--- title: "PEZA vs BOI: Which Registration Fits Your Business Model?" description: CREATE MORE gave PEZA and BOI the same tax menu. Compare export ratio, location, work-from-home rules and 5% SCIT vs 20% EDR to pick the right fit. image: https://blog.flyspaces.com/hubfs/flyspaces-landing-images/makati-meeting-pods.jpg --- [![spacesasia-logo](https://blog.flyspaces.com/hs-fs/hubfs/SpacesAsia%20-%20June%202019/spacesasia-logo.png?width=260&name=spacesasia-logo.png "spacesasia-logo")](https://blog.flyspaces.com/) - [Home](https://flyspaces.com/) - Navigate - [Flexible Workspaces](https://blog.flyspaces.com/tag/flexible-workspaces#blog-nav) - [News and Events](https://blog.flyspaces.com/tag/news-and-events#blog-nav) - [Industry Insights](https://blog.flyspaces.com/tag/industry-insights#blog-nav) - [City Guide](https://blog.flyspaces.com/tag/city-guide#blog-nav) - [Case Studies](https://blog.flyspaces.com/tag/case-studies#blog-nav) - Connect - [Contact Us](https://flyspaces.com/contact-us) - [Subscribe](https://flyspaces.us14.list-manage.com/subscribe/post?u=0b15b0bb7a66ae626f3388eb9&id=f72d186210) - Share : 7 July 2026 [Listerlynn Joy Garingo - De La Serna](https://blog.flyspaces.com/author/joy-garingo-delaserna) # PEZA vs BOI: Which Registration Fits Your Business Model? Until 2021, most exporters could settle this question quickly. PEZA's flat 5% tax on gross income earned was the headline advantage, and it pulled export manufacturers and IT-BPM firms into ecozones. Two laws changed that. The CREATE Act (Republic Act 11534) put every investment promotion agency (IPA) on one incentive menu. The CREATE MORE Act (Republic Act 12066) then widened the menu. [CREATE MORE was signed on 11 November 2024 and took effect on 28 November 2024](https://www.pwc.com/ph/en/tax/tax-alerts/2024/pwcph-tax-alert-44-create-more.pdf). Its [implementing rules were signed on 17 February 2025 and took effect on 20 February 2025](https://alasoplascpas.com/publications/tax-rules-and-news/tax-rules-and-news-010-2025/). This guide is for foreign investors, finance leads and tax counsel choosing where to register. It covers what PEZA and BOI now share, what still differs, and how to test your own case. Figures were checked against official and professional sources updated on 2 October 2026. It is general information, not legal or tax advice, so have Philippine counsel confirm the details before you file. ### What PEZA and BOI now share Both agencies register businesses for incentives. A registered business is called a registered business enterprise (RBE). An RBE that sells mainly abroad is a registered export enterprise (REE). One that sells mainly in the Philippines is a domestic market enterprise (DME). Either way, your activity has to appear in the Strategic Investment Priority Plan (SIPP), the government list of activities that can receive incentives. [The President approved the 2026 SIPP through Memorandum Order No. 47](https://www.pna.gov.ph/articles/1276539), and it lists IT-BPM, logistics, energy, healthcare and semiconductors under Tier 1, among other sectors. The fiscal menu is the same at both agencies. Income tax holiday (ITH). This is a period with no income tax. It runs 4 to 7 years depending on the SIPP tier and where the project sits. Under the [FIRB incentive tables](https://firb.gov.ph/incentives-available/) and the [APECO matrix](https://apeco.gov.ph/apecos-incentives-for-investors-draft/), the years for Tier I, II and III are: | Location | Tier I | Tier II | Tier III | | --- | --- | --- | --- | | National Capital Region | 4 | 5 | 6 | | Areas contiguous to the NCR | 5 | 6 | 7 | | All other areas | 6 | 7 | 7 | After the holiday, a choice. An export enterprise can pay a 5% special corporate income tax (SCIT) on gross income earned (GIE). It can instead use the enhanced deductions regime (EDR), which charges a 20% corporate income tax rate but allows extra deductions. [CREATE MORE cut the EDR rate from 25% to 20%](https://accralaw.com/2025/01/20/more-to-create/). It also let enterprises [skip the ITH and start on SCIT or EDR at the beginning of commercial operations](https://www.pwc.com/ph/en/tax/tax-publications/taxwise-or-otherwise/2025/create-more-a-better-version-of-the-create-law.html). How long it lasts. Projects with investment capital of P15 billion or less are approved by the IPA. Their SCIT or EDR period is 10 years after the ITH, [for a maximum of 17 years in total](https://www.grantthornton.com.ph/insights/articles-and-updates1/tax-notes/period-of-availment-of-incentives-for-firb-and-ipa-approved-projects-under-the-create-more-act-sections-19-21/). Projects above P15 billion go to the Fiscal Incentives Review Board (FIRB), which