Incentives of a PEZA-Registered Company

The Philippine Economic Zone Authority (PEZA) is an economic zone created under The Special Economic Zone Act of 1995 (R.A. 7915). It is a government agency connected to the Department of Trade and Industry tasked to promote employment, investments, and exports in the country. The agency has selected areas and buildings in the Philippines and declared them as PEZA Special Economic Zones.

PEZA also gives incentives to foreign businesses engaged in certain activities in the Philippines. These businesses are:

• Export manufacturing
• Information technology
• Tourism
• Medical tourism
• Agro-industrial enterprises
• Facilities enterprises
• Logistics services
• Ecozone developers
• Utilities

Once companies engaged in the above businesses are registered with PEZA, they are qualified for the agency’s fiscal and non-fiscal incentives. While the non-fiscal incentives apply to all PEZA-registered businesses, not all of the fiscal incentives are the same for each type of business.

Fiscal incentives

• Income Tax Holiday (ITH)
  This incentive grants an entity 100% exemption from paying corporate income taxes. Non-pioneer, pioneer, and the expansion projects are all exempt from taxes up to a certain number of years. Companies must apply for the Income Tax Holiday by filling up the downloadable form on the PEZA website.
• 5% special tax
  Once the Income Tax Holiday of the company expires, they are still exempted from paying local and national taxes. They are also given a 5% special tax on their gross income.
• No taxes and duties on imports
  PEZA-registered companies are not taxed for importing raw materials, spare parts, and machinery.
• Exemption from wharfage fees and export taxes
• VAT zero-rating
  Companies are eligible for this fiscal incentive once they pass the requirements of PEZA and the Bureau of Internal Revenue (BIR). Some PEZA-registered companies such tourism enterprises have a VAT-zero rating on locally purchased goods and services while logistic services have a VAT zero-rating on raw materials.
• Exemption from paying local fees
  PEZA-registered companies are exempted from paying local government fees which include licenses, imposts, and taxes.
• Exemption from expanded withholding tax
• Exemption from real estate and real property taxes
  Machinery installed and used for processing, industrial, or manufacturing purposes within the Special Economic Zones are exempted from real estate taxes during the first three years of usage.

Non-fiscal incentives:

• Simplified import-export procedures
  PEZA-registered companies have an easier time importing and exporting goods because the import permit and export documentation systems are electronic and automated.
• Employment of non-resident foreign nationals
  These nationals can hold technical, advisory, or supervisory positions in a PEZA-registered company.
• Special non-immigrant visa
  Non-resident foreign nationals are allowed multiple entries in a PEZAregistered Economic Zone Enterprise. They also get a Visa Facilitation Assistance, care of PEZA.
• Extended visa facilitation assistance
  Foreign nationals, along with their immediate family members, can enjoy this perk.

FilePino is uniquely positioned to help you set up your new business here in the Philippines. If you’re just starting a new company, we have the contacts and knowhow to grow your business quickly.

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