The Philippine investment environment is facing unprecedented development opportunities. As the second largest consumer market in ASEAN, the Philippines has huge domestic demand with a population of 112 million, of which the young labor force aged 25-54 accounts for more than 40%. GDP growth rate will reach 6.4% in 2023, outstanding performance in the Asia-Pacific region. The Marcos government actively promotes economic opening, and the negative list for foreign investment will be further reduced in 2024, and key areas such as retail, communications, and renewable energy will be significantly more open to foreign investment.
The Philippine tax reform in 2024 presents three major highlights. The corporate income tax rate has been reduced from 30% to 25%, and for small and medium-sized enterprises with annual turnover not exceeding 5 million pesos, it has been reduced to 20%. The “Creating Enterprise Recovery and Tax Incentives Act” (CREATE) has been fully implemented, simplifying the application process for tax incentives and shortening the preferential approval time to 45 working days. The new taxation policy for the digital economy was introduced, clarifying the taxation and management rules for new business formats such as cross-border e-commerce and digital services, and providing clear guidance for foreign investment in the digital economy.
The preferential policy system mainly focuses on three dimensions: regional preferential treatment, industrial preferential treatment and functional preferential treatment. Regionally, special economic zones such as PEZA and Clark Zone provide income tax holidays for companies settled there for up to eight years. Industrial preferential policies focus on supporting strategic industries such as manufacturing, IT-BPO, and renewable energy. In addition to tax exemptions, they also include support measures such as land and talent. Functional discounts provide rewards for specific behaviors such as R&D investment, technology upgrading, and job creation. For example, R&D expenditures can enjoy a 200% super deduction. It is worth noting that new preferential policies for digital transformation will be added in 2024 to support the digital upgrade of enterprises.
Data from the Philippine Bureau of Investment (BOI) shows that the total investment in preferential projects approved in 2023 will reach 168 billion pesos, a year-on-year increase of 32%, of which foreign-invested projects account for more than 60%. With the deepening and implementation of various preferential policies, the Philippines is expected to attract more high-quality foreign investment, especially in emerging fields such as digital economy and green development.
Core corporate income tax preferential policies
Under the latest tax system framework in the Philippines, preferential corporate income tax policies are all-round and multi-level. According to the latest provisions of the CREATE Act, the regular corporate income tax rate has been reduced to 25% in 2024, a significant decrease from the 30% before the reform. It is particularly worth noting that a lower tax rate of 20% applies to small and medium-sized enterprises with annual operating income not exceeding 5 million pesos. According to statistics from the Philippine Bureau of Revenue (BIR), this policy has benefited more than 85% of registered companies, reducing corporate tax burdens by a total of approximately 28 billion pesos in 2023.
Regarding the loss carry forward policy, the Philippines has adopted a more flexible approach. Generally, enterprises can carry forward operating losses for three years, but for enterprises affected by force majeure factors such as natural disasters and epidemics, the carry-forward period can be extended to five years. It is worth noting that new regulations will be added in 2024. Companies engaged in innovative industries, such as biotechnology, artificial intelligence and other fields, can carry forward losses for up to 7 years. However, it should be noted that the loss carryover must comply with the principle of “same business operation”. If the ownership of the enterprise changes by more than 25%, the right to carry forward the loss will be lost. According to BIR data, about 12% of companies used the loss carry-forward policy in 2023, with an average tax saving of about 1.5 million pesos per company.
The accelerated depreciation policy is an important tool for the Philippines to attract manufacturing investment. The latest regulations in 2024 allow companies to use the double declining balance method to calculate depreciation for eligible machinery and equipment, which can recognize about 40% of depreciation expenses earlier than the general straight-line method. Especially for companies that invest in green manufacturing and smart manufacturing, they can apply for a one-time deduction of 50% of the equipment value in the first year when the assets are put into use. This policy will drive a 35% increase in fixed asset investment in the manufacturing industry in 2023, resulting in an average tax saving of approximately 5 million pesos per manufacturing project.