can grant 20 years after the ITH, for up to 27 years in total. [The DOF raised the IPA approval threshold from P1 billion to P15 billion](https://www.dof.gov.ph/recto-create-more-law-is-a-win-win-for-both-businesses-and-the-filipino-people/). Many summaries quote "17 to 27 years" as if both agencies offered 27. For most projects, the cap is 17. Local taxes. Under SCIT, the 5% replaces all national and local taxes. [PEZA states the split as 3% to the national government and 2% to the host local government](https://www.peza.gov.ph/elligible-activities-and-incentives-category/fiscal-incentives). Under ITH or EDR, local governments may charge a registered business enterprise local tax (RBELT) of up to 2% of gross income instead of other local taxes and fees. [RBELT is not imposed on SCIT enterprises](https://www.rappler.com/business/ask-tax-whiz-comprehensive-overview-create-more-act/). VAT and duties. Local purchases directly attributable to the registered activity can be VAT zero-rated. For export enterprises this now runs [for the whole registration period](https://cpbrd.congress.gov.ph/wp-content/uploads/2026/06/DP2026-19-THE-FUTURE-OF-PHILIPPINE-FISCAL-INCENTIVES-UNDER-OECD-PILLAR-TWO.pdf). Imports of capital equipment, raw materials and spare parts can come in free of tax and duty. Extra deductions under EDR. The [DOF rules](https://bworldonline.com/economy/2026/07/28/766520/dof-sets-rules-for-claiming-enhanced-deductions/) allow an additional 100% deduction on power, research and development, and training. They allow an additional 50% on direct labor and on domestic inputs. Labor covers directly hired Filipino workers only, and domestic inputs need at least 50% local value added. [Managerial, administrative and subcontracted labor is generally excluded](https://www.grantthornton.com.ph/insights/articles-and-updates1/lets-talk-tax/making-enhanced-deductions-regime-work-for-registered-business-enterprises/). Since the tax menu is shared, a lower tax rate is no longer a reason to pick one agency over the other. The deciding factors are your export ratio, your location and your day-to-day operations. ### How PEZA works PEZA was created by the Special Economic Zone Act of 1995 (Republic Act 7916). It registers enterprises that locate inside PEZA-accredited economic zones, IT parks and buildings. [Enterprises outside those zones are generally not eligible for PEZA incentives](https://emerhub.com/philippines/peza-registration-in-the-philippines/). That makes the building lease part of the registration. A lease in a non-accredited building does not qualify, however good the rent is. PEZA export enterprises are expected to export at least 70% of output or gross sales. [PEZA allows domestic sales of up to 30% of total sales](https://www.peza.gov.ph/elligible-activities-and-incentives-category/fiscal-incentives). For service exporters, the usual reading is that [at least 70% of gross receipts must come from clients abroad](https://www.respicio.ph/commentaries/consequences-of-exceeding-local-sales-threshold-for-peza-registered-export-companies-in-the-philippines). That is a secondary source, so confirm the test and the measurement period in your registration agreement. The same source says going over the local-sales cap can lead to reclassification as a domestic market enterprise. PEZA also offers practical advantages that sit outside the tax menu: - Customs. Customs-PEZA clearance offices handle tax- and duty-free imports of registered enterprises at seaports, under [a joint Customs and PEZA order](https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/11/47500). Ask the zone operator how clearance works for your own cargo. - Visas. [PEZA issues a PEZA Visa valid for two years](https://www.peza.gov.ph/press-releases/peza-issue-2-years-visa-foreign-investors-and-workers) to foreign investors and non-resident foreign employees. Dependents' visas end when the principal's does. - Other perks. PEZA's [non-fiscal incentives page](https://www.peza.gov.ph/elligible-activities-and-incentives-category/non-fiscal-incentives) lists multiple-entry visa privileges and land leases of up to 75 years. Work from home is the rule that has moved most. Before CREATE MORE, [ecozone enterprises lost incentives if the registered activity ran outside the zone boundary](https://www.bworldonline.com/economy/2025/03/05/657458/work-from-home-rules-under-create-more/). CREATE MORE lets IPAs allow up to 50% work from home for ecozone locators. Then, under FIRB Resolution No. 005-2026, [IPAs may allow up to 90% for one year from 24 March 2026](https://www.pna.gov.ph/articles/1272729), because of the national energy emergency. [IPAs can set a lower cap, but