The 2026 SIPP: Where innovation meets incentives

As digital technologies continue to reshape industries and redefine the global economy, governments are increasingly competing not only for capital but also for innovation. Countries are investing heavily in sectors that will drive future growth, including artificial intelligence (AI), digital infrastructure, data centers, clean energy and other emerging technologies. The Philippines is no exception.

With the recent approval of the 2026 Strategic Investment Priority Plan (SIPP), the Philippine government has demonstrated its intention to position the country as a more attractive destination for high-value and innovation-driven investments. Approved through Memorandum Order 47 upon the recommendation of the Board of Investments (BOI), the 2026 SIPP outlines the activities that may qualify for fiscal incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, and further enhanced by the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act. More importantly, it provides a glimpse into the government’s broader policy direction on the industries expected to contribute to the country’s future economic growth.

The SIPP traces its roots to Republic Act 11534, otherwise known as the CREATE Act. Under CREATE, the BOI, in coordination with the Fiscal Incentives Review Board (FIRB), investment promotion agencies (IPAs), other government bodies administering tax incentives and the private sector, is tasked with identifying priority economic activities that may qualify for tax incentives.

In practical terms, inclusion in the SIPP may determine a project’s eligibility for incentives such as income tax holiday (ITH), special corporate income tax (SCIT), the enhanced deductions regime (EDR), VAT incentives, duty exemptions, and other fiscal and non-fiscal incentives available to registered business enterprises.

What makes the 2026 SIPP different?

The 2022 SIPP was largely designed against the backdrop of economic recovery following the disruptions caused by the pandemic. The 2026 SIPP reflects a different policy direction. Rather than focusing primarily on recovery, the new SIPP emphasizes economic transformation.

While earlier versions of the SIPP already covered information technology and certain innovation-related activities, these were often grouped under broader classifications such as research and development and knowledge-based services. The 2022 SIPP, for instance, already covered artificial intelligence, data analytics, cloud computing services, data centers, digital infrastructure, biotechnology and innovation hubs under its Tier III priorities. The 2026 SIPP, however, appears to take a more deliberate approach by expressly highlighting sectors such as artificial intelligence and data science, cybersecurity, quantum technologies, modern biotechnology and other emerging technologies as strategic priorities.

The 2026 SIPP also appears to sharpen its emphasis on industries that strengthen domestic industrial capabilities and supply chains, including electric vehicles (EVs), EV charging infrastructure, critical minerals processing, aerospace-related activities, and advanced digital solutions that enhance automation across various industries.

Although renewable energy was already covered in prior SIPPs, the 2026 SIPP places greater emphasis on emerging energy technologies, including hydrogen and nuclear energy.

Perhaps the most notable aspect of the 2026 SIPP is not simply the addition of new sectors, but what those additions reveal about the government’s policy direction. A review of the priority activities suggests that investments are no longer evaluated solely by their ability to generate employment or attract capital. Increasing importance is being placed on an activity’s capacity to promote innovation, digitalization, technological advancement, sustainability and supply-chain resilience.

From a tax policy perspective, this reflects a gradual shift from incentivizing economic activity in general to incentivizing activities that are expected to deliver strategic outcomes that support long-term competitiveness and economic transformation.

What does it mean for taxpayers and investors

For taxpayers and investors, the SIPP is more than just a list of preferred industries. It serves as the gateway to a range of tax and non-tax incentives that can significantly influence investment decisions, business expansion plans, and long-term growth strategies.

Companies engaged in emerging technologies, digital infrastructure, advanced manufacturing and innovation-driven activities may find expanded opportunities to qualify for tax incentives.

Obtaining incentives, however, is only one part of the equation. As incentive regimes become more targeted, IPAs and tax authorities are likewise expected to place greater emphasis on monitoring whether registered activities actually deliver the outcomes that justified the grant of incentives. This is consistent with the broader objective of ensuring that fiscal incentives generate measurable economic benefits and contribute meaningfully to national development.

Awaiting the fine print

At present, the detailed General Policies and Specific Guidelines for the 2026 SIPP have yet to be released. According to the BOI, these are expected to be issued within the third quarter of 2026. Until then, taxpayers and investors may need to navigate a transition period in which the government’s priorities are known, but the precise qualification requirements are not yet fully defined.

In the meantime, the BOI has clarified that the 2022 SIPP General Policies and Specific Guidelines will continue to apply pending the issuance of the 2026 implementing guidelines.

Looking ahead

The Philippine tax landscape continues to evolve in step with the rapid expansion of the digital economy. For taxpayers and investors, the 2026 SIPP presents both opportunities and responsibilities. The challenge, however, will be to translate these opportunities into qualifying projects that satisfy both commercial objectives and incentive requirements.

For policymakers, the success of the 2026 SIPP will not be measured solely by the number of registered projects or the incentives granted. Rather, it will depend on whether these investments translate into innovation, stronger industries, quality jobs, and sustainable economic growth—outcomes that the CREATE and CREATE MORE reforms were designed to achieve.

Jo Marie P. Santos-Layug is a Tax Supervisor from the Tax Group of R.G. Manabat & Co. (KPMG in the Philippines), Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Ltd., a private English company limited by guarantee. The firm has been recognized as a Tier 1 in Transfer Pricing Practice and in General Corporate Tax Practice by the International Tax Review. For more information, you may reach out to Jo Marie P. Santos-Layug or Maria Myla S. Maralit through [email protected], social media or visit www.home.kpmg/ph.