Reopening a Door Closed for Seven Years
Administrative Order No. 45, signed on July 23, 2026, ends the suspension of new economic zone issuances in the National Capital Region imposed through AO 18 in 2019. AO 45 specifically exempts IT Parks and IT Centers from the moratorium, while the suspension for other types of economic zones remains in place. For the IT-BPM sector, especially GCCs requiring large, high-specification floors in PEZA-accredited locations, this policy answers a long-dormant need.
A Competitive Incentive Structure
The Philippines offers one of the most aggressive fiscal incentive packages in Asia-Pacific for shared service and BPO operations. PEZA registration provides an income tax holiday of four to seven years, followed by a 5% gross income tax or enhanced deductions for ten years. The legal basis is the CREATE Act (RA 11534), later amended by CREATE MORE (RA 12066). It should be noted that fiscal incentives are not granted to new building developers in Metro Manila under PEZA Board Resolution No. 00-411; however, tenant companies may still qualify as locators.
Impact on Pipeline and Location Decisions
Certainty of PEZA-accredited supply is a prerequisite for GCCs evaluating expansion. With only around 496,000 square meters of quality PEZA space in prime locations—and around 44% of available PEZA space in Metro Manila assessed as aging—AO 45 signals that structural bottlenecks are being addressed. Colliers notes around 681,000 square meters are in the PEZA process, and five projects have submitted applications, including Altaire in Makati, One Trium Tower in Muntinlupa, and ARCA South 1 in Taguig.
A Signal for Multinational Companies
The combination of tax holidays, preferential rates, and reopened prime supply places the Philippines in a more competitive position vis-à-vis other regional destinations. However, companies still need to verify activity and location eligibility before incorporating incentives into cost models, as duration and coverage depend on specific activities and locations. In an increasingly tight global competition landscape, clarity of the policy framework is the differentiator between realized pipelines and delayed plans. Official policy updates are published through the Philippine Official Gazette and PEZA.
