PEZA Registration in the Philippines
PEZA Eligibility
Enterprises that are 100% foreign owned and engaged in preferred areas of investment may be entitled to incentives from the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA). Businesses may only avail of one set of incentives at a time and will be required to comply with investment commitments and inspection by the relevant government agency. Under PEZA, the set of incentives actually received by a registered enterprise will depend on the registration agreement actually signed between the enterprise/locator and the PEZA.
Foreign ownership is restricted for enterprises undertaking activities listed in the Foreign Investment Negative List (FINL) of the Philippines.
PEZA Incentives
PEZA offers aggressive incentives for export-oriented enterprises located in these economic zones.
These are:
- Profits remitted offshore by a PEZA-registered branch of a foreign corporation are also not subject to branch profits remittance tax.
- Income Tax Holiday for four years for Non-Pioneer IT Enterprises, or six years for Pioneer IT Enterprises;
- After the ITH period, the option to pay a special 5% tax on gross income earned, in lieu of all national and local taxes, except real property taxes on land owned by developers;
- Exemption from payment of import duties and taxes on imported machinery, raw materials and equipment;
- Additional deduction equivalent to 50% of training expenses, chargeable against the 3% share of the national government in the special 5% tax on gross income;
- Permanent resident status for foreign investors with initial investments of US$ 150,000.00 or more;
- Employment of non-resident aliens required in the operation of IT Enterprises;
- Special tax rate of 5% of gross income (measured as sales less direct costs) in lieu of all Philippine taxes after the ITH;
- Exemption from Branch Profit Remittance tax for PEZA-registered branches of foreign corporations; and
- The PEZA board may grant other incentives
PEZA and IT
PEZA encourages investments of Information Technology (IT) Enterprises, and the establishment and operation of IT Parks / Buildings to serve as readily available suitable locations for their operations, in order to accelerate the growth and development of the Philippine IT sector.
IT service activities eligible for PEZA incentives include:
- Software development and application, including programming and adaptation of system software and middleware, for business, media, e-commerce, education, entertainment, etc.;
- IT-enabled services, encompassing call centers, data encoding, transcribing and processing, directories, etc.;
- Content development for multi-media or internet purposes;
- Knowledge-based and computer-enabled support services, including engineering and architectural design services, consultancies, etc.;
- Business process out-sourcing using e-commerce;
- IT research and development; and
- Other IT related service activities, as may be identified and approved by the PEZA Board.
Requirements for PEZA Board Approval and Registration of IT Enterprises
IT Enterprises may apply for PEZA registration for availment of incentives by submitting the following requirements:
- PEZA Application Form No. 9124;
- Project Brief (note: the completion of the project brief entails the submission of additional documents relating to the statements made therein).
- Project Feasibility Study
Information / Documents necessary in the Preparation of the Project Feasibility Study
General and Technical Data/Documents
- Parent company and product brochures;
- Description of the new project (include description and uses of the service);
- Detailed organizational chart;
- Project timetable;
- Potential market, marketing costs, marketing program;
- Service process and flowchart;
- List of equipment, their country of origin, rated capacity and corresponding costs;
- Materials, their sources and prices; supply contracts, if any; ratio of imported to local materials, if applicable;
- Area requirement, office lay-out;
- Equipment lay-out;
- Electricity and water requirements;
- Types and volume of wastes and waste disposal system;
- Bio-data of principal officers;
- Certificate of registration with the Securities and Exchange Commission; and
- Articles of incorporation.
- Financial Data/Documents
- No. of employees, position and salary rates, training to be provided and length of training, classification of employees as to a) skilled, semi-skilled and unskilled, b) direct, indirect and administrative;
- No. of foreign experts to be hired, positions, salary rates, length of stay;
- Projected volume of sales, selling price and unit of measure;
- Breakdown of other dollar costs (interest on loans, salaries of foreign personnel);
- No. of workdays per year, no. of shifts per day;
- Sources of financing (please indicate whether loans to be obtained are foreign currency denominated or not);
- Latest audited financial statements, if any; and
- Parent company’s latest volume and value of sales, net income, total assets and no. of total employees, if applicable.
- Anti-graft certificate.
- Board Resolution authorizing the filing and designation of a representative.
- SEC Certificate of Registration, Articles of Incorporation and By-Laws (if not yet available, submit draft of Articles of Incorporation).