The policy of super deduction of R&D expenses is a key measure for the Philippines to improve its industrial innovation capabilities. According to the latest regulations, eligible R&D expenditures incurred by enterprises can enjoy a 200% super deduction, that is, an additional 100% deduction will be made based on the actual amount incurred. It is worth noting that two important provisions have been added in 2024: First, R&D projects in cooperation with local universities can enjoy a 250% super deduction; second, for R&D expenditures in key areas such as environmental protection technology and digital technology, a super deduction of The deduction rate can be up to 300%. To apply for this discount, you need to register your R&D plan with the Ministry of Science and Technology in advance and undergo annual evaluation. According to statistics, a total of 458 companies will enjoy the super deduction of R&D expenses in 2023, with a total tax reduction of 8.5 billion pesos.
Enterprises need to pay special attention to the fact that the above preferential policies have strict application conditions and compliance requirements. Enterprises must maintain a sound accounting system, perform tax declaration obligations in a timely manner, and keep relevant supporting materials for at least 10 years. Any violation may result in the disqualification of benefits and the forfeiture of tax benefits already enjoyed. It is recommended that enterprises fully evaluate their own conditions before applying, and consult professional tax advisors when necessary to ensure that various preferential policies are used in compliance.
Special reminder: Starting from July 1, 2024, companies that enjoy the above preferential policies need to submit applications through the BIR’s electronic tax system, and paper applications will no longer be accepted. Enterprises should familiarize themselves with the operating procedures of the electronic system as early as possible to avoid procedural issues affecting the enjoyment of preferential policies. According to BIR’s calculations, the electronic reform will shorten the processing time of preferential application by about 60% and greatly improve the efficiency of tax processing.
In the second half of 2024, the Philippine Department of Finance is expected to further optimize preferential corporate income tax policies, focusing on expanding research and development support and increasing tax incentives for strategic emerging industries. It is recommended that enterprises continue to pay attention to policy developments and seize new preferential opportunities in a timely manner. At the same time, enterprises should also pay attention to the possibility of stacking preferential policies and maximize the effect of tax incentives through reasonable planning.
Detailed explanation of tax incentives for various special economic zones
As important platforms for attracting foreign investment, the three major special economic zones in the Philippines have their own characteristics and echo each other, forming a unique pattern of complementary regional advantages. Among them, the PEZA Economic Zone will implement a new preferential policy framework in 2024 with its complete policy system and extensive industrial coverage. Enterprises settled in PEZA can enjoy an income tax holiday for 4-7 years. After the expiration, they can choose to collect gross income tax at a special rate of 5%. This policy effectively replaces all national and local taxes. Judging from the latest data, PEZA’s policies have achieved remarkable results. The total exports of enterprises in the zone will reach US$68.5 billion in 2023, a year-on-year increase of 18%, creating more than 1.9 million jobs. Preferential policies are mainly aimed at traditional advantageous industries such as export manufacturing, IT services, logistics and warehousing. At the same time, emerging industry categories such as digital creative industries and biomedical research and development will also be added in 2024. Enterprises applying for PEZA preferential treatment follow a unified process, from submitting a project proposal to finally obtaining a registration certificate. The standard approval time takes about 45 working days. It is worth mentioning that the “green channel” mechanism launched in 2024 will shorten the approval time for key projects to 20 working days, greatly improving administrative efficiency.
Practical case: A Japanese electronics manufacturer invested US$200 million in building a smart factory in PEZA in 2023 and enjoyed a seven-year income tax holiday, which is expected to save about US$30 million in taxes. The project created employment for 5,000 people and became a model for PEZA to attract investment.
The Clark District (CDC) will launch a unique “Digital Special Economic Zone” strategy in 2024, shifting its development focus to the digital industry and high-tech manufacturing fields. Enterprises in the zone can not only enjoy an income tax holiday of up to eight years and a special tax rate of 5%, but also receive zero tariff treatment for capital equipment and raw materials. The attractiveness of this policy combination is fully reflected in the data: the Clark Special Zone attracted US$4.2 billion in foreign investment in 2023, of which the technology industry accounted for more than 45%. Compared with PEZA, Clark Zone’s entry threshold is more flexible, but it has higher requirements for enterprises’ technical level and environmental protection standards. The “one-stop” service model that the SAR is proud of allows enterprises to complete the entire process from initial application to various license applications within 40 working days, greatly improving investment convenience.