not below 50%](https://bworldonline.com/top-stories/2026/04/13/742267/peza-says-one-year-wfh-to-help-protect-jobs-growth/). The 90% limit is temporary unless extended, so do not build a long-term headcount plan on it. ### How BOI works The Board of Investments (BOI) operates under the Omnibus Investments Code of 1987 (Executive Order 226). Its main difference from PEZA is location. [BOI-registered firms are not restricted to economic zones](https://news.outsourceaccelerator.com/philippine-bpo-create-more-irr/), so you can set up where your people, customers or supply chain are. BOI also suits businesses that sell in the Philippines. A domestic market project does not carry a 70% export test, as long as the activity is on the SIPP. Two cautions apply: - Foreign ownership. For domestic market projects, [foreign ownership is generally capped at 40% unless a specific law allows more](https://philippines.incorp.asia/guides/boi-registration/). Pioneer-classified activities are treated differently, so check your activity's classification. - BOI export enterprises. BOI also registers export enterprises, and they have an export ratio too. The same guide gives [50% of service revenue for Filipino-owned firms and 70% for foreign-owned firms](https://philippines.incorp.asia/guides/boi-registration/). Large domestic projects can qualify as high-value domestic market enterprises (HVDMEs). [An HVDME has investment capital above P15 billion and is import-substituting, or had export sales of at least US$100 million in the previous year](https://www.bworldonline.com/economy/2025/01/12/646122/unveiling-the-opportunities-of-the-create-more-act/). BOI's own FAQ says applications [are treated as approved if the Board does not act within 20 working days after the application is accepted](https://boi.gov.ph/ufaqs/how-long-will-it-take-to-obtain-boi-peza-other-ipas-approval-once-all-requirements-are-complied-with/). That page predates CREATE MORE, so confirm the current timeline with BOI. ### PEZA and BOI side by side | Factor | PEZA | BOI | | --- | --- | --- | | Governing law | RA 7916 and CREATE rules | EO 226 and CREATE rules | | Location | Inside a PEZA-accredited zone, IT park or building | Anywhere in the Philippines | | Typical fit | Export manufacturers, IT-BPM, ecozone developers | Domestic market, infrastructure, energy, logistics, agribusiness, and export enterprises outside ecozones | | Export ratio | At least 70% for export enterprises, with up to 30% local sales | None for domestic market projects; export enterprises have their own ratio | | ITH, SCIT, EDR | Same menu | Same menu | | Local taxes | SCIT replaces local taxes; RBELT up to 2% under ITH or EDR | Same | | Approval authority | IPA up to P15 billion, FIRB above | Same | | Customs | Customs-PEZA clearance process for registered locators | Standard Bureau of Customs procedures | | Visas | PEZA Visa, two years | Ask BOI; [47(a)(2) visas also cover BOI-registered companies](https://kittelsoncarpo.com/philippine-visas/47a2-peza-visa/) | | Work from home | Up to 50% by law, temporarily up to 90% until about March 2027 | No ecozone boundary; confirm the cap in your approval | ### 5% SCIT or 20% EDR SCIT is simple. You pay 5% of gross income earned, which is revenue less the direct costs the rules allow. EDR takes a different route. It keeps the 20% rate, but you subtract extra amounts for labor, power, training, research and local inputs before applying it. The better option depends on your cost mix. The two examples below are illustrative figures, not a forecast and not any real company. They are in PHP millions and ignore the ITH years, additional depreciation, loss carry-over and the exact RBELT base. Labor-heavy service center. Revenue is 1,000, qualified direct labor is 500, other direct costs are 100 and administrative costs are 100. - SCIT: GIE = 1,000 − 500 − 100 = 400. Tax = 5% × 400 = 20. - EDR: taxable income before enhancement = 1,000 − 500 − 100 − 100 = 300. Extra labor deduction = 50% × 500 = 250. Taxable income = 300 − 250 = 50. Tax = 20% × 50 = 10. - EDR also brings RBELT, up to 2% of gross income. If the base were 400, that adds up to 8, which narrows the gap to 18 against 20. Asset-light software firm. Revenue is 1,000, qualified direct labor is 100, other direct costs are 50 and administrative costs are 100. - SCIT: GIE = 1,000 − 100 − 50 = 850. Tax = 5% × 850 = 42.5. - EDR: taxable income before enhancement = 1,000 − 100 − 50 − 100 = 750. Extra labor deduction = 50% × 100 = 50. Taxable income = 700. Tax = 20% × 700 = 140. A common shortcut says IT-BPM firms should always take SCIT. These numbers show it depends on how much of your cost base qualifies for the