Tax Incentive Programs

The Philippine government has several tax incentive programs depending on the nature of one’s business, with different incentive schemes available relative to the location and registration of the proposed business activity.
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Philippine Economic Zone Authority (PEZA)

The creation of PEZA, the development of Special Economic Zones throughout the country, and the very competitive incentives available for investments within PEZA special economic zones are embodied in the Special Economic Zone Act of 1995 (Republic Act No. 7916).

As provided in the Special Economic Zone Act, the PEZA Board is chaired by the Secretary of the Department of Trade and Industry (DTI). PEZA, as an agency under DTI, is the Philippine government agency tasked to promote Philippine investments, extend assistance, registry and granting of incentives, and facilitation of the business operations of investors in export-oriented manufacturing and service facilities within selected areas throughout the country proclaimed by the President of the Philippines as PEZA Special Economic Zones.

PEZA oversees and administers incentives to developers/operators in world-class, ready-to-occupy, environment-friendly, secure, and competitively-priced Special Economic Zones. PEZA’s dynamic, responsive and client-oriented ethics have earned the trust and confidence of investors, the local business sector, and the foreign Chambers of Commerce in the Philippines. PEZA is also ISO 9001:2000 certified.

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Qualifications

Export-oriented enterprises that locate in any of PEZA economic zone are qualified.

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Fiscal Incentives

• Income Tax Holiday (ITH): 6 years for pioneer projects, 4 years for non-pioneer projects
• 5% tax rate imposition on gross income and exemption from all national and local taxes upon expiry of ITH
• Tax and duty free importation of raw materials, capital equipment, machineries and spare parts
• Zero Value Added Tax (VAT) rating for local purchases, subject to compliance with BIR and PEZA requirements
• Exemption from payment of local government imposts, fees, licenses, and taxes
• Exemption from wharfage dues and export tax, impost, and fees
• Exemption from expanded withholding tax

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Non-Fiscal Incentives

• Employment of foreign nationals in supervisory, technical or advisory positions
• Simplified import–export procedures
• Special Non-Immigrant Visa with Multiple Entry Privileges for the specific non-resident foreign nationals

See the full list of incentive programs provided by PEZA.


Requirements:

• Duly accomplished and notarized PEZA application form and Anti-Graft Certificate (R.A. No. 3019);
• SEC Certificate of Registration, Articles of Incorporation and By Laws (if not available, submit draft of Articles of Incorporation);
• Corporate Profile (including that of parent company, if applicable);
• Project brief (i.e., information on market, technical, financial and management aspects of the project); and
• Board Resolution authorizing the filing and designation of a representative.

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Procedure:

• Submit accomplished application form;
• Present application to the PEZA Board for evaluation and recommendation for approval;
• Submit pre-registration requirements upon approval;
• Prepare the Registration Agreement; and
• Secure signed copy of the Registration Agreement.

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