Success story: A US data center operator invested US$80 million in Clark in 2023 and enjoyed an 8-year tax holiday. The project uses 100% green energy and not only receives an extension of the preferential period, but also enjoys additional carbon emission reduction subsidies.
The Subic Bay Special Administrative Region (SBMA) will rely on its unique geographical advantages to focus its development on the marine economy and high-end manufacturing in 2024. Its tax preferential policies implement stepped management according to the investment scale. Enterprises with an investment of more than 5 million US dollars can enjoy a tax holiday of up to 8 years and obtain priority land use rights. A major feature of this area is the provision of “offshore manufacturing licenses”, allowing companies to set up bonded warehouses in the area to achieve more flexible supply chain management. The results of these measures were immediate, with foreign investment in SBMA increasing by 27% year-on-year in 2023, reaching US$2.5 billion. In terms of application process, SBMA adopts a standardized processing process. From online pre-registration to completion of all license applications, the entire process is controlled within 47 working days.
Typical case: A Korean ship manufacturer invested US$1.5 billion in building a smart shipyard in SBMA in 2023, enjoying an 8-year tax holiday plus supporting facilities. It is expected that the annual output value will reach US$3 billion, creating employment for 8,000 people.
It is worth noting that in 2024, the Philippine government has put forward new requirements for special economic zone enterprises, including a local procurement rate of no less than 30%, and R&D investment accounting for no less than 2% of revenue. This reflects the government’s guidance of foreign investment and the local economy. Policy guidance for deep integration. When enterprises choose special economic zones, they need to comprehensively weigh supporting facilities, human resources, logistics costs and other factors, and also consider the industrial cluster effect to maximize investment benefits. Judging from the current development trend, the preferential policies of the three major special economic zones are evolving in a more precise and green direction, which will create greater development space and opportunities for enterprises.
Preferential policies for strategic industries
In order to promote the development of key industries, the Philippine government has formulated a series of precise tax preferential policies. In the manufacturing sector, the new policy framework implemented in 2024 focuses on supporting three types of enterprises. If export-oriented manufacturing companies account for more than 70% of their exports, they can enjoy income tax reductions and exemptions for six years, followed by a preferential tax rate of 15% for the following three years. It is worth noting that if a company invests in remote areas, the tax holiday can be extended to 8 years. In terms of local manufacturing, large-scale projects with investment exceeding US$20 million are provided with equipment investment credits of up to 30%. At the same time, companies can enjoy a 200% super deduction for training expenses incurred by hiring local employees. Data in 2023 show that foreign direct investment in manufacturing will reach US$8.7 billion, a year-on-year increase of 42%, of which high-tech manufacturing accounts for nearly 60%. For high-tech manufacturing, the government has specially set up an industrial development fund of 10 billion pesos to support enterprises in technological transformation and intelligent upgrading.
As a pillar industry in the Philippines, the IT-BPO industry will receive stronger policy support in 2024. For labor-intensive service companies, as long as the number of employees exceeds 500, they can enjoy a 4-year income tax reduction of half, plus a 150% super deduction of employee social security expenses. Software development companies have received special treatment, with a 300% super deduction for R&D expenditures and a 10% tax reduction on intellectual property income. The data center field offers the strongest incentives. New data centers can enjoy an 8-year tax holiday and a 30% subsidy on electricity costs. These policies have achieved remarkable results. The IT-BPO industry will earn US$32 billion in foreign exchange in 2023, and is expected to exceed US$40 billion in 2024.
