Quick Guide to Taxation Laws and Restrictions on Foreign InvestmentMarch 11, 2019
NEW IRR FOR CPD LAWMarch 18, 2019
Being a PEZA registered comes with a lot of benefits or incentives, it is one of the Philippine government’s way of encouraging more foreign investors to boost economic development.
Incentives available to PEZA registered Enterprises is divided into two namely:
Fiscal incentives which refers to the “monetary benefit” offered to the enterprises such as tax savings, discounts and etc. while on the other hand. Non- fiscal incentives are those benefits that are simply “non-monetary” value.
- Income Tax Holiday (ITH) – 100% exemption from corporate income tax:
- 4 years ITH for Non-pioneer project
- 6 years ITH for Pioneer project
ITH Extension year may be granted if Project complies with the following criteria (one criterion is equivalent to one ITH extension year,), provided that the total ITH entitlement period shall not exceed eight (8) years:
> The average net foreign exchange earnings of the project for the first three (3) years of operations is at least US$500,000.00 and,
> The capital equipment to labor ratio of the project does not exceed US$10,000.00 to 1 for the year immediately preceding the ITH extension year being applied for.
o 3 years ITH for Expansion project (ITH applies to incremental sales)
- 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 equipment and parts.
- Exemption from wharfage dues on import shipments of equipment.
- VAT zero-rating of local purchases of goods and services, including land-based telecommunications, electrical power, water bills, and lease on the building, subject to compliance with Bureau of Internal Revenues 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 not be subject to payment of real estate taxes for the first three (3) years of operation of such machineries. Production equipment not attached to the real estate shall be exempt from real property taxes.
- Exemption from expanded withholding tax.
- 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 position, and their spouses and unmarried children under twenty-one years of age. PEZA extends Visa Facilitation Assistance to foreign nationals their spouses and dependents.