PEZA Philippine Economic Zone Authority

Peza Philippine Economic Zone AuthorityPEZA is attached to the Philippine Department of Trade and Industry (DTI).  PEZA is the Philippine government agency tasked to promote investments, extend assistance, register, grant incentives and facilitate the business operations of investors in export-oriented manufacturing and service facilities inside selected areas throughout the country proclaimed by the President as PEZA Special Economic Zones (ecozones).

The PEZA Special Economic Zones has earned the trust of investors with its many locations throughout the Philippines ready for development, offered at a secured and competitive prices. Under PEZA, companies can avail of tax incentives and other benefits.

PEZA’s dynamic, responsive and client-oriented ethics have earned the trust and confidence of foreign and local investors and the Philippines Foreign Chambers of Commerce  in its Special Economic Zones and tax incentives.

PEZA is ISO 9001:2000 certified.

Incentives for Ecozone and IT Locators

  •  Income Tax Holiday (ITH) – 100% exemption from corporate income tax:
    ◦ 4 years ITH for Non-pioneer project
    ◦ 6 years ITH for Pioneer project
    ◦ 3 years ITH for Expansion project (ITH applies to incremental sales)
  • Upon expiry of the Income Tax Holiday – 5% Special Tax on Gross Income and exemption from all national and local taxes. (“Gross Income” refers to gross sales or gross revenues derived from the registered activity, net of sales discounts, sales returns and allowances and minus cost of sales or direct costs but before any deduction is made for administrative expenses or incidental losses during a given taxable period)
  • Exemption from Wharfage Dues and Export Taxes, Imposts and Fees
  • Special Non-Immigrant Visa 47(a)2 with Multiple Entry Privileges for the following non-resident Foreign Nationals in a PEZA-registered Economic Zone Enterprise : Investor/s, officers, and employees in supervisory, technical or advisory position, and their spouses and unmarried children under twenty-one years of age. PEZA extends Visa Facilitation Assistance to foreign nationals their spouses and dependents.
  • Employment of foreign nationals
  • Simplified Import and Export procedures

Other incentives under Executive Order 226 (Omnibus Investment Code of 1987), as may be determined by the Philippine Economic Zone Authority Board.

Note: The companies registered with the Subic Bay Metropolitan Authority (SBMA) or Subic Bay Freeport Zone and the Clark Freeport Zone (CDC), are not eligible for the Income Tax Holidays, but will enjoy a 5% tax on gross income.

To benefit of PEZA’s tax breaks and incentives
, a company needs to register and locate its operations in one of the PEZAs’ Special Economic Zones, IT Parks, Technology Parks, or buildings. Businesses inside the PEZA zones must export 100% of their production/services but in some special cases an exemption can be granted for the sale of up to 30% of its production/services to be sold in the domestic market.

A company located in the PEZA zone may be 100% foreign owned business  as long as its activities are not listed in the Foreign Investment Negative List. The registration approval and the incentives granted by PEZA is given on a case by case basis.

The establishment of PEZA and the laws regulating its tax incentives and other benefits available to investors in  the Philippines Special Economic Zones was enacted by the Special Economic Zone Act of 1995 (Republic Act No. 7916).

For companies that will not avail of PEZA incentives see the rules on foreign ownership of Philippine companies.

Tax  breaks and incentives of the Philippines Board of Investments

BOI Philippines Board of Investments

The Philippines’ Board of Investments (BOI) operates under the authority of the Department of Trade and Industry (DTI). The BOI is the leading government agency for promoting local and foreign investments in the Philippines. By focusing on globally competitive industries, the BOI’s aim is to stimulate economic prosperity and employment for the country. The agency promotes the sustainable use of the state’s resources and the cooperation of the government with private investors through preferred areas of business which are published once a year in the Investment Priorities Plan (IPP). The IPP is drawn up  by an inter-agency delegation and approved by the President; it lists specific areas of activities which qualify a business for incentives.

Projects registered with the BOI can avail from fiscal incentives and tax breaks:

•Income Tax Holiday *
•Exemption From Wharf Dues and Export Tax, Duty, Impost and Fees
•Exemption From Taxes and Duties on Imported Spare Parts
•Tax Exemption on Breeding Stocks and Genetic Materials
•Tax Credits
•Additional Deductions from Taxable Income

* 3 to 8 years of Income Tax Holiday and 4 to 6 years of local business tax exemption respectively for non-pioneer and pioneer industries.

There are different requirements for pioneer and non-pioneer industries.

•  Pioneer industries: 100% foreign owned companies are entitled to incentives if:

◊ at least 70% of their services/products are intended for export, or
◊ its projects are undertaken in less-developed areas of the Philippines as listed by the BOI.

These enterprises are required to attain 60% Filipino-ownership within 30 years of registration  with the BOI unless they are exporting or intend to export 100% of their services/production.

•  Non-pioneer industries: Foreign ownership is limited to 40%, unless 70% of the  annual production is exported.

Incentives may still be granted to businesses whose activity is not included in the IPP, under one of these conditions:

1) The enterprise is at least 60% Filipino-owned  and 50% or more of the services/products are intended for export , or

2) The company is more than 40%  foreign-owned and 70% or more of the services/products is intended for export.

Note: Outsourcing, Back Office, Call Centers, BPO, KPO, LPO and FPO activities are considered 100% export.

For all local and foreign companies wishing to register at the BOI, Dayanan Philippines Business Consultancy will:

– Ascertain if your  business qualifies for BOI incentives
– Assist in finding a BOI approved location
– Prepare  and submit of all the required documents  for Philippines BOI registration