The renewable energy industry is facing major opportunities under the guidance of the “2050 Carbon Neutrality” strategy. Investments in green energy projects can enjoy seven years of income tax exemption, and equipment imports are exempt from customs duties and value-added tax. It is particularly worth mentioning that in 2024, new policies related to carbon credit trading will be added. Enterprise emission reductions can be traded in the international carbon market, and the income obtained will be exempt from income tax. The import of environmental protection equipment implements a “zero tariff” policy, and enterprises purchasing local environmental protection equipment can receive a tax credit of 20% of the purchase amount. According to statistics, investment in renewable energy will reach US$5.2 billion in 2023, and the proportion of renewable energy installed capacity is expected to increase to 40% by 2025.
As a key industry for post-epidemic recovery, tourism has received comprehensive policy support. Newly built or renovated star-rated hotel projects can enjoy a 50% reduction in income tax and a 50% reduction in land use tax for five years. In terms of investment in tourism facilities, an investment credit of up to 25% is provided for integrated resort projects with an investment of more than 10 million U.S. dollars, and the introduction of foreign professionals can also facilitate the introduction of work permits. Support policies for the leisure industry are more flexible. Projects such as theme parks and convention and exhibition centers can apply for installments of land value-added tax for up to 10 years. The number of inbound tourists will reach 5.8 million in 2023, and tourism revenue will recover to 85% of pre-epidemic levels. In 2024, the government plans to invest 20 billion pesos in tourism infrastructure construction, which is expected to drive more than 100 billion pesos in private investment.
The implementation of these preferential policies cannot be separated from strict supervision. Companies are required to submit operating reports every quarter and undergo annual compliance reviews. Any breach of commitment or false declaration will result in the disqualification of the preferential treatment and the back payment of the tax that has been reduced. At the same time, enterprises should pay attention to the superimposed use of policies. Many preferential measures can be applied for in combination, but they need to plan in advance to avoid repeated enjoyment.
The Philippine government is preparing a new round of industrial policy adjustments, focusing on emerging areas such as digital economy and green development. It is recommended that enterprises pay close attention to policy trends, make arrangements in advance, and make full use of various preferential policies to support enterprise development. At the same time, companies must also pay attention to balancing short-term tax incentives and long-term development strategies to ensure the sustainability of investment decisions.
In the second half of 2024, the government will launch the “Industrial Upgrading 2.0 Plan” and is expected to invest 50 billion pesos to support the development of key industries, which will bring new development opportunities to various industries. Enterprises should take precautions and make relevant preparations in order to seize the opportunity in the new round of industrial policies.
Detailed explanation of Investment Priority Plan (IPP)
The Investment Priority Plan (IPP), as the core policy tool for attracting foreign investment in the Philippines, will be comprehensively updated in 2024. The new version of IPP focuses on seven priority development areas: intelligent manufacturing, renewable energy, digital infrastructure, modern agriculture, medical health, education innovation and environmental protection. Among them, investment projects in the field of intelligent manufacturing can enjoy an 8-year income tax holiday, and R&D expenditures can enjoy a 200% super deduction discount. In addition to a seven-year tax holiday, renewable energy projects can also enjoy multiple benefits such as zero tariffs on equipment imports and tax exemptions on carbon trading income. Digital infrastructure investments, especially 5G network construction and data center projects, can receive equipment investment credits of up to 40%.
The intensity of preferential treatment in the field of modern agriculture will be significantly increased in 2024. Agricultural science and technology projects can enjoy a 6-year tax holiday, the import of agricultural product processing equipment enjoys zero tariff, and the land use tax is reduced by 70%. The medical and health industry focuses on supporting biopharmaceutical and medical device manufacturing, providing a tax preferential period of up to 10 years, and a 300% super deduction for R&D expenditures. In terms of educational innovation, vocational and technical training institutions can enjoy a five-year tax holiday, and the import of educational equipment is exempt from tariffs. Environmental protection projects receive the most generous support, including a 10-year tax holiday and a 50% equipment subsidy.
