Councilor Paolo Raynor Salvosa has proposed an ordinance granting tax holidays and rental incentives to qualified circular economy startups in Baguio City.
The proposed measure, titled the “Baguio Circular Economy Startup Tax Holiday,” establishes a framework of local tax exemptions and incentives for newly registered businesses that advance circular economy principles.
Eligible startups must be duly registered with the City Government of Baguio and with the appropriate national agency, maintain their principal office within the city, and ensure that at least 50% of their workforce are Baguio residents.
Applicants must demonstrate that their core operations promote waste reduction, reuse, repair, remanufacturing, recycling, upcycling, sustainable materials development, or resource recovery, including activities that support compliance with the Extended Producer Responsibility Act of 2022.
The ordinance adopts the globally recognized 10R (R-Hierarchy) framework as the basis for determining the level and duration of incentives.
Startups engaged in “short-loop” strategies, such as Refuse, Rethink, and Reduce, are granted the longest tax holiday period, followed by those implementing medium-loop strategies like reuse and repair, and finally those focused on long-loop approaches such as recycling and recovery. Each tier is entitled to a graduated exemption from local business taxes and fees, with higher-impact waste prevention models receiving longer and more substantial benefits.
In addition to tax relief, qualified startups may avail of graduated discounts on rental fees for city-owned facilities used for events, product launches, workshops, or exhibitions promoting circular economy initiatives. The same tiered structure applies, with stronger incentives for enterprises that prevent waste at the source.
The measure also provides a transition benefit for “scale-up” startups that are beyond five years but not more than eight years from registration. These entities may qualify for partial exemptions if they meet financial vulnerability thresholds, submit audited financial statements, and commit to reinvesting a portion of their net profits into local circular economy research, green infrastructure, or community-based waste diversion programs within the BLISTT area.
To further incentivize inclusive and socially responsive innovation, the ordinance introduces bonus benefits for startups that meet at least two specified criteria, such as formal engagement with the informal waste sector, gender and youth-responsive ownership or management, use of indigenous Cordilleran materials, conduct of community circular literacy workshops, or readiness for green public procurement accreditation. Qualified entities may receive an extension of their tax holiday or an additional discount on local business taxes.
Implementation and monitoring will be led by the City Treasurer’s Office in consultation with a Local Circular Economy Action Team.
Startups must submit annual compliance reports detailing their continued circular operations and measurable environmental contributions, such as the volume of waste diverted from landfills or partnerships supporting EPR targets. Non-compliance or falsification of documents will result in revocation of incentives and liability for unpaid taxes.
The ordinance creates a multi-sectoral Circular Economy Oversight Committee composed of representatives from the city government, private sector, academe, and civil society.
The committee will regularly review implementation and recommend adjustments to the Implementing Rules and Regulations (IRR) to keep the program responsive and effective.
The proposed ordinance has been approved on first reading by the Baguio City Council and referred to the Committee on Appropriations and Finance Cluster B for review. **Jordan G. Habbiling
