Facts checked as of 2 Oct 2026. Rules for the work-from-home window and the Strategic Investment Priority Plan (SIPP) have changed this year, so confirm current terms with PEZA before you commit.
PEZA is the Philippine Economic Zone Authority. It registers companies that operate inside special economic zones, IT parks and ecozone centers, and it grants them tax incentives in return. Since 2024 those incentives are governed by the CREATE MORE Act, Republic Act No. 12066. This guide lists what is on offer, how long it lasts, and what it takes to qualify.
1. What CREATE MORE changed
The Official Gazette records RA 12066 as signed on 8 November 2024, and it took effect on 28 November 2024. It amends the 2021 CREATE Act (RA 11534).
Four changes matter most for locators, which is PEZA's word for companies registered in its zones:
For the government's own account, see the DOF summary and the FIRB's CREATE MORE page.
2. The income tax incentives
PEZA offers three main income tax packages. Export enterprises can use all three. Domestic market enterprises are limited to the Enhanced Deductions Regime.
Income Tax Holiday (ITH). This is a full exemption from income tax on your registered activity. It runs four to seven years, depending on location and industry priority.
Special Corporate Income Tax (SCIT). This is a flat 5% on gross income earned. Of that, 3% goes to the national government and 2% to the host local government. It replaces all national and local taxes, which means no separate local business tax.
Enhanced Deductions Regime (EDR). You pay 20% on taxable income, but you can deduct more than your actual costs in several categories. The extra deductions are 100% for power, research and development, and training, and 50% for domestic inputs, labor and trade exhibitions. In plain terms, a PHP 10 million power bill can be deducted as PHP 20 million. An additional 50% deduction for trade fairs and tourism reinvestment runs until 2034. Net operating losses can also be carried forward from the last year of the ITH period instead of the year of loss.
CREATE MORE raised the extra deduction on power expenses from 50% to 100%. The change matters most to companies with high electricity use, such as manufacturers and data operations. Office-based firms with small power bills will see a smaller benefit.
3. How long the incentives last
Duration depends on who approves the project and which SIPP tier the activity falls under. The combined SCIT and EDR period, once capped at 10 years, now reaches 17 years for agency-approved projects and 27 years for FIRB-approved ones.
| Approval level | ITH first, then SCIT or EDR | Or SCIT/EDR from day one |
|---|---|---|
| PEZA-approved (up to PHP 15 billion) | 4 to 7 years ITH, then 10 years | 14 to 17 years |
| FIRB-approved (above PHP 15 billion) | 4 to 7 years ITH, then 20 years | 24 to 27 years |
Source: PwC Tax Alert 4 (2025), the PEZA fiscal incentives page and DV Philippines.
The ITH length depends on the tier and the location. In Metro Manila it is 4, 5 or 6 years for Tiers I, II and III. In areas next to the capital it is 5, 6 or 7 years. Everywhere else it is 6, 7 or 7 years. Check the current table, because the 2026 SIPP keeps the three tiers.
The tiers, under the 2026 SIPP:
For very large national projects, the President can grant up to 40 years of income tax incentives. This requires at least PHP 50 billion in capital or 10,000 local jobs within three years.
4. VAT, duties and local taxes
VAT zero-rating. Local purchases by export enterprises are zero-rated for VAT when they are directly attributable to the registered activity. The covered items include janitorial, security, financial, consultancy, marketing and promotion services, plus administrative support such as HR, legal and accounting. That helps a company that would otherwise pay VAT on its office support services and wait for a refund.
The 70% rule. An export enterprise must export at least 70% of its output. One that falls short loses VAT zero-rating on local purchases the following year.
Duties. Duty and VAT incentives now run for the whole registration period.
Local taxes. Local governments may charge an optional registered business enterprise local tax of up to 2% of gross income during the ITH or EDR period, in place of other local taxes, fees and charges. Companies on the 5% SCIT pay no separate local tax.
Certificate of entitlement. Locators claiming income tax incentives must attach a Certificate of Entitlement to Tax Incentives to their annual income tax return. BIR Revenue Memorandum Circular No. 42-2026 confirms this is still mandatory. See also PwC Tax Alert 22.
5. Work-from-home rules
CREATE MORE lets PEZA locators run a telecommuting program covering up to 50% of the workforce, and this is no longer limited to IT-BPM. The 50% counts employees engaged in the registered activity, not every person on the payroll.
The penalty for going over is regular corporate income tax on the excess only, not loss of the whole incentive.
There is also a temporary window. FIRB Resolution No. 005-2026 lets registered enterprises place up to 90% of their registered workforce on remote work. The investment promotion agency may set a lower cap, but not below 50%. Companies must keep their export revenues and may not cut headcount. It applies from 24 March 2026 for one year, unless lifted or extended. Check PEZA's own cap for your zone before you plan headcount around 90%.
Firms that want fully remote teams have another route. Enterprises registered with the Board of Investments are not tied to a zone and can still work 100% remotely. BOI has its own eligibility rules, so compare both agencies before choosing.
6. How to qualify and register
You need three things. The first is a company registered with the SEC. The second is a physical location inside a PEZA zone, IT park or ecozone center. PEZA's list of eligible activities includes export manufacturing, IT-BPM and tourism. The third, for export status, is the 70% export threshold above.
PEZA registration follows seven steps, according to practitioner guides from Kittelson & Carpo and Emerhub:
PEZA's citizen charter aims to process complete applications within 20 working days. Fees and documents change, so confirm them with PEZA before filing.
Choosing a building
Your zone and building decide which incentives you can claim, so the office search and the tax plan should happen together. FlySpaces compares offices in PEZA-accredited buildings across operators and can arrange viewings. We are not tax advisers, so have your accountant confirm which regime fits your numbers.