Philippine Economic Zone Authority Tax Incentives

Philippines PEZA – Philippine Economic Zone Authority

Companies that register and locate within an area that is under the Philippine Economic Zone Authority (PEZA) are entitled to various tax incentives and other advantages.

Usually enterprises located in a PEZA approved ecozone are required to export 100% of their production.

Incentives for Ecozone and IT Locators

100% foreign ownership allowed except in activities which are limited by the Foreign Investment Negative List

Income Tax Holiday (ITH) or exemption from corporate income tax for 4 years, extendable to a maximum of 8 years; after which a special 5% tax on gross income (sales less direct costs) shall be paid in lieu of all national and local taxes.  The income tax holiday is not available for locators in the Subic Bay Metropolitan Authority (SBMA) and Clark Freeport Zone, they are entitled to the special 5% tax on gross income as described above.

Exemption from duties and taxes on imported capital equipment, spare parts, supplies, raw materials. Tax credits will issued on breeding stocks or genetic materials when they are sourced locally.

PEZA may grant the right to the locator on a case to case basis the sale of up to 30% of production to the domestic market.

Exemption from wharfage dues and export taxes, imposts and fees.

Permanent resident status for foreign investors and immediate family members.

Employment of foreign nationals.

Simplified import and export procedures.

Other incentives under Executive Order 226 (Omnibus Investment Code of 1987), as may be determined by the Philippine Economic Zone Authority Board.

For companies that will not avail of PEZA incentives see the rules on foreign ownership of Philippine companies

Tax incentives by the Philippines Board of Investments