The Davao City Council has given its final approval to a significant update of the city's investment regulations, paving the way for enhanced incentives aimed at attracting a wider range of businesses. On Friday, January 5, 2026, the 21st Davao City Council approved on third and final reading the amendments to the Davao City Investment Code, a move designed to modernize the city's economic landscape.
Modernizing a 31-Year-Old Framework
Councilor Myrna Dalodo-Ortiz, the principal proponent of the ordinance, emphasized the necessity of the update. She explained that the revised code ensures the city government is prepared to offer compelling opportunities to potential investors. "Many of the needs of our city require that the City Government has to be ready with something to offer to investors who want to invest in the city," Dalodo-Ortiz stated. The amendments aim to make Davao open to diverse investments, particularly those involving modern technologies.
Expanded Scope of Priority Investment Areas
According to April Dayap, Head of the Davao City Investment and Promotion Center (DCIPC), the newly amended code provides a comprehensive definition of Priority Investment Areas (PIA). While it retains the core sectors from the 1994 code—such as agri-business, tourism, light manufacturing, and technology—it now includes more specific and modern ventures.
The updated PIA list now comprehensively covers:
- Detailed agri-business categories.
- Retirement villages, star-rated hotels, theme parks, and convention centers under tourism.
- Sports tourism and various types of hospitals and health services.
- Technology sectors like BPO facilities, innovations, and new inventions.
- Eco-industries, including electric vehicle-related businesses.
Enhanced Tax Incentives for MSMEs
A key focus of the revised code is providing substantial support to Micro, Small, and Medium Enterprises (MSMEs) operating within the designated PIAs. Dayap highlighted that the city made sure these businesses can enjoy more benefits.
The new incentives, to be granted by the Davao City Investment Promotions Board, include:
A graduated exemption from business tax for up to five years from the start of commercial operations. This means a 100% exemption for the first three years, 60% in the fourth year, and 40% in the fifth year.
Exemption from basic Real Property Tax has been extended from two to three years.
Exemption from mayor’s permit fees is now extended from three to five years. It is important to note that these local tax exemptions do not cover specific fees like garbage, sanitary inspection, or electrical inspection fees.
Additionally, MSMEs will be exempt from amusement tax for four years. Exemption from tax on the transfer of Real Property Tax will apply only to amusement tax-subject projects within the PIA.
This legislative update marks a strategic effort by Davao City to position itself as a competitive and forward-thinking investment destination in the Philippines, directly supporting local entrepreneurs while attracting new capital.
