Tax incentives granted by investment promotion agencies (IPAs) left the government with more than ₱146 billion in net revenue shortfall in 2024, collecting only 62 centavos for every peso of foregone revenue.

In its latest preliminary cost-benefit analysis (CBA) published on Dec. 15, 2025, the Fiscal Incentives Review Board (FIRB) said the government’s foregone revenues—or taxes that could have been collected—due to tax perks given away to qualified investments reached ₱146.85 billion in 2024.

“This corresponds to an estimated net revenue loss of ₱0.38 per ₱1 of incentives granted,” FIRB said.

This, however, marks an improvement from the ₱170.18 billion in foregone revenues in 2023, which had a net revenue ratio of 42 centavos for every peso spent on tax incentives.

The government, through IPAs, racked up 31 percent more in tax expenditures, amounting to ₱382 billion in 2024 from ₱292 billion the year before.

Tax collections during the period surged to ₱235.16 billion compared with ₱121.8 billion in 2023.

FIRB’s analysis covered 2,046 registered business enterprises (RBEs), of which 719 availed themselves of the government’s income tax-based incentives and 1,024 of non-income tax-based incentives. Among these, 702 RBEs availed themselves of both types of incentives.

The Board only took account of incentives provided under the National Internal Revenue Code (NIRC) of 1997, or the Tax Code, and the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. The impact of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act was not included, as it only took effect in February last year.

Based on FIRB data, providing incentives to the energy sector was the most beneficial move for the government in 2024.

The government incurred ₱17.19 billion in tax expenditures but collected ₱103.78 billion in taxes in return, or 44 percent of the year’s total. This means that for every peso spent, it generated ₱6 in revenue.

Tourism and projects under public-private partnerships (PPPs) were the other sectors where tax incentives yielded positive fiscal returns, generating ₱1.20 and ₱1.13, respectively, for every peso of foregone revenue.

The worst-performing sector was manufacturing, as the government incurred ₱274.51 billion in tax expenditures yet collected only ₱52.82 billion in taxes in return. The net revenue ratio stood at ₱0.19 for every peso of incentives.

Other sectors that recorded subpar performances include unfilled and unspecified registered activities, with a net revenue ratio of also ₱0.19; agriculture and fishery at ₱0.36; and mining and quarrying at ₱0.79.

Factoring in production costs and revenues, RBEs that received incentives added ₱1.14 trillion to the economy in 2024, equivalent to 4.33 percent of the country’s gross domestic product (GDP).

In the same period, return on investments (ROI)—calculated as the ratio of gross value added (GVA) to tax expenditure—stood at 3.00. Essentially, for every peso of tax expenditure, incentivized RBEs generated ₱3 in direct economic value.

Based on these metrics, the impact of incentives on the country’s productivity was weaker in 2024 compared with the year before.

In 2023, the GVA of incentives to the economy reached ₱1.72 trillion, or 7.09 percent of total GDP, while ROI amounted to 5.91.

“This suggests that tax incentives have stimulated economic activity and generated returns for the government. However, fiscal incentives are not the sole driver that induces economic activities. Other factors, such as favorable economic conditions or firm-specific characteristics, have also played a role,” FIRB said.

According to FIRB, large-sized enterprises benefited the most from incentives in 2024, availing ₱377.65 billion, or 98.86 percent of total estimated tax expenditure, averaging ₱281.41 million per firm.

Medium-sized businesses received only ₱4.04 billion, or 1.06 percent of total incentives.

Meanwhile, small and micro-sized firms were provided just 0.07 percent and 0.02 percent of total incentives, respectively.

More than three-fifths, or around 62 percent, of these companies are registered with the Philippine Economic Zone Authority (PEZA), according to FIRB.

FIRB, which is chaired by the Department of Finance (DOF), is the interagency government body mandated to oversee the grant and administration of incentives by IPAs.

The Board’s annual preliminary CBA report is based on the annual tax incentives report and the annual benefits report submitted by RBEs to their respective IPAs.