If you run a foreign company looking to set up outsourcing operations, such as IT-BPO, call centers, or IT services in the Philippines, registering with the Board of Investments (BOI) can be a smart move to maximize your business’s potential.
By registering with the BOI, your company can access a range of tax incentives and other benefits designed to support your business in the priority sectors like outsourcing. In fact, many existing foreign-owned outsourcing companies in the Philippines have already taken advantage of these incentives, streamlined their operations, and reduced tax burden.
This article simplifies the process of getting Board of Investments (BOI) registration in the Philippines, including the requirements, steps, and benefits. We’ll also answer common questions to guide you through the process. Keep reading and let us know how we can help you get registered!
What is BOI Registration?
BOI Registration is the process of officially registering your business or project with the Board of Investments (BOI) in the Philippines. This registration is crucial for companies in priority sectors, as it grants access to various fiscal and non-fiscal incentives, including tax holidays, exemptions, and government support.
Board of Investments (BOI)
As an attached agency of the Department of Trade and Industry (DTI), the Board of Investments (BOI) is responsible for the advancement of investments in the Philippines. It is mandated under Executive Order 226 or the Omnibus Investments Code of 1987 and particularly supports registered enterprises engaged in activities enumerated in the Investment Priorities Plan (IPP). It also assists Filipino and foreign investors to venture and thrive in vast areas of economic pursuits and acts as the one-stop shop in doing business in the Philippines.
BOI Registration Incentives
By registering with the BOI, you can access both fiscal and non-fiscal incentives (based on E.O. 226, as amended), including tax exemptions and reductions, as well as operational advantages that make it easier for you to do business in the Philippines.
Fiscal Incentives
Fiscal incentives are financial benefits that directly impact your company’s finances by reducing its tax burden or providing exemptions. Key fiscal incentives of BOI registration include:
- Income Tax Holidays (i.e., six (6) years for projects with Pioneer status and for projects located in a Less Developed Area (LDA), four (4) years for new projects with Non-Pioneer status, and three (3) years for expansion or modernization projects);
- Duty exemption on imported capital equipment, spare parts, and accessories;
- Exemption from wharfage dues and export tax, duty, impost, and fees;
- Tax exemption on breeding stocks and genetic materials;
- Tax credits on imported raw materials;
- Tax and duty-free importation of consigned equipment; and,
- Additional deduction for labor expense.
Non-Fiscal Incentives
Non-fiscal incentives do not directly affect your taxes or finances, but they offer other forms of support to make doing business easier. Key non-fiscal incentives of BOI registration include:
- Employment of foreign nationals;
- Simplification of customs procedures for imported products;
- Importation of consigned equipment; and
- Privilege to operate a bonded manufacturing or trading warehouse (subject to custom rules and regulations).
Other Business-Specific Incentives
For your specific type of business, here are the other incentives and privileges you may qualify for:
Revised Forestry Reform Code of the Philippines (P.D. 705)
The law provides incentives for your industrial tree plantations, allowing you to treat development and operation expenses as business expenses or capital expenditures. Additionally, you can deduct 33 and ⅓ percent of your investment from your taxable income.
Philippine Mining Act of 1995 (R.A. 7942)
Under this law, you can enjoy incentives such as exemption from real property tax and taxes on pollution control devices, as well as income tax benefits like carrying forward losses and accelerated depreciation, in addition to those provided under E.O. 226 (as amended), unless specified otherwise in the IPP.
Book Publishing Industry Development Act (R.A. 8047)
This provides you incentives under E.O. 226, as amended, to support the growth and development of the book publishing industry in the Philippines.
Downstream Oil Industry Deregulation Act of 1998 (R.A. 8479)
The law provides you a five (5)-year income tax holiday, labor expense deductions, and exemptions from contractor’s tax, real property tax on production equipment, and taxes on imported spare parts. It also offers you a 3% minimum tax on imported capital equipment, tax credits on domestic equipment, and the unrestricted use of consigned equipment.
Magna Carta for Disabled Persons (R.A. 7277)
The Magna Carta offers you incentives under E.O. 226, as amended, to support your business that employs or caters to the needs of persons with disabilities.
Renewable Energy Act of 2008 (R.A. 9513)
Under this law, you can enjoy several incentives, including a seven (7)-year income tax holiday, duty-free importation of machinery and materials, and a corporate tax rate of 10% after the tax holiday. Additional benefits include accelerated depreciation, VAT exemption on fuel or power sales, cash incentives for electrification, and tax credits on domestic capital equipment and services.
Tourism Act of 2009 (R.A. 9593)
This provides you incentives under Executive Order 226, as amended, to support the growth and development of the tourism industry in the Philippines. These incentives are designed to attract investments and promote tourism-related businesses.
BOI Registration Eligibility Criteria
To qualify for BOI registration, your business must meet specific eligibility criteria, including business structure requirements, foreign ownership conditions, and compliance with legal and tax regulations.
Business Structure
If your business is wholly Filipino-owned, you can register for BOI incentives as long as you are engaged in activities listed in the Investment Priorities Plan (IPP). You can participate in domestic activities, whether they are considered pioneer projects or not.
Foreign Ownership
On the other hand, if your business is 100% foreign-owned, you can still qualify for incentives, i.e., if you are involved in pioneer projects and meet one of these conditions: (a) at least 70% of your products or services are for export, or (b) your proposed projects are located in Less Developed Areas (LDA).
You must also achieve 60% Filipino ownership within 30 years unless you are exporting 100% of your goods and services, such as in Business Process Outsourcing (BPO), Knowledge Process Outsourcing (KPO), Legal Process Outsourcing (LPO), Call Center Agencies, and Outsourcing companies. For non-pioneer projects, your foreign ownership is limited to 40%, unless over 70% of your annual production is exported.
