered BPO A PEZA-registered
company is not
BPO company that is
entitled to this
organized as a

exemption.

Philippine branch
office of a foreign
corporation is
exempt from the
15% branch profit
remittance tax on
profits realized from
registered activities
and earmarked for
remittance to the
head office abroad.