What You Need to Know About PEZA

Starting a business in the Philippines is an exciting adventure. It starts from finding a commercial space and hiring workers to be affiliated with different agencies and organizations that could help your company prosper. This is where the Philippine Economic Zone (PEZA) Authority comes into the picture.

Here are some information about PEZA that you need to know:

The Philippine Economic Zone Authority (PEZA) is a Department of Trade and Industry agency tasked to constantly turn the Philippines into a principal destination for investments. It promotes the countrys competitiveness by facilitating the business operations of foreign entities in export-oriented manufacturing and service facilities within the Special Economic Zones. It is under The Special Economic Zone Act of 1995 or RA 7916 with the goal of encouraging and promoting the establishment and development of economic zones (ecozones) in identified and selected areas in the country.

Export enterprises in the Philippines such as outsourcing and offshoring operations that are owned by foreign companies can opt to register with PEZA. The Philippine government offers benefits and incentives in the form of tax holidays and exemptions to encourage investment. Tax incentives typically depend on the geographic location of a business.

Being accredited by PEZA opens the door for businesses to not only thrive, but to take advantage of the benefits that could save them money.

PEZA registration usually takes 21 days from the submission of documentary requirements. However, it depends on the availability of the board and if all the required and necessary documents were provided.

Not every kind of business is entitled to registration.

The following are the types of enterprises that are eligible for incentives under RA 7916:

• • Export Manufacturing
  • IT Service Export
  • Tourism
  • Medical Tourism
  • Agro-industrial Export Manufacturing
  • Agro-industrial Bio-fuel Manufacturing
  • Logistics and Warehouse Services
  • Ecozone Development/Operation
  • Facilities Providers
  • Utilities

The following industries are supported by PEZA:

• • IT Research and Development
  • Business Process Outsourcing
  • Call Centers
  • Coke, Refined Petroleum and Other Fuel Products
  • Computer and Related Activities
  • Construction
  • Data Encoding, Transcribing and Related Service
  • Electricity, Gas, Steam and Hot Water Supply
  • Food Products and Beverages
  • Garments and Textiles
  • Health and Social Work
  • Manufacturing, N.E.C.
  • Hotels and Restaurants
  • Postal and Telecommunications Services
  • Private Education Services
  • Real Estate Activities
  • Software Development

Here is the list of requirements when applying for a PEZA membership:

1. Project brief – a discussion on the proposed business activities which may require additional requirements depending on the contents of the brief.

2. Anti-graft certificate

3. Board Resolution authorizing the filing and designation of a representative

4. SEC Certificate of Registration, Articles of Incorporation and By-Laws (if not yet available, submit draft of Articles of Incorporation)

5. Project Feasibility Study which shall state the following

a. General and Technical Data and Documents Requirements

b. Parent company and product brochures

c. Description of the new project (include description and uses of the service)

d. Detailed organizational chart

Project timetable

e. Potential market, marketing costs, marketing program

Service process and flowchart

f. List of equipment, country of equipment origin, rated capacity and corresponding costs

g. Materials, their sources and prices; supply contracts, if any; ratio of imported to local materials, if applicable

h. Area requirement, office lay-out

Equipment lay-out

i. Electricity and water requirements

Types and volume of wastes and waste system

j. Curriculum Vitae of principal officers

k. Certificate of registration with the Securities and Exchange Commission; and

Articles of incorporation

l. Financial Data and Documents Requirements

m. Number 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

n. Number of foreign experts to be hired, positions, salary rates, length of stay

o. Projected volume of sales, selling price and unit of measure

Breakdown of other dollar costs (interest on loans, salaries of foreign personnel)

p. Number of workdays per year, no. of shifts per day

q. Sources of financing (please indicate whether loans to be obtained are foreign-currency denominated or not)

r. Latest audited financial statements, if any; and

s. Parent company’s latest volume and value of sales, net income, total assets and number of total employees, if applicable.

The process of application:

1. Filing of application

2. Processing and evaluation

3. Approval process

4. Submission of documents

5. Registration

The agency is authorized to provide its member companies the following fiscal and non-fiscal incentives:

Fiscal Incentives

• • Income Tax Holiday (ITH) 100% exemption from corporate income tax;
  • 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.

• • Tax and duty free importation of raw materials, capital equipment, machineries and spare parts;
  • Exemption from wharfage dues and export tax, impost or fees;
  • Tax and duty free importation of raw materials, capital equipment, machineries and spare parts;
  • VAT zero-rating of local purchases subject to compliance with BIR and PEZA requirements;
  • Exemption from payment of any and all local government imposts, fees, licenses or taxes. However, while under Income Tax Holiday, no exemption from real estate tax, but machineries installed and operated in the economic zone for manufacturing, processing or for industrial purposes shall be exempt from real estate taxes for the first three (3) years of operation of such machineries. Production equipment not attached to real estate shall be exempt from real property taxes.

Non-Fiscal Incentives

• • Simplified Import – Export Procedures (Electronic Import Permit System and Automated Export Documentation System);
  • Special Non-Immigrant Visa 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;
  • Non-resident Foreign Nationals may be employed by PEZA-registered Economic Zone Enterprises in supervisory, technical or advisory positions.

If you are still in the process of conceptualizing your business or already investing in properties where you want your company to grow, involve PEZA in the journey. It never hurts to maximize the perks and benefits they provide.

Is your business under PEZA? Are you planning to register? We want to hear your experience and thoughts. Share it with us in the comments section.

Contact information

Address: PEZA Building Roxas Boulevard corner San Luis Street Pasay City, Metro Manila

Contact no.: +632 551-3451

Source: http://www.peza.gov.ph

https://www.pwc.com/en_PH/ph/business-guides/assets/documents/iip-2013.pdf

http://www.formsphilippines.com/guide/4/procedure-and-requirements-for-economic-zone-regis

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