PEZA vs BOI: How BIR Tax Incentives Differ for Registered Business Enterprises Under the CREATE Act
PEZA and BOI both grant tax incentives from the same standardized menu created by the CREATE Act (Republic Act No. 11534) — an income tax holiday, then a choice between a 5% special corporate income tax or enhanced deductions — but which agency an enterprise registers with still depends on where it operates and what it does, not on which gives a “better” rate. Confusing the two IPAs (Investment Promotion Agencies) for interchangeable options is a common early-stage mistake; the incentive rates converged under CREATE, but eligibility and mechanics did not.
Track Compliance Across Every Registered Entity FREE →Why PEZA and BOI incentives look almost identical now #
Before the CREATE Act, PEZA and BOI each administered incentive packages that could differ meaningfully in rate and structure. Section 294 of the NIRC, introduced by RA 11534, replaced that patchwork with one standardized incentive menu that both agencies now apply to enterprises they register, built around an income tax holiday followed by a single follow-on regime. A widely cited restatement of the core provision describes it this way:
“Section 294 provides that an Income Tax Holiday (ITH) shall be granted for a period of four (4) to seven (7) years, followed by the Special Corporate Income Tax (SCIT) rate of 5% on the gross income earned, in lieu of all taxes, both national and local, or enhanced deductions (ED) for five (5) or ten (10) years.”
This site relied on secondary summaries of the CREATE Act’s Section 294 for this passage, as the full text of Republic Act No. 11534 could not be reached directly to re-verify the exact wording — confirm the precise statutory text before relying on it for a formal filing position.
Where PEZA and BOI still genuinely differ #
The rate menu converged, but eligibility, location requirements, and VAT treatment did not. PEZA registration is built around operating within a PEZA-accredited economic zone, IT park, or freeport, and pairs naturally with the VAT zero-rating that applies to purchases consumed within the zone for export-oriented operations — the classic fit is manufacturing-for-export, IT-BPO, and similar activities physically located in a zone. BOI registration does not require zone-based operations and covers a wider range of activities under the Strategic Investment Priority Plan (SIPP), including many domestic-market enterprises that could never qualify for a PEZA zone location in the first place. An enterprise’s activity and site — not a side-by-side rate comparison — usually decides which IPA is even available to it.
| PEZA | BOI | |
|---|---|---|
| Core incentive menu | ITH (4–7 yrs) then 5% SCIT or ED (Sec. 294, CREATE Act) | Same standardized menu (Sec. 294, CREATE Act) |
| Location requirement | Generally must operate within an accredited economic zone/IT park | No zone-location requirement |
| Typical fit | Export manufacturing, IT-BPO, zone-based operations | Broader SIPP-listed activities, including domestic market enterprises |
| VAT treatment on zone purchases | Zero-rating commonly available for zone-based export activity | Zone-specific zero-rating generally not applicable outside a zone |
| Governing IPA per project | Single IPA per registered project — not stacked | Single IPA per registered project — not stacked |
Registering with only one IPA per project #
A registered business enterprise avails of CREATE Act incentives through one Investment Promotion Agency per registered project, not simultaneously through both. An enterprise with genuinely separate business lines could, in principle, register one activity with PEZA and a distinct activity with BOI, but a single project or registered activity draws its incentive from whichever IPA approved that specific registration — there is no stacking of PEZA and BOI benefits on the same project.
Worked example: choosing an IPA for an export manufacturer #
A manufacturer plans to build a facility exporting 100% of output and is deciding between locating inside a PEZA economic zone or registering the same activity with BOI instead.
| PEZA (zone-based) | BOI (outside a zone) | |
|---|---|---|
| Income tax holiday | 4–7 years (Sec. 294) | 4–7 years (Sec. 294) |
| Follow-on regime | 5% SCIT or enhanced deductions | 5% SCIT or enhanced deductions |
| VAT on imported raw materials for export production | Zero-rated within the zone | Standard VAT rules apply; zone zero-rating unavailable |
| Site flexibility | Must locate within an accredited zone | Can locate anywhere eligible under the SIPP |
For an export-heavy operation that can physically locate inside an accredited zone, the VAT treatment on zone purchases is often the deciding factor even though the income tax terms are the same either way — which is exactly the kind of distinction a straight rate comparison misses.
Related reading #
See CREATE MORE Act Incentives for Registered Business Enterprises for how the follow-on CREATE MORE Act (Republic Act No. 12066) adjusted parts of this framework, CREATE MORE Act Enhanced Deduction: A Worked Example for the mechanics of the enhanced-deductions alternative to the 5% SCIT, and RR No. 1-2026: VAT on Local Sales to RBEs for how zone VAT treatment has since been refined.
Frequently Asked Questions #
Are PEZA and BOI tax incentives the same under the CREATE Act? #
Largely, yes, at the level of the menu offered. Section 294 of the NIRC, as introduced by the CREATE Act (RA 11534), standardized the core incentive package — an income tax holiday of 4 to 7 years followed by either a 5% special corporate income tax on gross income earned or enhanced deductions for 5 or 10 years — as the framework both PEZA and the Board of Investments (BOI) apply, rather than each agency setting its own independent incentive terms.
What’s actually different between registering with PEZA and registering with BOI? #
The practical differences are about the enterprise’s activity and location rather than the tax rate menu itself: PEZA registration generally requires operating within a PEZA-accredited economic zone or IT park and suits export-oriented and IT/BPO enterprises with strong VAT zero-rating needs on zone purchases, while BOI registration does not require operating inside a special zone and covers a broader range of priority activities listed in the Strategic Investment Priority Plan (SIPP), including many domestic-market enterprises.
How long can a registered business enterprise keep its income tax holiday? #
Under Section 294 of the NIRC as amended by the CREATE Act, the income tax holiday runs 4 to 7 years depending on the enterprise’s location and industry tier under the Strategic Investment Priority Plan, and must generally be availed of starting within three years from the date of registration.
What happens after the income tax holiday period ends? #
The registered business enterprise moves to either a 5% special corporate income tax on gross income earned, in lieu of all national and local taxes, or an enhanced deductions regime, for an additional 5 or 10 years depending on its classification — the enterprise generally chooses one of these two follow-on regimes, not both.
Can an enterprise be registered with both PEZA and BOI at the same time? #
No. A registered business enterprise avails of incentives through a single Investment Promotion Agency (IPA) for a given registered project or activity; PEZA and BOI are separate IPAs, and CREATE Act incentives are granted per project through the IPA that approved that specific registration, not stacked across agencies.
Summary #
The CREATE Act standardized PEZA and BOI incentive rates under Section 294 of the NIRC, so the choice between them now turns on activity and location — zone-based export operations toward PEZA, broader SIPP-listed activities without a zone requirement toward BOI — rather than on which agency offers a better deal.