How to Register as a PEZA accredited Company for Ease of Business and Tax Incentives

Filipinos are known to be exceptional talents. If you’re venturing out to other countries for an additional quality workforce at a reasonable price, the Philippines is a destination for your outsourcing needs.

I mean, it’s not a surprise! Filipinos are really good in English, and they have qualities that are proven reasons you should hire a Filipino team!

 

Ease of Doing Business in the Philippines

With that, you might think of setting up a home base in the Philippines. But it’s not that easy to set up a business for foreigners in the Philippines. In fact, the Philippines is ranked a dismal 95 out of 190 countries in terms of ease of business. Even at this rank, it’s considered a big improvement from previous years.

In an article by the Asia Business Journal, they said:

“According to the World Bank, it takes an average of 13 procedures to start a business, nine procedures to register property, and 22 procedures to build a physical establishment in the Philippines.” 

“Once the business has been set up, the company makes 13 annual tax payments. If a contract is broken and a business needs to resolve a dispute with its customers or suppliers, it takes an average of 962 days to resolve an issue through our courts.”

How do you get more ease of business and tax incentives for operating in the Philippines? Here is how to register as a PEZA accredited company.

 

Who is PEZA? 

To attract businessmen and foreign investors, the Department of Trade and Industry created an entity called the Philippine Economic Zone Authority or PEZA by virtue of Republic Act 7916 otherwise known as “The Special Economic Zone Act of 1995.”

With this, businesses conducted on special zones are given fiscal and non-fiscal incentives such as tax holidays, zero-rated vat, and special visa privileges.

Here is the list of all the PEZA Zones and buildings you can set your business in.

 

Industries Eligible for PEZA 

To be eligible for PEZA, you must be in the following industries:

• Agro-industrial Bio-Fuel Manufacturing 
• Agro-industrial Export Manufacturing
• Economic Zone Development and Operation
• Export Manufacturing
• Facilities Provider
• Information Technology (IT) Service Export 
• Logistics and Warehousing Services
• Medical Tourism
• Tourism
• Utilities

 

Benefits of Becoming PEZA Registered

PEZA awards multiple benefits for companies who passed their qualifications. Here are fiscal and non-fiscal benefits they can enjoy. 

 

Fiscal Incentives 

• In general, Income Tax Holiday (100% for exemption from Corporate Income Tax). 
  • 4 Years for Non-pioneer project
  • 6 Years for Pioneer project
• After the Income Tax Holiday, a 5% special tax on gross income will be levied.
• Exemption from expanded withholding tax
• Exemption from wharfage dues and export tax, impost or fees
• Exemption from payment of any and all local government imposts, fees, licenses or taxes
• Tax and duty free importation of raw materials, capital equipment, machinery, and spare parts
• VAT zero-rating of local purchases subject to compliance with BIR and PEZA requirements

 

Non-Fiscal Incentives – Importations

• Simplified Import-Export Procedures (Electronic Import Permit System and Automated Export Documentation System)

 

Non-Fiscal Incentives – Visa Privileges

• Extended 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
• 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

 

Requirements for PEZA Registration

After registering for your business, you can apply for PEZA accreditation by submitting the following documents:

• Notarized PEZA Application Form. Download the forms on their website.
• Company Profile that includes:
  • The company applying for and the parent company, if any.
  • Outline of the company history
  • Includes the Business Projects and activities that are currently in the operation or proposal
  • List of affiliated companies that are currently registered already with PEZA and Board of Investments, alongside the: 
    • Certificates of Registration for the Companies 
    • Terms and conditions
  • Profile of the Company’s Principal Officers
• Audited Financial Statements, if any.
• Certificate of Registration with the Securities and Commission (SEC)
• Articles of Incorporation
• Board Resolution authorizing the PEZA Application noting the designated authorized personnel
• A project brief stating the technical, managerial, and financial information of the project or business.

Take note; it’s easier to hire a consulting firm to pass all the documents for you.

Conclusion

With that, I hope you have profitable operations in the Philippines! But if you just want to tap to Filipino talent without setting a PH branch (for now), you can opt to hire remote workers.

Check out Remote Staff for qualified remote workers who are ready to help your business today!