Legal and Tax Compliance
Your business must comply with Philippine laws, including tax regulations. You may need to provide your Taxpayer Identification Number (TIN) and a copy of your BIR registration when registering with the BOI.
BOI Registration Requirements
To successfully complete your BOI registration in the Philippines, you must submit several required documents that demonstrate your business’s legal, financial, and operational compliance.
1. Business Registration Documents
You will need to submit the SEC Certificate of Incorporation, Articles of Incorporation (AOI), and By-Laws if your business is a corporation, partnership, branch office, representative office, or regional headquarters. For sole proprietorships, you must provide the DTI Certificate of Registration to verify your business registration.
2. Financial and Tax Documents
You are required to submit an Audited Financial Statement, including a feasibility report with projected financial data for the next five (5) years. Additionally, if applicable, you must provide your Income Tax Return for the last three (3) years to demonstrate your business’s financial standing.
3. Project Report
You must prepare a Project Report that outlines your activities and their alignment with the Strategic Investment Priority Plan (SIPP). This report is crucial for the BOI to assess whether your project meets national economic priorities.
4. Board Resolution
You will need a Board Resolution from your company’s board of directors or an authorized signatory. This resolution should formally approve your application and designate the person authorized to sign and submit the BOI registration documents.
4. BOI Application Form
You must also complete the BOI Application Form 501, which comes in different versions depending on your industry. This form is essential for initiating your BOI registration process and applying for applicable incentives.
5. Other Supporting Documents
You might also need to submit additional documents like business permits, licenses, and industry-specific documents, such as endorsement permits or an Environmental Compliance Certificate (ECC), based on your business’s nature and location.
How to Register with the BOI (Step-By-Step Guide)
To register your business with the Board of Investments (BOI) and qualify for incentives, follow these steps:
1. File the BOI Application Form 501.
To begin the BOI registration process, submit the accomplished BOI Form 501 and other supporting documents. If incomplete, the application will be returned with a checklist for correction.
2. Receive a Notice of Publication and an Assessment Bill.
Once the application is processed, you will receive a feedback letter from the Project Evaluation and Registration Division (PERD). This also contains a Notice of Publication (for publication in any newspaper of general circulation) and an assessment bill for the filing fee. Pay the fee and submit the form to the Records Division to receive an application number.
3. Wait for Evaluation.
The Project Evaluation will proceed, and the application will be presented to the Management Committee and Board for review.
4. Receive the Notice of Board Action (NOBA).
Upon approval, you will receive the Notice of Board Action (NOBA) and be required to submit pre-registration documents and pay the registration fee.
5. Secure the BOI Certificate of Registration (COR).
Once all requirements are met and fees are paid, you will receive the BOI Certificate of Registration, officially recognizing your business and making it eligible for BOI incentives.
BOI Reportorial Requirements
As a holder of the Special Investors Resident Visa (SIRV), you are entitled to reside in the Philippines while your investment subsists. For this purpose, you should submit an annual report, in the form fully prescribed for the purpose, to prove that you have maintained your investment in the country. Should you withdraw your investment from the Philippines, the Special Investors Resident Visa issued to you will then automatically expire.
The BOI issued Memorandum Circular No. 2017-003, expounding on the implementation of the revised BOI Form S-1 (or the “Annual Report on Actual Operations”) and the guidelines for submission of reporting requirements. This streamlined the procedures for registered corporations, requiring them to submit only the Annual Report through the S-1 form. These BOI-registered corporations are not anymore required to submit the semestral reports or the BOI Form S1-2. According to the BOI, the use of the revised S-1 Form will cover reports starting fiscal year 2016. The revised form replaces eight different types of S-1 forms for different industries.
Other BOI Registration FAQs
Here are some frequently asked questions (FAQs) about BOI registration that can help guide you through the process:
1. What is considered a Pioneer Activity? A pioneer activity is one that:
- manufactures or processes goods or raw materials not yet produced in the Philippines on a commercial scale;
- uses new and untried designs, formulas, or methods for production or transformation;
- engages in agricultural activities essential to the country’s self-sufficiency; or
- produces non-conventional fuels or manufactures equipment that uses non-conventional energy sources.
2. What are the common challenges or obstacles in BOI registration? Common obstacles during the BOI application process include not meeting the required criteria, misunderstanding the listed activities in the IPP, and opposition from affected sectors. The BOI requires a Notice of Publication and may hold hearings if objections arise.
3. How long will it take to obtain approval of BOI registration? The processing time for BOI registration typically ranges from 10 to 20 working days, depending on your business type, proposed activities, and the BOI Management Committee’s review time. According to E.O. 226, as amended, however, applications are automatically approved if the BOI Board does not act within 20 working days of receiving the application.
4. After approval, what restrictions are attached? Once your BOI registration is approved, you will receive an approval letter with a list of general and specific terms and conditions. The general conditions cover management, financial, operational, and marketing restrictions that must be followed to avoid cancellation, while the specific terms may vary depending on your business and include nationality, operational, and reporting requirements.
… and you might just need our assistance.
At FilePino, we simplify the process of registering your company, ensuring compliance with all legal requirements. Our team of experts provides end-to-end support—from registration to regulatory compliance—so you can focus on your investments and growth strategies.
Ready to register your company with the Board of Investments (BOI) in the Philippines ? Set up a consultation with FilePino today! Call us at (02) 8478-5826 (landline) and 0917 892 2337 (mobile) or send an email to info@filepino.com.