Introduction

Expanding your business in the Philippines starts with understanding Investment Promotion Agencies (IPAs). Registering with the Philippine Economic Zone Authority (PEZA) can offer significant benefits like tax incentives and smoother operations. Registering a business with the Philippine Economic Zone Authority (PEZA) offers numerous benefits, including tax incentives, simplified import/export procedures, and access to world-class infrastructure. Businesses engaged in export-oriented industries, IT services, manufacturing, and logistics often seek PEZA registration to maximize operational efficiency and reduce costs. This guide outlines the step-by-step process for registering a business with PEZA.

What is Philippine Economic Zone Authority (PEZA)

The Philippine Economic Zone Authority (PEZA) is a pivotal government agency in the Philippines, driving the creation of economic zones to attract foreign investments. By offering enticing incentives and robust support, PEZA empowers businesses in these zones to thrive. This strategic approach not only facilitates ease of doing business but also spurs economic growth and development across the nation.

Functions of the Philippine Economic Zone Authority

PEZA plays a vital role in attracting foreign investment and managing economic zones in the Philippines. Its primary functions include:

1. Regulating and Promoting Investments: PEZA facilitates foreign direct investments by offering tax incentives and regulatory support.

2. Establishing Economic Zones: This department oversees the development and operation of specialized industrial parks, IT hubs, and tourism zones.

3. Granting Fiscal and Non-Fiscal Incentives: Provides businesses with tax breaks, streamlined processes, and infrastructure support.

4. Ensuring Compliance: Enforces environmental and labor laws to maintain ethical business practices.

5. Facilitating Trade and Export Activities: Streamlines customs and logistics processes for PEZA-registered enterprises.

PEZA Registration Requirements

To qualify for PEZA incentives, businesses must meet specific requirements, including:

1. Eligible Business Activity: Must be engaged in export manufacturing, information technology services, medical tourism, logistics, warehousing, or agro-industrial production.

2. Business Location: Must operate within PEZA-accredited economic zones in the Philippines.

3. Investment Capital: Sufficient capitalization depending on the industry and business model.

4. Environmental Compliance: Adherence to environmental laws and sustainability standards.

5. Corporate Registration: Properly registered as a legal business entity in the Philippines.

PEZA Registration Process

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:

1. Submit application documents for pre-screening
2. Pay application fee of ₱3,600 and secure official receipt
3. Submit the duly accomplished application form along with other required documents
4. Wait for receipt of Board Resolution
5. Submit Pre-Registration requirements as stated in Board Resolution
6. Pay registration fee of ₱6,000
7. Sign registration agreement with PEZA

Step 1: Determine Business Eligibility

PEZA registration is open to businesses engaged in:

• Export Manufacturing – Businesses that export at least 70% of their production.
• IT and Business Process Outsourcing (BPO) – Call centers, software development, and IT-enabled services.
• Tourism and Medical Tourism – Eco-tourism, health and wellness facilities.
• Agro-Industrial Activities – Agricultural processing and biofuel production.
• Logistics and Warehousing – Import/export logistics, cold storage, and distribution centers.
• Economic Zone Development – Companies establishing special economic zones.

Businesses must locate within PEZA-designated zones or develop their own economic zone to qualify.

Step 2: Prepare the Required Documents

Documentary Requirements

• Letter of Intent to PEZA
• Board Resolution authorizing the business to apply for PEZA registration
• Business Plan/Project Study detailing:

1. Nature of business and operations
2. Market analysis and projected revenues
3. Capitalization and investment commitments
4. Job creation and economic contributions

• Articles of Incorporation and By-Laws (SEC-registered)
• BIR Certificate of Registration (Form 2303)
• Audited Financial Statements (for existing businesses)
• Lease Agreement or Land Title of the business location within a PEZA zone

Step 3: Submit Application to PEZA

• Submit the application and required documents to the PEZA Main Office or the designated PEZA Economic Zone Office.
• Pay the non-refundable filing fee (varies depending on business type).

Step 4: Attend the PEZA Evaluation and Interview

• PEZA will review the business proposal and financial viability.
• An interview with PEZA officials may be required to clarify operational and investment plans.

Step 5: Await PEZA Board Approval

• The PEZA Board evaluates and approves applications in scheduled board meetings.
• If approved, PEZA issues a Certificate of Registration and Enterprise Agreement.

Step 6: Secure Other Necessary Permits

After PEZA registration, businesses must:

• Register with the Bureau of Internal Revenue (BIR) for tax compliance.
• Secure LGU Business Permits (Barangay Clearance, Mayor’s Permit).
• Comply with SSS, PhilHealth, and Pag-IBIG employer registration.
• Apply for environmental clearances from the DENR (if applicable).

Step 7: Comply with Post-Registration Requirements

• Submit Annual Reports on export performance, investment commitments, and employment generation.
• Maintain BOI/PEZA compliance records to continue enjoying tax incentives.
• Renew PEZA registration as required.

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Benefits of PEZA-Registered Companies

1. Exemptions from the payment of import duties and taxes on imported machinery, equipment, and raw materials.

2. Income tax holidays for a certain number of years, which translates to 100% exemption from corporate income tax.

3. Exemption from expanded withholding tax.

4. Permanent resident status for foreign investors with initial investments of US$ 150,000 or more.

5. Exemption from branch profit remittance tax for PEZA- registered branches of foreign companies

6. Exemption from payment of any and all local government imposts, fees, licenses or taxes

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Conclusion

PEZA registration is an excellent opportunity for businesses looking to maximize tax benefits and operational efficiency in the Philippines. While the process involves multiple steps and regulatory compliance, the long-term incentives outweigh the administrative effort. Consulting a business lawyer or investment specialist can help streamline the PEZA registration process and ensure compliance with all legal requirements.

Frequently asked questions (FAQs)

1. What is PEZA?

The Philippine Economic Zone Authority (PEZA) is a pivotal government agency in the Philippines, driving the creation of economic zones to attract foreign investments. By offering enticing incentives and robust support, PEZA empowers businesses in these zones to thrive. This strategic approach not only facilitates ease of doing business but also spurs economic growth and development across the nation.

2. What are the requirements for registering with PEZA? 

• Eligible business activity
• Business location
• Investment capital
• Environmental Compliance
• Corporate registration

3. What are the benefits of PEZA Registration? 

• Income Tax Holiday (ITH) – 4 to 6 years of corporate tax exemption.
• Special 5% Gross Income Tax (GIT) in lieu of all national and local taxes.
• Zero VAT rating for local purchases.
• Duty-free importation of capital equipment and raw materials.
• Simplified import and export procedures.

4. What are the steps required to register for PEZA?

• 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

Refer to the steps mentioned above for a detailed guide.

5. What are the functions of PEZA?

• Regulating and Promoting Investments
• Establishing economic zones
• Granting Fiscal and Non-Fiscal Incentives
• Ensuring compliance
• Facilitating Trade and Export Activities