The IPP application process has been optimized to be more efficient. Companies only need to submit application materials, including feasibility study reports, environmental impact assessments and financing certificates, through the Board of Investment (BOI) online platform. The standard approval time has been shortened from the original 60 days to 30 days, and major projects can apply for a fast track and complete the approval within 15 days. It is worth noting that a “green channel” mechanism will be added in 2024. Projects with an investment of more than 50 million US dollars can enjoy one-on-one specialist services to ensure seamless approval.
The preferential period is determined using a more flexible step-by-step management method. The basic preferential period is 4-6 years. If the enterprise meets further conditions, such as creating more than 1,000 jobs, having a local procurement rate of more than 50%, investing in backward areas, etc., it can obtain an extension of 1-2 years. There will be 458 projects approved by the IPP in 2023, with a total investment of more than 280 billion pesos and an estimated 156,000 jobs created.
Regional preferential policies
In terms of regional preferential policies, the Philippine government has formulated differentiated support measures based on the development characteristics of different regions. For investment projects in backward areas, in addition to enjoying the basic discounts stipulated in the IPP, they can also receive an additional three years of income tax holiday, a 150% super deduction for employee salary expenses, and a 30% deduction for infrastructure construction expenses against taxable income. Forehead. In 2023, backward areas will attract investment of 37.5 billion pesos, a year-on-year increase of 65%, showing that the policy effect is significant.
Rural development incentives focus on supporting agricultural industrialization and rural tourism. Agricultural industrialization projects can enjoy an eight-year tax holiday, and agricultural facility construction expenditures enjoy a tax-immediate refund policy. Rural tourism projects receive full exemption from land use tax and infrastructure subsidies. In 2024, the government set up a PHP20 billion rural development fund to focus on supporting rural industrial upgrading and infrastructure improvement.
For areas prone to natural disasters, the government has introduced special post-disaster reconstruction policies. Enterprises investing in disaster-stricken areas can enjoy a tax preferential period of up to 12 years, receive a 50% fiscal subsidy for infrastructure reconstruction expenditures, and 100% pre-tax deduction for employee housing subsidy expenditures. This policy helped the disaster-stricken areas attract 15.2 billion pesos of investment in 2023, effectively promoting post-disaster economic reconstruction.
An important feature of regional preferential policies is that they can be used in conjunction with IPP policies. For example, if a manufacturing project that meets IPP conditions chooses to invest in a backward area, it will not only enjoy the benefits stipulated in the IPP, but also receive additional regional benefits, and may ultimately receive a comprehensive preferential period of up to 15 years. However, enterprises need to note that the superimposed use of preferential policies needs to apply for approval from relevant departments in advance and formulate detailed implementation plans.
Special preferential treatment for foreign investment
For foreign-invested enterprises, the Philippine government will launch a series of more attractive special preferential policies in 2024. In terms of technology transfer, foreign companies can enjoy special discounts when transferring advanced technology to local Philippine companies. Technology transfer expenses can receive a 250% super deduction, and related patent royalties are levied at a reduced rate of 8%. At the same time, in order to promote the technological upgrading of local enterprises, the government has established a technological innovation fund of 5 billion pesos, providing subsidies of up to 40% for eligible technology transfer projects. In 2023, 187 foreign companies have adopted preferential technology transfer policies, driving local companies’ investment in technological innovation to reach 28 billion pesos.
A more flexible tax exemption policy has been implemented for the import of capital equipment. Manufacturing projects with an investment of more than 10 million US dollars can enjoy zero-tariff treatment on imported key production equipment, and the value-added tax will be refunded immediately upon collection. The new policy in 2024 allows imported equipment to be paid in installments to enjoy the same discounts, which greatly improves the efficiency of enterprises’ capital use. Data shows that the total amount of equipment imported through this preferential treatment in 2023 will reach 5.2 billion U.S. dollars, saving companies about 1.5 billion U.S. dollars in customs duties and tax costs.
