PEZA Registration in the Philippines

PEZA, short for Philippine Economic Zone Authority, is a government agency under the Department of Trade and Industry (DTI). It is responsible for promoting investments and facilitating business operations among foreign investors in select areas in the Philippines. These areas are known as PEZA Economic Zones. Under the Special Economic Zone Act of 1996, the creation of PEZA aims to:

• Generate income for the Philippine economy
• Create employment opportunities for the Philippine workforce
• Enable foreign investors to set up business operations in the Philippines

How to Register with PEZA

Companies that avail of PEZA Registration are entitled to numerous tax incentives, and exemptions. However, only certain types of enterprises are eligible for PEZA Registration in the Philippines. 100% foreign-owned enterprises engaged in preferred areas of investment may avail of either PEZA or BOI registration. However, businesses may only avail of one set of incentives at a time, and foreign ownership of businesses is restricted for industries under the Foreign Investments Negative List (FINL) of the Philippines.

Companies looking to avail of tax breaks and other PEZA incentives must locate their operations in one of the many PEZA zones, buildings and IT Parks located around the country. Enterprises located within the said areas are required to export 100% of their production. PEZA approval on specific incentives is given on a case to case basis. Interested enterprises must also provide information on capital structure, nationality of investors  and a feasibility study in accordance with the prescribed format.

PEZA Incentives in the Philippines

Companies that avail of PEZA Registration are entitled to numerous incentives, including:

• Income Tax Holidays-100% exemption from corporate income tax
• 5% special tax on Gross Income and an exemption from national and local taxes upon expiry of Income Tax Holiday.
• Tax-free importation for raw materials and other equipment
• Exemption from wharf dues, export taxes, and other fees
• A zero VAT rating for local purchases, subject to BIR and PEZA requirements
• Exemption from local government imposts, licenses and other taxes. Companies under income tax holiday will not be exempted from real-estate tax. However, machinery used for manufacturing and other industrial purposes will be exempt from real estate taxes for the first 3 years of operation. Production equipment will also be exempted from real property taxes
• Exemption from Expanded Withholding Tax

PEZA Requirements in the Philippines

Listed below are some of the documentation requirements for PEZA Registration in the Philippines:

• Project brief- entails the submission of additional documents to confirm the statements made therein
• Anti-graft certificate
• Board Resolution Authorizing the designation of a representative
• SEC Certificate of Registration
• Project feasibility study- includes reference documents and other information used for the study

Some of the documents required for the feasibility study include:

• 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;
• 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)