Thanks to ongoing economic reforms, business-friendly laws, and developing infrastructure, the Philippines attracts business investors in thousands every year. In addition, the government has paved the way for reforms in the form of new incentives and brand-new authorities to facilitate doing business in the Philippines.
The government has developed PEZA or the Philippine Economic Zone Authority to boost exports and increase employment opportunities. PEZA has been set up to motivate foreign and local entrepreneurs or investors to set up export-oriented manufacturing plants, IT businesses, or regional warehouses in prevailing economic zones, IT parks, and IT buildings.
If you wish to learn more about starting a business in the Philippines or acquiring PEZA incentives, you have come to the right place. Read on to learn more!
What Is the Philippine Economic Zone Authority or PEZA?
The Filipino government has created PEZA so that it serves as a one-stop, non-stop establishment for foreign and local businesses to get their hands on licenses and permits. PEZA is not just limited to building and occupancy permits, simplified import and export permits, or VISA processing but are also engaged with the Bureau of Customs and the Department of Environment and National Resources to streamline the distribution of clearances.
PEZA has simplified the process of starting a business in the Philippines for foreigners. PEZA registration means that companies need not procure any business permits from the local government unit.
What Kinds of Businesses Can Acquire the PEZA Incentives?
Foreign and local investors can set up businesses in established economic zones, IT parks, and IT buildings across the country, given that they are engaged in any of the following types of companies:
- Export Manufacturing
- IT (Information Technology) Service Export
- Medical Tourism
- Agro-Industrial Export Manufacturing
- Agro-Industrial Biofuel Manufacturing
- Logistics and Warehousing Services
- Economic Zone Development and Operation
- Facilities Providers for PEZA enterprises
- Utilities inside Special Economic Zones
What Are the Incentives Available for PEZA Businesses?
Experts believe that PEZA has simplified setting up a business in the Philippines, and rightfully so. However, PEZA has accomplished more than just streamlining business registration and issuance of business permits. It has also conferred upon investors privileges in tax holidays, importation incentives, and so forth.
Let’s have a look at some of the incentives made available to IT enterprises via PEZA:
- Income Tax Holiday for four years for Non-Pioneer IT enterprises and six years for Pioneer IT enterprises
- Once the Income Tax Holiday (ITH) Period is over, the enterprises earn the right to pay a special 5% tax on gross income earned, in place of all types of national and local taxes except the real property taxes on land owned by developers.
- Exemption from payment of import duties and taxes on import machinery and equipment and raw materials
- Permanent Resident Status for Foreign Investors with starting investments of US$150,000.00 or more
- And so forth
What Are the Registration Requirements for PEZA?
If you are planning on setting up a company in the Philippines via PEZA, you should keep the following details in mind:
- Application form with the project brief
- An Anti-Graft Certificate
- A Board Resolution sanctioning the filing and designation of a representative
- A certificate of registration from the Securities and Exchange Commission (SEC), Articles of Incorporation, and By-Laws (if not available, a draft of Articles of Incorporation will work for the time being)
- Project Feasibility Study
- Resume or Biodata of the Principal Officers
- Company Profile of Parent Company (if applicable)
- Audited Financial Statements (AFS) and Annual Income Tax Returns going back three years (AFS from the prior years if in operation for less than three years)
- Notarized summary of the established location for business, list of machinery and types of equipment, export and local sales performance, employment for the past three years (if applicable)
- And any other documents that the PEZA may deem fit.
If the submitted documents are complete, it can take PEZA up to 21 working days from applying to approve the same.
Are you wondering about how to start a business in the Philippines as a foreign investor? You will be glad to learn that PEZA allows 100% foreign ownership of businesses barring specific industries. This is a revolutionary move from the PEZA as it has encouraged foreign investments in huge numbers. So get in touch with us today to learn more about business opportunities in the Philippines!