The preferential reinvestment policy focuses on encouraging foreign companies to expand investment in the Philippines. Enterprises that use profits for expansion or new projects can enjoy a tax credit of 25% of the reinvestment amount. If they are invested in priority industries, the credit ratio can reach up to 35%. It is particularly worth mentioning that the “Industrial Chain Extension Reward” will be added in 2024. Foreign companies that drive investment in upstream and downstream supporting enterprises can receive an additional 10% investment credit. In 2023, the total reinvestment by foreign companies will reach 32 billion pesos, a year-on-year increase of 48%.
In terms of tax incentives for expatriates, the government has taken more competitive measures. Senior management talents and technical experts can enjoy a preferential personal income tax rate of 15%, and housing allowances and children’s education subsidies are exempt from personal income tax. The new policy in 2024 further relaxes the identification standards. Foreign talents with a monthly salary of more than 150,000 pesos can apply for preferential tax rates, which is significantly lower than the 2023 pesos threshold in 2023. Currently, more than 12,000 foreign talents have enjoyed this discount.
Application process and precautions
Applications for various preferential policies implement a “one-stop” service model, and companies can submit applications through the unified platform of the Board of Investment (BOI). The upgraded online system in 2024 supports electronic processing of the entire process, greatly improving work efficiency. The specific application process is divided into four stages: preliminary qualification review (5 working days), formal application review (20 working days), department countersignature (10 working days) and final approval (5 working days). Especially major projects can apply for the “green channel” to shorten the approval time to 20 working days.
The documents required for application have been standardized and managed. Basic documents include: project feasibility study report, company registration certificate, financial statements for the past three years, environmental impact assessment report, etc. In 2024, document requirements will be simplified and some repetitive materials will be eliminated, but requirements for corporate compliance commitment letters and local procurement plans will be added. All documents must be provided in English or Tagalog, and foreign language documents must be accompanied by certified translations.
The Investment Committee has produced detailed guidance on issues of common concern to businesses. More common questions include: whether preferential policies can be used in combination (in principle, it is possible, but applications need to be made one by one), how to calculate the tax preferential period (from the date of commercial operation), and restrictions on foreign shareholding ratios (which vary by industry, generally Manufacturing industry can hold 100% shares), etc. An online consultation service will be added in 2024, and companies can communicate directly with policy experts through video conferencing.
A stricter management system has been adopted in terms of approval time limits. Standard projects promise to complete the entire process of approval within 40 working days, and major projects within 20 working days. If the approval is overdue, the approval department must explain the reasons and complete the matter within a time limit. In 2023, the average approval time will be 35 days, and the on-time completion rate will reach 92%. It is worth noting that a “deficient acceptance” mechanism will be added in 2024, allowing companies to start the approval process while supplementing secondary materials to further improve efficiency.
Compliance requirements and follow-up management
After an enterprise obtains investment incentives, it must strictly abide by relevant compliance requirements. Annual reporting is the most basic compliance obligation. Enterprises must submit annual performance reports to the Investment Committee before March 31 of each year, including the degree of achievement of investment completion, job creation, local procurement, environmental protection and other commitment indicators. Starting from 2024, annual declarations will be fully electronic, and companies will submit standardized reports through online platforms. The declaration qualification rate for 2023 is 87%. Enterprises that fail to declare on time will be fined a late payment fee of 1,000 pesos per day.
Strict assessment indicators are set to maintain preferential qualifications. Enterprises need to continue to meet minimum investment requirements (not less than 20 million pesos in manufacturing), local procurement rate (not less than 40%), employment commitments (creating no less than 1 job for every 1 million pesos invested) and other conditions. In 2024, new environmental compliance requirements will be added, and companies must pass annual environmental audits. Data shows that 32 companies will be disqualified from preferential treatment in 2023 because they fail to continuously meet the conditions.
The violation penalty system was further improved. Minor violations (such as late submission of materials) will be given a warning and a deadline for rectification; major violations (such as false reporting of investment amounts) will be fined five times the amount of the violation and may face criminal prosecution. In 2024, the crackdown on tax evasion will be particularly strengthened. If an enterprise is found to be using preferential policies for tax planning, all the preferences already enjoyed will be recovered and an additional 50% fine will be imposed.
