Starting a Business in the Philippines

Starting Business PhilippinesWhy would anyone want to start and do business in the Philippines?

The bureaucratic and legal hurdles a company or entrepreneur must overcome to incorporate and register a new firm here can be frustrating. However, with the help of a business consultant, that has extensive experience in Philippines business registration and setting up foreign owned businesses here, such as Dayanan Business Consultancy, that is not an issue.

The fact that so many foreign companies have regional headquarters, representative offices, foreign branch offices and other business setups in the Philippines, speaks volumes that it is well worth wading through the red tape to have operations here.

English Speaking and Talented Human Resources

One of the biggest advantages of doing business in the Philippines is that it has a higher level of English proficiency than any other Asian country. There is also an immense pool of talented Filipino graduates and experienced workers providing cost effective human resource solutions.

In addition, the Philippine Government offers incentives through a dozen Investment Promotion Agencies (IPAs) promoting “Economic Zones” in selected areas of the country. Incentives include various tax exemptions, tax holidays, special investor’s visas, and others to promote investment in businesses.

These include:

•    The Philippine Board of Investments (BOI)
•    The Philippine Economic Zone Authority (PEZA)
•    The Tourism Infrastructure and Enterprise Zone Authority (TIEZA)
•    Aurora Special Economic Zone Authority
•    Authority of the Freeport Area of Bataan (AFAB)
•    Bases Conversation Development Authority (BCDA)
•    Clark Development Corporation
•    Cagayan Economic Zone Authority (CEZA)
•    PHIVIDEC Industrial Authority
•    Philippine Retirement Authority
•    Regional Board of Investments (ARMM)
•    Subic Bay Metropolitan Authority (SBMA)
•    Zamboanga Economic Zone Authority

These secure ready-to-occupy world-class, environment-friendly, and competitively priced Special Economic Zones are waiting for various types of businesses, both commercial and industrial, to take advantage of them.

Depending on which Investment Promotion Agency is being utilized; these can include manufacturing, BPO, tourism, agri-business, IT services and more.

For example, the Philippine Board of Investments is focused on BPOs, the electronics industry, shipbuilding, and renewable energy. PEZA’s priorities are focused more on manufacturing and industrial agricultural manufacturing for export and BPO’s, as well as overall economic zone development and operation. There is some overlap in the kinds of businesses to which the IPAs will grant incentives.

It’s More Fun in The Philippines!

The Tourism Infrastructure and Enterprise Zone Authority of course – “encourage local and foreign investments in our tourism industry through the establishment of Tourism Enterprise Zones (TEZs) in strategic areas of the country.”

The tourism industry opens up a tremendous amount of opportunities for businesses, especially in the small to medium range.
TIEZA is giving incentives for the development of tourism related businesses such as:

•    Travel and tour services
•    Transport services – land, sea, and air
•    Adventure sports such as mountaineering, spelunking, and scuba diving
•    Convention organizers
•    Accommodation establishments – hotels, resorts, condotels, Inns, motels and homestay operators that cater to tourist
•    Tourism estate management services
•    Restaurants, shops, and department stores
•    SPAs
•    Health and Wellness facilities
•    Museums and Galleries (Especially in cultural heritage zones)
•    Theme Parks
•    Convention Centers
•    Zoos

To learn more about the procedures, time, and cost involved in starting a business in the Philippines, business contact the DBC Team now for a free consultation.

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