As an entrepreneur seeking to expand their business in the Philippines, you must be aware of the different investment promotion agencies (IPAs) and how registering with them can provide numerous benefits for your business.
Here is a step-by-step guide on how to register your business with the Philippine Economic Zone Authority (PEZA), along with the processes, documents, and requirements needed when securing registration with PEZA.
Entrepreneurs who wish to take advantage of tax incentives in the Philippines can opt to register their business that has not yet begun operations with PEZA. Before proceeding, they must ensure that their business has a physical office located in the designated Special Economic Zones (SEZ) provided by PEZA.
Additionally, entrepreneurs that plan to claim full foreign ownership over their business in the Philippines should adhere to the Foreign Investments Negative List provided by the government.
Generally, PEZA follows a 7-step registration process:
- Submit application documents for pre-screening
- Pay application fee of ₱3,600 and secure official receipt
- Submit the duly accomplished application form along with other required documents
- Wait for receipt of Board Resolution
- Submit Pre-Registration requirements as stated in Board Resolution
- Pay registration fee of ₱6,000
- Sign registration agreement with PEZA
Depending on the type of business you wish to engage in, PEZA will require different sets of documentary requirements for each business and industry.
Under recent updates, PEZA Memorandum Circular (MC) No. 2021-48 requires new and existing enterprises in the following economic zones to register their business in the PEZA Information System on Compliance to Environmental Standards (PISCES):
- Cavite Economic Zone
- Mactan Economic Zone & Mactan Economic Zone-II-SEZ
- Baguio City Economic Zone
- Pampanga Economic Zone
- Laguna International Industrial Park-SEZ
- Gateway Business Park-SEZ
- Subic Shipyard-SEZ
- Clark TI-SEZ
Foreign enterprises seeking to register with PEZA must provide the following documents as provided under Section 4, Rule 6 of Corporate Recovery and Tax Incentives for Enterprises (CREATE) Implementing Rules and Regulations (IRR):
For enterprise-level Information:
- DTI or SEC Certificate of Registration, whichever is applicable
- Bureau of Internal Revenue (BIR) Certificate of Registration
- Tax Identification Number (TIN)
- General Company Information
- Business capitalization and Ownership Structure
- Authorized Business Representative Details
- Latest Audited Financial Statement (AFS), is applicable
For Project or Activity-level Information:
- Location address, contacts, activity representative details
- Description, classification, and type of activity
- Project or activity set-up timetable
- Committed investment capital and other related details
- Facility or utility requirements
- Projected financial performance
- Projected sales, raw materials, and production
- Projected employment, by type
PEZA may require additional documents depending on the nature of your business or application, such as:
- Articles of Incorporation and By-Laws
- Board Resolution of a duly authorized company representative/signatory
- Project Brief
- Anti-Graft Certificate
- Project Feasibility Study
Generally, the approval time for PEZA registration takes up to 21 days, depending on the requirements submitted and the type of industry you wish to invest in.
PEZA-registered enterprises can enjoy the following incentives, but not limited to:
- Income tax holiday (ITH) of four to six years
- Special corporate income tax (SCIT) rate of 5% based on gross income in lieu of national and local tax rates for five to 10 years
- Value-added tax (VAT) zero-rating and exemptions on importation or local purchases of goods and services directly and exclusively used on the registered project.
- Duty exemption on imported capital equipment, raw materials, spare parts, or accessories
- Exemption from wharfage dues and export tax, duty, impost, and fees
- Employment of foreign nationals in supervisory, technical, or advisory positions
Moreover, the enactment of CREATE law provided new rules for the incentive system in the Philippines. It introduces a targeted incentive system that categorizes industries into different tiers. Thes tiers receive various incentives that can be useful for their business.
The tier system is as follows:
|INDUSTRY TIER 1||ACTIVITIES|
|TIER I||Activities that:|
|TIER II||Activities that produce supplies, parts and components, and intermediate services that are not locally produced, but are critical to industrial development and import-substituting activities, including crude oil refining.|
|TIER III||Activities that include:|
These tiers help IPAs identify the fiscal and non-fiscal incentives they can offer to foreign businesses investing in the Philippine market.
Register Your Business with PEZA
Registering with relevant IPAs in the Philippines enables you to enjoy both fiscal and non-fiscal incentives for your business. Maximizing incentives provided by the government through agencies such as PEZA allows you to ensure that your business is off to a great start.
Benefits such as tax exemptions and deductions can help you focus your efforts towards business development and operations. If you find these procedures exhaustive, you can always reach out to business consulting firms to assist you during your registration process.
Register and Apply for Tax Incentives with PEZA
With a large pool of qualified business consultants, our team can help you secure the necessary steps when registering and applying for tax incentives provided by PEZA.