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PEZA vs. BOI Registration in the Philippines

Kittelson & Carpo Consulting will assist your company in determining eligibility for tax incentives and processing the required documentation for either PEZA or BOI Registration. We will also identify possible advantages and disadvantages between BOI and PEZA.

Below is a table that carefully reviews the difference between PEZA and BOI Registration in the Philippines

PEZA
(Philippine Economic Zone Authority)

BOI
(Board of Investments)

REQUIREMENTS

Physical Location
Companies are required to relocate operations inside a PEZA IT Zone or PEZA building

Eligibility
Any new or existing firm is eligible for PEZA benefits, as long as it closes all operations outside PEZA zones and relocates inside a PEZA designated location

Documentation

  • Project brief- entails the submission of additional documents to confirm the statements made therein
  • Anti-graft certificate
  • Board Resolution Authorizing the designation of a representative
  • SEC Certificate of Registration
  • Project feasibility study- includes reference documents and other information used for the study

Filing Fee

Application Fee

  • Non-Pioneer: P3,600.00
  • Pioneer: P6,000.00

Registration Fee

  • Registration of New Projects…..P6,000.00

Export Commitment

  • There are no export commitments for registrable IT services
  • For Filipino citizens, at least 50% of total services must be exported
  • For foreigners, at least 70% of total services must be exported

REQUIREMENTS

Physical Location
Companies are not required to relocate to a designated zone

Eligibility
Any new or existing firm is eligible for BOI benefits

Documentation

  • 3 copies of BOI application form 501
  • 3 copies of project report and supporting documents

Filing Fee

Application for registration

  • Project costs not exceeding P4 million: P1,000.00
  • Project costs exceeding P4 million (but not over P20 million): P2,000.00
  • Project costs exceeding P20 million (but not over P50 million): P3,000.00
  • Project costs exceeding P50 million: P4,000.00

Export Commitment

  • For Filipino citizens, there is no export commitment
  • For more than 40% foreign-owned companies, at least 70% of total services must be exported
  • For firms that engage in pioneer activities, 100% of activities may be invested in domestic markets provided that the firm complies with requirements under the Foreign Investments Act (FIA). [paid-up capital of at least USD 200,000 which may be lowered to USD 100,000 for projects that involve advanced technology as determined by the Department of Science and Technology and hire at least (50) direct employees]

 

TAX INCENTIVES

  • Offshore profit remittances, not subject to remittance tax;
  • 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;
  • Exemption from Branch Profit Remittance tax for PEZA-registered branches of foreign corporations; and
  • Other incentives, as determined by the PEZA Board.

TAX INCENTIVES

  • Three (3) to eight (8) year income tax holidays;
  • Four (4) to six (6) year exemption from local business taxes for pioneer and non-pioneer industries;
  • Exemption from Taxes and Duties on Imported Spare Parts
  • Exemption from Wharf Dues and Export Tax, Duty, and Impost Fees
  • Tax Exemption on Breeding Stocks and Genetic Materials
  • Tax Credits
  • Additional Deductions from Taxable Income

INDUSTRIES SUPPORTED

  • Software Development and Application:Programming and development of system software for business, media, e-commerce, education, entertainment, and many others
  • IT-enabled Services:Call centers, Data Encoding, Transcribing and Processing, Directories, etc.
  • Content Development for the Internet and other forms of media
  • Knowledge-based and Computer-enabled Support Services:Engineering, Architectural design services, and Consultancies
  • Business Process Outsourcing (BPO)
  • IT research
  • Other IT-related services

INDUSTRIES SUPPORTED

  • ICT Services: Software development, computer graphics, animation
  • ICT-enabled Services: Business that can be delivered through the use of ICT infrastructure [call centers, contact centers, legal transcription, medical transcription, engineering, design, back-office operations, business process outsourcing]
  • ICT-support Services: Business that supports the development of ICT Services [R&D Centers, Incubation Centers, Educational/Training Institutions, Community Access Facilities, Internet Service Providers]

REGISTRATION PROCEDURE

  • PEZA application is submitted
  • PEZA application is evaluated
  • Application is presented and reviewed before the PEZA board

Turnaround Time: depends on the availability of the PEZA board

REGISTRATION PROCEDURE

  • Submission of BoI application
  • Project Outline
  • Feasibility Report
  • Five year Financial Plan

Turnaround Time: 5-21 days