extra deductions. A power-heavy manufacturer, with the 100% power deduction and the 50% domestic input deduction, can often reduce taxable income close to zero. Your accountant should model your actual cost lines, because the rules define "direct" and "qualified" costs narrowly. ### Three example profiles These are generic profiles, not case studies of real companies. An offshore delivery center for overseas clients. Nearly all revenue comes from abroad, the team is mostly direct labor, and the firm may want an accredited building in a business district. PEZA is a natural fit. BOI is also possible, because it has no ecozone requirement. Compare the building options, the work-from-home rules and the SCIT versus EDR numbers before deciding. A utility-scale solar developer. The land is outside any ecozone and the power is sold domestically. BOI fits, because PEZA needs an ecozone location and an export ratio. Power and machinery costs make the EDR worth modeling. Confirm the SIPP tier of the activity, since the tier sets the ITH years. A cold-chain logistics network across several cities. Sites follow ports and customers, and revenue is domestic. BOI fits on location and market. Check that the specific activity is on the SIPP and what equipment imports your approval covers. The two-entity option. A group with both export and domestic revenue can register one entity with PEZA for exports and another with BOI for domestic sales. [Philippine Hub Partners describes this structure](https://philippinehubpartners.com/peza-vs-boi-foreign-investors-philippines-2026/). It brings transfer pricing, cost allocation and intercompany contract questions. Take it to counsel before committing. ### Registration steps and ongoing compliance The usual sequence is: 1. Confirm your activity and tier on the SIPP. 2. Decide the corporate structure and incorporate with the SEC. 3. Secure the site. For PEZA, this is a lease in an accredited building or zone. Agree the lease terms before you apply. 4. File the application with PEZA or BOI. 5. Wait for the Board decision. 6. Receive the certificate of registration. Advisers report that [PEZA registration typically takes four to six weeks](https://emerhub.com/philippines/peza-registration-in-the-philippines/) when documents are complete. Your own timeline will depend on the completeness of your file and the agency's board schedule. Registration is followed by reporting. RBEs file an Annual Tax Incentives Report (ATIR) and an Annual Benefits Report (ABR) with their IPA. [The deadline is 30 calendar days after the statutory deadline for the annual tax return](https://firb.gov.ph/frequently-asked-questions/). [The reports are still required in a loss year, because the incentive entitlement still exists](https://www.scribd.com/document/682511081/Firb-Advisory-Faqs-Firms-Atir-And-Abr). These duties come from the Tax Incentives Management and Transparency Act (Republic Act 10708), [explained here by Grant Thornton](https://www.grantthornton.com.ph/insights/articles-and-updates1/lets-talk-tax/implementing-timta/). PEZA enterprises should also track the export ratio against the commitment in their registration agreement, so a weak export quarter does not turn into a loss of status. ### A four-step check before you choose 1. Test your export ratio. If at least 70% of sales go abroad, PEZA and BOI export registration are both open. If you sell mainly in the Philippines, BOI domestic registration is the likelier path. 2. Test your location. If the team must sit in a particular city or a non-accredited building, PEZA may not work. 3. Model SCIT and EDR on your real cost lines, with the ITH years for your tier and location. 4. Settle the structure. Decide whether one entity or two fits your revenue mix, and who will carry the compliance reporting. *Get tax counsel involved before you sign a lease, and agree the lease terms before you apply. If you are weighing PEZA-accredited buildings against other locations, FlySpaces can compare the options against your headcount, term and budget.* Tags: [PEZA](https://blog.flyspaces.com/tag/peza) ![](https://blog.flyspaces.com/hubfs/SpacesAsia%20-%20June%202019/author-img.png) ##### [Listerlynn Joy Garingo - De La Serna](https://blog.flyspaces.com/author/joy-garingo-delaserna) Joy Garingo - De La Serna is a Filipino business executive specializing in the real estate, flexible workspace, and Employer of Record (EOR) sectors within the Asia-Pacific (APAC) region. She is involved in creative ventures and community-centric workspace environments that support local startups, founders, and generational shifts in hybrid work styles. 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