Maximizing incentives in the 2026 SIPP

Incentives shape investment decisions — but not all incentives are created equal. With the 2026 Strategic Investment Priority Plan (SIPP), this distinction becomes more pronounced. While much of the discussion focuses on which industries qualify, a more important question is often left unasked: at what level do they qualify?

The SIPP remains the government’s primary policy tool for identifying activities eligible for fiscal and non-fiscal incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. It is issued every three years to align investment priorities with national development goals. In practice, it does more than define eligibility. It signals where investments are encouraged to move.

Under CREATE, eligibility is only the starting point. The level of incentives depends on how an activity is classified, as well as where it is located. These factors work together to determine both the value and duration of incentives. With CREATE MORE expanding incentive periods and refining the menu of incentives, classification, alongside location, has become a strategic consideration, rather than a mere compliance requirement.

At the center of the SIPP is a three-tier system. Introduced in 2022, the framework is retained in 2026 but applied with greater precision and intent. Under CREATE MORE, projects may enjoy an Income Tax Holiday (ITH), followed by either a Special Corporate Income Tax (SCIT) rate or Enhanced Deductions (ED). Investors may also opt to skip the ITH and apply the SCIT or ED outright for a longer period. With total incentive availment potentially reaching up to 14 to 27 years, the difference between tiers is material. Higher-tier activities, particularly Tier III, generally benefit from longer availment periods, reflecting the government’s push toward innovation-driven and strategic industries.

Tier I covers activities with strong job creation potential and those that address gaps in basic goods and services. It includes sectors that support industrial development such as manufacturing, agriculture, infrastructure, and logistics.

The 2026 SIPP introduces a more defined structure. While Tier I in the 2022 SIPP retained all activities from the 2020 IPP, the current framework now organizes these activities into two clearer clusters: modern basic needs and sustainability-driven industries. The more specific activities fall under these clusters, including integrated logistics, value-adding manufacturing, halal, kosher, and organic production, and environmental and climate-related projects. This reflects a more intentional approach to grouping and prioritization, even if the underlying activities remain largely similar.

Information technology and business process management (IT-BPM) activities remain under Tier I. While these sectors are already established exporters, they are still seen as part of the baseline. The implication is clear; Tier I is not merely a starting point, but a structured base. It sets expectations. It also implicitly challenges businesses to evolve toward higher-value activities if they want access to enhanced incentives. 

Tier II reflects a sharper focus on supply chain resilience and import substitution. It targets gaps in domestic production and seeks to reduce import dependence. The list includes high-impact sectors such as electric vehicle manufacturing, charging infrastructure, sustainable aviation fuel, and mineral processing into higher-value outputs. It also covers import-substituting industries such as iron and steel products not locally produced.

Food security is another key theme. Activities such as hybrid seed production, animal vaccine manufacturing, and precision agriculture are now explicitly prioritized, reflecting a shift toward self-sufficiency and value chain integration.

Tier III, the highest, shows the most significant expansion. While earlier iterations already covered research and development, the 2026 SIPP widens the scope to include science, technology, and innovation (STI) ecosystems. Priority areas now include data science, cybersecurity, artificial intelligence, quantum technologies, and additive manufacturing.

This signals a shift toward innovation-led growth. Importantly, the SIPP does not limit Tier III to new industries. Even traditional sectors can qualify if they incorporate advanced technologies. A manufacturing firm that adopts Industry 4.0 and 5.0 technologies may move from Tier I to Tier III. The message is practical; innovation is not sector-specific. It is activity-driven.

Export-oriented activities remain recognized, along with those governed by special laws. As a baseline rule, these fall under Tier I unless they meet higher-tier criteria. This includes export manufacturing, IT-enabled services, and support functions such as logistics and testing. Housing and infrastructure also remain covered.

Taken together, the 2026 SIPP reflects a more calibrated approach. Core industries are still supported. However, the emphasis has shifted. It is no longer enough to participate in priority sectors — businesses are expected to contribute meaningfully through innovation, value creation, or supply chain strengthening.

In my view, this is a positive direction. It aligns incentives with long-term economic strategy. However, as the distinction between tiers is now more nuanced, it introduces complexity.  Two companies in the same industry may be treated differently based on process, technology, or integration. This raises practical challenges. Classification will likely require closer engagement with Investment Promotion Agencies (IPAs). Projects with multiple components may face ambiguity in tier assignments. The need for clear and consistent guidelines becomes more critical. There is also the question of predictability. Incentives carry financial weight. Small differences in classification can affect returns. Businesses need clarity early in the planning stage. Delays or inconsistent interpretations across agencies could dampen the intended policy impact.

From a policy perspective, further guidance on measurable criteria would be helpful. For example, clearer thresholds for what constitutes “advanced technology” or “value-adding” could reduce subjectivity and ensure that only those who have rightfully adopted the requirements secure the higher-tier incentives. Transparent benchmarks can strengthen investor confidence and improve implementation efficiency. Despite these challenges, the opportunities are clear. The SIPP should be viewed as a framework for designing investments.

“Climbing the tiers” is not theoretical and can be achieved through deliberate structuring. Businesses may expand upstream or downstream to capture more value, adopt digital and advanced technologies to improve efficiency, and align sustainability or innovation goals.

In many cases, these are not large shifts. But the impact on incentives can be significant. This reinforces the need for early-stage planning. Tax and incentive considerations should be integrated into business design, not addressed after the fact. Coordination between operational, financial, and tax teams becomes essential.

Ultimately, under the 2026 SIPP, incentives are no longer just about qualifying industries. They are about direction, rewarding alignment with national priorities, whether in innovation, sustainability, or supply chain resilience. The key question for investors is simple but critical: not just whether a project qualifies, but whether it qualifies at the right level. Those who can answer this early and act on it may find that incentives are not merely a benefit, but a competitive advantage.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

Anika Mae Fierro is a senior associate at the Tax Services department of Isla Lipana & Co., the Philippine member firm of PricewaterhouseCoopers global network.

anika.mae.fierro@pwc.com