Outsourcing in the Philippines: The Benefits of PEZA-Registered Companies

Posted by Janis Narvas

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Dec 4, 2018 10:00:00 AM

In the past two decades, businesses in developed countries have sought operational efficiency through outsourcing. As a result, outsourcing in the Philippines has become a viable option for businesses to reduce overhead costs without compromising quality. To drive the growth of the outsourcing industry, the Philippine government provides incentives for foreign-owned companies to invest in the country. This week, we discuss the benefits of being a Philippine Economic Zone Authority (PEZA)-registered enterprise.

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What is PEZA? 

Through the Republic Act No. 7916, PEZA is mandated to promote the flow of foreign investments into special economic zones, industrial estates or parks, and export processing zones. It also aims to promote cooperation between industrialized countries and the Philippines and knowledge transfers.

By encouraging investors to engage in outsourcing in the Philippines, PEZA helps generate more jobs in the different economic zones throughout the country.

  • Tourism, Including Medical Tourism
  • Information Technology Service Export
  • Export Manufacturing
  • Agro-Industrial Bio-Fuel Manufacturing
  • Agro-Industrial Export Manufacturing
  • Logistics and Warehousing Services
  • Utilities
  • Facilities Providers
  • Economic Zone Development Corporation

Refer to the PEZA website for the  complete list of business activities that are eligible for tax incentives.

Fiscal and Non-Fiscal Incentives of PEZA-Registered Companies

Companies registered under PEZA may enjoy the following benefits:

Fiscal Incentives

  • 100% exemption from corporate income tax
    • 4 years income tax holiday (ITH) for non-pioneer projects
    • 6 years for pioneer projects
  • Once the ITH expires, PEZA-registered companies benefit from a 5% Special Tax on Gross Income, as well as exemption from national and local taxes.
  • Tax and duty-free importation of raw materials, capital equipment, machineries, and spare parts.
  • Exemption from wharfage dues and export tax, impost or fees
  • VAT zero-rating of local purchases subject to compliance with BIR and PEZA requirements
  • Exemption from the payment of any and all local government imposts, fees, licenses or taxes
  • Exemption from expanded withholding tax

Non-Fiscal Incentives

  • Simplified Import-export procedures through the Electronic Import Permit System and Automated Export Documentation System)
  • Foreign nationals that are non-residents of the Philippines may gain employment in PEZA-registered Economic Zone Enterprises as long as their roles are managerial, technical, or advisory in nature.
  • Special non-immigrant visa with multiple entry privileges may be extended to non-resident foreign nationals, as long as they are investors, supervisors, technical experts, or advisers. This privilege extends to their spouses and unmarried children below 21 years old.

Refer to the PEZA website for more details, as well as the complete and updated list of fiscal and non-fiscal incentives.

Establish a Business in the Philippines

If you are looking to set up a branch or a subsidiary in the Philippines, you need help from the experts. D&V Philippines is a high-end professional services firm that will assist you in every step of the process: from securing your business permits to setting up an accounting system, we’ve got you covered.

Learn more about D&V Philippines by reading our whitepaper, Gateway to Start Your Business in the Philippines. Schedule a free consultation today to learn how we can help you get started.

Download Gateway To Start Your Business in the Philippines Whitepaper
 

Topics: Business in the Philippines

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