The Board of Investments (BOI) has approved a total of P1.16 trillion worth of investments for 2023, which marked not only a 59-percent growth from the previous year, but also a record high for the agency. For the year 2024, the BOI is eyeing to further increase these investments to P1.5 trillion. These investments are important for the country as they signify foreign confidence in the business climate and contribute to further economic development.
The role of the BOI is bringing investments to the Philippines. As an attached agency of the Department of Trade and Industry, the BOI is involved in the preparation of the Strategic Investments Priority Plan (SIPP), which represents the industries that the Philippine government is seeking to develop. Industries under the SIPP are entitled to incentives, both fiscal and nonfiscal in nature. Other than this, the BOI also helps investors in the country by providing information, assisting with business procedures and requirements, and even highlighting opportunities for collaboration.
In an episode of the Thought Leaders and Game Changers podcast, Trade Undersecretary and BOI managing director Ceferino “Perry” Rodolfo discussed the role of the BOI in promoting investments and aiding investors, as well as providing an overview of which countries are investing in the Philippines and which industries are experiencing continuous growth.
Most, however, will know of the BOI for its role in the approval of incentives. All eligible enterprises not located within economic zones must apply for incentives with the BOI. Pursuant to Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, these incentives have been standardized, specifically income tax holiday, special corporate income tax rates, enhanced deductions, duty exemptions, and value added tax (VAT) exemptions/zero-rating.
Aside from these fiscal incentives, BOI also offers other certain benefits for investors. One of these is the employment of foreign nationals; BOI-registered enterprises may employ foreign nationals in supervisory, technical, or advisory positions. Another is the simplification of customs procedures for exportation and importation of products. Finally, BOI-registered will also have access to bonded warehouses.
Online service
With the help of the BOI, investors will also find it easier to register their enterprises. Recently, the BOI has implemented its BOI Online Service System (BOSS) that allows registrants to apply for project registration, avail of incentives, submit reports, as well as apply for endorsements and other BOI services. Through BOSS, these transactions can all be done online and in a more convenient manner.
The President has also issued Executive Order (EO) No. 18, series of 2023, which mandates the creation of green lanes for strategic investments. Put simply, green lanes expedite the processing of permits, licenses, certifications and/or authorizations required by a business enterprise. Through the use of these green lanes, investors engaged in these strategic investments (as defined under the SIPP) will have an easier time with their applications. Furthermore, pursuant to this EO, national government agencies and local governments will work toward the simultaneous processing of applications so that businesses engaged in strategic investments will be able to start their operations earlier.
Complementing the BOI’s efforts in attracting investments is the Philippines’ ongoing policy reforms. Recently, Congress has enacted transformative policies such as the Ease of Paying Taxes (EOPT) Act, CREATE, Tax Reform for Acceleration and Inclusion and even the Ease of Doing Business Act. To further cater to foreign investments and create a more conducive business environment, the country has also set its sights on the remaining packages of the comprehensive tax reform program.
In my recently published book, “Why Invest in the Philippines?,” I have provided not only a breakdown of the policies that the government has recently implemented, but also policies that the government is likely to implement in the near future. This would arm potential investors with foresight and allow them to adapt or plan ahead accordingly. It also provides an outlook on the Philippine economy as well as an overview on the business regulatory backdrop in the country.
In the end, attracting foreign investors requires not only offering tax incentives, but more importantly, further improving the ease of doing business and reducing the cost of doing business.
Through our international tax and investment road show, I have been in a position to listen to the concerns of foreign investors who have attended our investment and tax briefings. Last month, we conducted the road show in East Asia (Singapore, Malaysia, Japan and South Korea). Currently, it is being conducted in the UnitedStates (San Francisco, Los Angeles, New York and Washington) and will be held in Europe (Spain, Germany, Netherlands, France, Switzerland and the United Kingdom) next month. After these road shows, I plan to meet Secretary Frederick Go, special assistant to the President for investment and economic affairs, to discuss all the concerns and feedback we gathered from our investment and tax briefings.
One of the recurring concerns raised was the VAT refund. While the EOPT Act introduced the risk-based approach in processing VAT refund, which is similar to my proposal for a risk-based audit, we still need to address it directly. To this, I am proposing the establishment of a Tax Refund Center, which is separate from the Bureau of Internal Revenue.
Moreover, it would be helpful to establish a Consultative Council composed of representatives from foreign chambers of commerce in the Philippines to provide an avenue for discussion and resolution of concerns and issues related to foreign direct investments that prevent foreign investors from investing or expanding in the Philippines.
As we continue our international tax and investment road show in the United States, Europe, Oceana, North America and Middle East, the Asian Consulting Group remains steadfast in its commitment to working with our government in promoting investing and doing business in the Philippines. Invest in the Philippines today. INQ
This article reflects the personal opinion of the author and not the official stand of the Management Association of the Philippines or MAP. The author is MPA/Mason Fellow at Harvard Kennedy School. He is member of MAP Tax Committee and MAP Ease of Doing Business Committee, co-chair of Paying
Taxes on Ease of Doing Business Task Force and chief tax advisor at ACG. Feedback at map@map.org.ph and mon@acg.ph.