The PEZA was created under Republic Act (RA) 7915 known as “The Special Economic Zone Act of 1995” as amended by RA 8748. It promotes the flow of both local and foreign investors into special economic zones which would generate employment opportunities and establish backward and foreign linkages among industries in and around the economic zones.
PEZA promotes the establishment of economic zones, IT Parks and IT Buildings to respond to demands for ready-to-occupy locations for foreign and domestic investors who are export manufacturers or exporters of IT-enabled services.
Any company looking to export is recommended to look into a PEZA zone to be able to take full advantage of all the tax benefits the Philippines has to offer. PEZA approval, however, are granted on a case by case basis.
Requirements to be able to register with PEZA include:
- The company’s operations must be located in one of the PEZA zones, building, IT parks or technology parks.
- The company must export at least 70% of their production. PEZA may approve the sale of up to 30% of production in the domestic market but 100% export is preferred.
- Full foreign ownership of a PEZA enterprise is allowed provided they are not engaged in activities that appear on the FINL.
Companies registered in the PEZA are entitled to the following incentives:
- Income Tax Holiday- Exemption from payment of Corporate Income Tax for 4 years, up to a maximum of 8 years; After the ITH period, they are subject to 5% tax on gross income (sales less direct costs) in lieu of all local and national taxes.
- Exemption from Export Tax
- VAT Zero Rating
Application Process for PEZA:
- Submit an application that includes information on capital structure, nationality of investors and a feasibility report in accordance with a PEZA prescribed format.
- Present it to the PEZA Board
For more information, you can visit the official PEZA website http://www.peza.gov.ph/