The preferential termination clause clearly stipulates four situations: the enterprise actively applies for termination, fails to meet the commitment targets for two consecutive years, major violations of laws and regulations, and bankruptcy liquidation. In particular, a “special circumstances exemption” clause will be added in 2024. Enterprises that are temporarily unable to meet the standards due to force majeure can apply for a grace period of up to 12 months.
Suggestions on selecting preferential policies
For enterprises of different sizes, it is recommended to adopt differentiated preferential policy selection strategies. Large enterprises (investment exceeding 500 million pesos) are recommended to give priority to the IPP comprehensive preferential package, which can enjoy multiple preferential policies at the same time to maximize tax savings. Medium-sized enterprises (investment amount of 100 million to 500 million pesos) can focus on individual special incentives, such as equipment import exemptions or technology transfer incentives. Small enterprises (investment amount less than 100 million pesos) are recommended to choose regional preferential policies to enjoy additional support for investment in backward areas.
The optimal solutions for each industry vary depending on the characteristics of the industry. The manufacturing industry can make comprehensive use of IPP, equipment import exemptions and technology transfer discounts; the service industry should focus on talent introduction discounts and reinvestment discounts; the agricultural sector should make full use of land use tax exemptions and agricultural subsidy policies. Data in 2023 show that the average tax preferential amount for the manufacturing industry reaches 28% of the investment amount, for the service industry it is 22%, and for agriculture it is 35%.
There are several factors that need to be considered when calculating return on investment. It is recommended to use the dynamic investment rate of return method to comprehensively consider tax incentives, subsidy income, cost savings, etc. to calculate the actual return level of the project. The calculation tool released by the Investment Committee in 2024 can automatically generate a comparison report of preferential plans to facilitate corporate decision-making. According to statistics, making full use of preferential policies can shorten the project investment payback period by 25-30%.
Risk prevention recommendations focus on compliance management. Enterprises should establish a dedicated policy tracking team to regularly evaluate the implementation of preferential policies and make response plans for policy adjustments. Particular attention should be paid to avoid over-reliance on a single preferential policy, and it is recommended to spread risks through diversified layout.
Future Policy Outlook
Policy adjustments in 2025 will pay more attention to precise policy implementation. It is expected that industry classification will be further refined to provide more targeted support for strategic emerging industries. At the same time, the approval of preferential policies will be more stringent, and the enforceability of corporate commitments will be subject to critical review. According to the Investment Committee’s forecast, foreign investment is expected to grow by 20% in 2025 and will reach 350 billion pesos.
The preferential trends in emerging industries are mainly concentrated in five major areas: artificial intelligence, biomedicine, new energy, digital economy and high-end manufacturing. These areas will enjoy a longer preferential period (up to 15 years) and higher R&D support (up to 400% super deduction). It is expected that by 2025, investment in emerging industries will account for 45% of total foreign investment.
Regional policy coordination will become closer. The government plans to establish a Beijing-Tianjin-Hebei-style regional coordinated development mechanism to coordinate industrial layout and avoid vicious competition. It is expected that cross-regional investment preferential policies will be introduced to support the coordinated development of enterprises in multiple regions. In 2025, 50 billion pesos will be invested to support regional coordinated development projects.
Analysis of investment opportunities shows several key directions: first, digital infrastructure construction, with investment demand expected to exceed 100 billion pesos; second, green energy transformation, with the government planning to build 50 renewable energy industrial parks by 2025; third, high-end manufacturing Upgrading, especially electric vehicles and the semiconductor industry will receive key support.
It is recommended that enterprises pay close attention to policy trends, plan key areas in advance, strengthen communication with local governments and industrial parks, and seize policy opportunities in a timely manner. In particular, it is important to note that policy adjustments in 2025 may bring new entry thresholds and compliance requirements, and companies should be fully prepared. Taken together, the investment environment in the Philippines will continue to be optimized, but companies also need to pay more attention to the formulation and execution of long-term development strategies.
