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Philippine Economic Zone Authority (PEZA)

The document summarizes the key aspects of the Philippine Economic Zone Authority (PEZA) including its creation, composition, and fiscal and non-fiscal incentives for businesses. PEZA was created by the Special Economic Zone Act of 1995 to oversee special economic zones in the Philippines. It offers various tax incentives like income tax holidays and import duty exemptions to registered businesses. It also facilitates simplified import/export and visa procedures for foreign investors and employees. The document briefly mentions Barangay Micro-Business Enterprises (BMBE), which are small businesses with total assets less than 3 million pesos.

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173 views7 pages

Philippine Economic Zone Authority (PEZA)

The document summarizes the key aspects of the Philippine Economic Zone Authority (PEZA) including its creation, composition, and fiscal and non-fiscal incentives for businesses. PEZA was created by the Special Economic Zone Act of 1995 to oversee special economic zones in the Philippines. It offers various tax incentives like income tax holidays and import duty exemptions to registered businesses. It also facilitates simplified import/export and visa procedures for foreign investors and employees. The document briefly mentions Barangay Micro-Business Enterprises (BMBE), which are small businesses with total assets less than 3 million pesos.

Uploaded by

Lea
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter 4

Philippine Economic Zone Authority


(PEZA)
Creation and Composition
• Created by Republic Act 7916 otherwise known
as “The Special Economic Zone Act of 1995”
– Chairman – the secretary of the Department of
Trade and Industry
– Vice Chairman – the Director General
– Members of the Board are undersecretaries
representing nine (9) key government
Departments, to ensure efficient coordination
between PEZA and their respective departments on
matters pertaining to investors’ operations inside
the Special Economic Zones
Fiscal Incentives
• Just like in any other country, taxation in the Philippines can be quite
complex especially for foreign entities. Businesses registered under
PEZA can enjoy the following tax incentives:
• Income Tax Holiday (ITH) – 100% exemption from corporate income tax:
– 4 years ITH for Non-pioneer Project (Applicable to Manufacturing, IT,
Tourism, Medical Tourism, and Agro-industrial Activities)
– 6 years ITH for Pioneer Project (Applicable to Manufacturing and IT
activities only)
• Upon expiry of the Income Tax Holiday, 5% Special Tax on Gross Income
and exemption from all national and local taxes. (“Gross Income” refers
to gross sales or gross revenues derived from the registered activity, net
of sales discounts, sales returns, and allowances, and minus cost of
sales or direct costs but before any deduction is made for administrative
expenses or incidental losses during a given taxable period).
• 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 on local purchases of goods and services,
subject to compliance with BIR and PEZA requirements.
• Exemption from payment of any and all local government
imposts, fees, licenses, or taxes. However, while under
Income Tax Holiday, no exemption from real estate tax,
but machineries installed and operated in the economic zone
for manufacturing, processing, or for industrial purposes shall
be exempt from real estate taxes for the first three (3) years
of operation of such machineries. Production equipment not
attached to real estate shall be exempt from real property
taxes.
• Exemption from expanded withholding tax.
• For Agro-industrial Economic Zone Enterprise Activities:
Exemption from payment of local government fees such as
permits, certificates, and various fees needed prior to
operation.
Non-Fiscal Incentives
• Simplified Import-Export Procedures (Electronic Import
Permit System and Automated Export Documentation
System).
• Non-resident foreign nationals may be employed by
PEZA-registered Economic Zone Enterprises in
supervisory, technical, or advisory positions.
• Special Non-Immigrant Visa with Multiple Entry
Privileges for the following non-resident foreign
nationals in a PEZA-registered Economic Zone
Enterprise: Investor/s, Officers, and Employees in
supervisory, technical, or advisory positions, and their
spouses and unmarried children under twenty-one years
of age. PEZA extends Visa Facilitation Assistance to
foreign nationals and their spouses and dependents.
BMBE

Barangay Micro-Business Enterprises


BMBE
• Refers to any business entity or enterprise
engaged in the production, processing or
manufacturing of products or commodities,
including agro-processing trading and
services, whose total assets including those
arising from loans but exclusive of the land on
which the particular business entity’s office,
plant and equipment are situated, shall not be
more than Three Million Pesos (P3M)

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