While attending to client queries, it has always been a challenge to identify whether a client’s activity would qualify as an Export Service with reference to the Philippine Economic Zone Authority (PEZA) requirement for registration. According to PEZA, an Export-oriented enterprises rendering at least 70% of its products/services intended for export may be registered. What does export enterprise mean? Would the above requirement be satisfied just because a company has clients abroad and it is paid in foreign currencies so that it can now be considered as rendering export service? The answer is NO. First, it is important to know if the activity is eligible for Peza registration. For reference, below are the activities eligible for Peza registration:
- Export Manufacturing
- IT (Information Technology) Service Export
- Medical Tourism
- Agro-industrial Export Manufacturing
- Agro-industrial Bio-Fuel Manufacturing
- Logistics and Warehousing Services Economic Zone Development and Operation :
- Manufacturing Economic Zone Development / Operation
- IT Park Development / Operation
- Tourism Economic Zone Development / Operation
- Medical Tourism Economic Zone Development / Operation
- Agro-Industrial Economic Zone Development / Operation
- Retirement Economic Zone Development /Operation Facilities Providers
- Facilities for Manufacturing Enterprises
- Facilities for IT Enterprises
- Retirement Facilities
Second, the requirement of 70% must be complied with. Under the Foreign Investment act, export enterprise shall mean an enterprise wherein a manufacturer, processor or service [including tourism] enterprise exports sixty percent [60%] or more of its output, or wherein a trader purchases products domestically and exports sixty percent [60%] or more of such purchases. However for purposes of Peza registration, its export activity has to be 70%.
Most often, our office receives several inquiries about qualification of an enterprise with Peza, particularly, service oriented business activities. The confusion lies mostly on how to identify the services to be rendered in order to qualify.
Give us a holler and we can assist you in the evaluation of your business activities for Peza qualification.
By: Atty Grace Pangilinan