Choosing between PEZA (Philippine Economic Zone Authority) and BOI (Board of Investments) registration is one of the most consequential decisions a foreign company makes when entering the Philippines. Both are Investment Promotion Agencies (IPAs) that confer incentives under the CREATE MORE Act (RA 12066, effective November 2024), but they serve different business models and impose different operational requirements.
What CREATE MORE changed
The original CREATE Act (2021) unified the incentive framework across all IPAs. The CREATE MORE Act (2024) built on that by:
- Reducing the Enhanced Deductions Regime (EDR) CIT rate from 25% to 20% for Registered Business Enterprises (RBEs)
- Raising the power expense deduction under EDR to 100% (from 50%)
- Clarifying that both domestic and resident foreign corporations qualify for EDR
- Aligning incentive durations more explicitly with the Strategic Investment Priority Plan (SIPP)
The core incentive menu — Income Tax Holiday (ITH) followed by either SCIT or EDR — applies to both PEZA and BOI registrations.
The incentive package compared
| Feature | PEZA | BOI |
|---|---|---|
| Income Tax Holiday | 4–7 years (tier-based) | 4–7 years (tier-based) |
| Post-ITH option A | 5% SCIT on gross income | 5% SCIT on gross income |
| Post-ITH option B | 20% CIT + Enhanced Deductions (EDR) | 20% CIT + Enhanced Deductions (EDR) |
| VAT zero-rating on local purchases | Yes — on goods and services used in registered activity | No (standard VAT rules apply) |
| Duty-free importation of capital equipment | Yes | Yes (subject to conditions) |
| Location requirement | Must operate inside a PEZA-accredited economic zone or IT park | No zone requirement; nationwide |
| Export requirement | Generally 70%+ revenues from export | None for domestic market activities; export-oriented activities get longer ITH |
The 5% SCIT is in lieu of all national and local taxes on the registered activity — an attractive simplification for high-revenue, low-margin operations. The 20% EDR CIT is better for companies with significant deductible costs (labour-intensive, power-heavy, high training expenditure).
When PEZA makes sense
PEZA is the default choice for:
- IT-BPM, BPO, and KPO companies — PEZA IT Parks are the established home for these sectors; VAT zero-rating on office costs (rent, utilities, internet) is a material cash-flow benefit
- Manufacturing and export operations — PEZA ecozones offer customs-bonded status, enabling duty-free input importation and streamlined export
- Any company where 70%+ of revenue is from export clients — the zero-rating benefit compounds over the life of the incentive
The trade-off: PEZA operations must physically locate within an accredited ecozone or IT park. This limits flexibility in choosing office locations and often means premium rental rates in prime zones.
When BOI makes sense
BOI is better for:
- Domestic-market businesses — retail, distribution, healthcare, construction, food manufacturing, and other activities serving the Philippine market
- Companies that need location flexibility — BOI does not restrict you to an ecozone; you can operate anywhere in the Philippines
- Pioneer and preferred activities under the SIPP — some high-priority sectors qualify for the longest ITH periods regardless of IPA, and BOI processes these registrations efficiently
- Holding companies or headquarters — BOI can accommodate structures that PEZA cannot
BOI-registered companies do not receive VAT zero-rating on local purchases, which means they pay standard 12% VAT on inputs and must claim refunds on any export-related zero-rated activities separately.
The registration process
Both PEZA and BOI require a registered Philippine entity (business registration first), a completed application with a project description and investment plan, and approval of the activity against the SIPP. PEZA registration additionally requires a lease or authority from the ecozone administrator. Both agencies process applications in 20 to 30 business days for straightforward projects.
The honest answer
For most foreign IT, professional services, or technology companies entering the Philippines, PEZA is the default and the better cash-flow story — VAT zero-rating pays for itself quickly. For domestic-market or location-flexible businesses, BOI’s lack of a zone requirement and broad SIPP coverage make it the right fit.
The decision also depends on your capitalisation, headcount, power costs, and post-ITH revenue projections. Chamberlain models this for clients as part of our business registration service. Book a consultation and we will run the numbers for your specific project.
Frequently asked questions
What is the main difference between PEZA and BOI registration?
PEZA is for export-oriented enterprises operating inside designated economic zones, with VAT zero-rating on local purchases as a key cash-flow benefit. BOI covers a broader range of activities including domestic-market businesses, without the zone requirement.
What tax incentives do PEZA and BOI offer under CREATE MORE in 2026?
Both offer an Income Tax Holiday (4–7 years), then a choice between a 5% Special Corporate Income Tax (SCIT) on gross income or a 20% CIT under the Enhanced Deductions Regime (EDR). CREATE MORE (RA 12066, effective November 2024) reduced the EDR CIT from 25% to 20% and raised the power expense deduction to 100%.
Which is better for a BPO or IT-BPM company?
Most IT-BPM and BPO companies register with PEZA because their services are export-oriented and they benefit from VAT zero-rating on office rent, utilities, and local services. BOI is an option when the company has significant domestic market sales or operates outside a PEZA zone.
Official sources
Primary references this guide is checked against.