How local, foreign businesses can avail of PEZA incentives
If you are planning to open a business, you may want to consider setting it up at one of the economic zones in the Philippines. That’s because the government offers incentives to entice both local and foreign entrepreneurs to start a business there.
The Philippine Economic Zone Authority or PEZA is the government agency responsible for promoting the registration of new business and increasing investments in the Philippines. PEZA also grants incentives to those who wish to open a new business in “environment friendly and world-class” business zones.
There are several existing and upcoming economic zones in the country. These are Manufacturing Economic Zone, Information Technology Parks or Centers, Agro-Industrial Economic Zone, Tourism Economic Zones, and Medical Tourism Parks or Centers. The development of these zones encourages investors to veer away from the already congested Metro Manila area and boost local economies.
The businesses who open in these special zones are provided with not just assistance, but also special privileges and benefits. Here’s how to qualify for the PEZA incentives.
How does a business quality for PEZA eligibility?
Registering for PEZA incentives can take up to 21 days. Applying for one means you have already secured the necessary requirements to open a business in the Philippines.
Here are the requirements you need to qualify for PEZA incentives.
- A notarized PEZA Application Form,which can be downloaded from the PEZA website.
- A Corporate Profile. It outlines the company or companies’ history, business projects, and activities that are currently in operations or are being proposed. A Corporate Profile also includes a list of the affiliated companies that are already registered with PEZA and the Board of Investments (BOI). Copies of the Certificates of Registration (COR), along with the Terms and Conditions should also be included in the Corporate Profile. If the company or companies have annual reports and audited financial statements available, these should also be submitted to PEZA. A Corporate Profile also includes the profiles of the company or companies’ principal officers.
- Certificate of Registration with the Securities and Exchange Commission (SEC).
- Updated Articles of Incorporation.
- Board Resolution that authorizes the PEZA application. This also includes the designation of the company’s authorized representative or representatives who are responsible for the PEZA registration
- A Project Brief, which details the technical, managerial, and financial information of the project or business that is applying for the PEZA incentives.
Who Can Apply for PEZA incentives?
The business activities that are eligible to apply for the PEZA incentives are:
- Export Manufacturing
- Information Technology (IT) Service Export
- Medical Tourism
- Agro-industrial Export Manufacturing
- Agro-industrial Bio-Fuel Manufacturing
- Logistics and Warehousing Services
- Economic Zone Development and Operation
- Facilities Provider
What Are The Specific PEZA Incentives?
- PEZA-qualified businesses can enjoy an Income Tax Holiday (ITH), which means a 100 percent corporate income tax exemption. Pioneer businesses or projects can enjoy a six-year ITH, while non-pioneers can enjoy a four-year ITH.
- When the ITH expires, a business can avail of the 5% Special Tax on Gross Income and exemption from all taxes, both national and local.
- The PEZA-qualified business also enjoys tax- and duty-free imports of their capital equipment and raw materials. This also includes their machines and its corresponding spare parts.
- The businesses are given exemption from wharfage dues, as well as export tax, fees, and impost.
- If the companies have local purchases, these are subjected to VAT zero-rating as long as it complies with both PEZA and BIR requirements.
- PEZA-qualified businesses are also exempted from expanded withholding tax.
These PEZA incentives allow new businesses to focus on what’s important – growing their business without worrying about the extra expenses that come with it.
Need help in your PEZA application? Let DJKA Business Services help you.
About the Author:
Anne Ruth Dela Cruz is a seasoned writer who has interests in health, wellness and business start ups. She has also dabbled in corporate communications and public relations. A mother of four, Anne also loves videoke sessions and reading a good book. My posts appear on: Negosentro, World Executives Digest, Executive Chronicles, Get Health Access, and Trade & Travel Journal.