PEZA is attached to the DTI along with other government agencies

PEZA is designed as a one-stop, non-stop shop for businesses to secure licenses and permits. In addition to building and occupancy permits, simplified import/export permits, and visas processed through PEZA, it has arrangements with the Bureau of Customs and the Department of Environment and National Resources to facilitate the issuances of clearances.

PEZA registration also exempts companies from having to secure business permits from the local government unit. 

PEZA grants incentives to induce investments in the Philippines

Businesses registered to engage in the following activities in the PEZA Ecozones qualify for incentives:

• Export Manufacturing
• IT (Information Technology) Service Export
• Tourism
• Medical Tourism
• Agro-industrial Export Manufacturing
• Agro-industrial Bio-Fuel Manufacturing
• Logistics and Warehousing Services
• Economic Zone Development and Operation
• Facilities Providers for PEZA enterprises
• Utilities inside Special Economic Zones

For companies engaged in certain activities, PEZA incentives are granted.

In addition to streamlined business registration and permit processes that make starting and conducting business easier, PEZA registered businesses enjoy tax holidays, importation privileges, and other privileges.

For example, PEZA grants the following incentives to registered IT Enterprises.

• Income Tax Holiday for four (4) years for Non-Pioneer IT Enterprises, or six (6) years for Pioneer IT Enterprises;
• After the ITH period, the option to pay a special 5% tax on gross income earned, in lieu of all national and local taxes except real property taxes on land owned by developers;
• Exemption from payment of import duties and taxes on imported machinery and equipment and raw materials;
• Additional deduction equivalent to 50% of training expenses, chargeable against the 3% share of the national government in the special 5% tax on gross income;
• Permanent resident status for foreign investors with initial investments of US$ 150,000.00 or more;
• Employment of non-resident aliens required in the operation of IT Enterprises; and
• Other incentives, as may be determined by the PEZA Board.

These privileges and access to ease of business registration make it very attractive to register as a PEZA enterprise in the Philippines.

BPO is the common business activitiy registered with PEZA

BPOs availing of PEZA benefits have seen massive growth in the Philippines.

Together with the export of processed and manufactured goods, the encouragement of IT services is among the major thrusts for PEZA.

PEZA incentives are a significant part of what makes it attractive to set up back-office processing operations and outsourcing in the Philippines. Specific to IT, enterprises engaging in the following may register under PEZA:

• Software development and application, including programming and adaptation of system softwares and middlewares, for business, media, e-commerce, education, entertainment, etc.;
• IT-enabled services, encompassing call centers, data encoding, transcribing and processing; directorics; etc.;
• Content development for multi-media or internet purposes;
• Knowledge-based and computer-enabled support services, including engineering and architectural design services, consultancies, etc.;
• Business process out-sourcing using e-commerce;
• IT research and development; and
• Other IT related service activities, as may be identified and approved by the PEZA Board
• An IT Enterprise operating any of the listed IT service activities can register with PEZA to avail of the incentives if it physically locates inside a PEZA-registered IT Park, Building or special economic zone.

Aside from work from the home setup, some companies rent apartments and hotels for their BPO employees to work in.

Because of the pandemic, PEZA has allowed the expansion of work-from-home arrangements or workspaces outside of PEZA-registered IT park, building, or special economic zones for IT employees. This flexibility has allowed many PEZA-registered IT enterprises to continue to operate in safety and productively.

There are important documents you need to submit to be registered with PEZA

To qualify for the benefits of PEZA registered companies, an application has to be made and the necessary documents submitted for approval by the PEZA Board.

You need to consult with your lawyer to complete the requirements for PEZA applications

1. Application Form with Project Brief

2. Notarized Secretary’s Certificate on Board Resolution authorizing the filing of the application with PEZA and
   designation of a representative authorized to transact with PEZA with Anti-Graft attestation

3. Certificate of Registration from the Securities and Exchange Commission, Articles of Incorporation and
    By-Laws indicating among its purpose the applicant’s export/manufacturing activities / License to Transact
    Business

4. Resume or biodata of principal officers

5. Company profile of parent company (if applicable)

6. Audited Financial Statements (AFS) and Annual Income Tax Returns for the last three (3) years; if operating
   for less than 3 years, AFS for prior year/s

7. Notarized summary of the existing business location, list of machinery and equipment, export and local
    sales performance (volume and value), employment for the past three (3) years (as applicable).

8. Other requirements as PEZA may require after PEZA Board approval. (These are specific to the industry.)

Upon application, PEZA will conduct a series of examinations with the submitted documents and this may take some time.

Provided the documents are complete and in order, it can take 21 working days from the filing of the application to approval by the PEZA Board.

It is important to prepare these documents ahead, particularly the Articles of Incorporation which often require coordination for documents between the Philippines and abroad considering the foreign element.

The Negative List limits the activities of the foreign investors in the Philippines

Up to 100% foreign ownership is allowed for PEZA registered enterprises except for those engaged in activities limited by the annual Foreign Investment Negative List of the Philippines. The negative list limits foreign ownership in certain industries, but foreign ownership can be total in the export enterprises typical of PEZA.

It is in line with the drive to encourage foreign investment that PEZA also facilitates the issuance of permanent or temporary visas for foreign investors and employees or registered enterprises.

Contact us here or at contact@lawyerphilippines.org for assistance in PEZA registration and related requirements.