Board of Investments and Philippine Economic Zone Authority are sectors of the Department of Trade and Industry both designed to attract foreign investors, to promote the economy and generate income for the Philippines. Registering with these sectors entitles the companies to tax incentives and other benefits.

Benefits enjoyed by BOI registered companies are:

  1. Income tax holidays for 3-8 years
  2. Exemption from local business taxes for a 4-6 year period
  3. An equity investment in a Philippine corporation

Companies opting to register with BOI in the Philippines must first comply with the following requirements:

  1. notarized application form
  2. project summary-contains activities related to those listed in the Investment Priorities plan
  3. feasibility report-contains projected financial statements for the next five years

PEZA, on the other hand, offers the broadest set of incentives for export-oriented enterprises locating within identified economic zones. These are:

  1. Offshore profit remittances, this will not be subject to remittance tax;
  2. Income Tax Holiday for four (4) years for Non-Pioneer IT Enterprises, or six (6) years for Pioneer IT Enterprises;
  3. After the ITH period, the option to pay a special 5% tax on gross income earned, in lieu of all national and local taxes, except real property taxes on land owned by developers;
  4. Exemption from payment of import duties and taxes on imported machinery and equipment and raw materials;
  5. Additional deduction equivalent to 50% of training expenses, chargeable against the 3% share of the national government in the special 5% tax on gross income;
  6. Permanent resident status for foreign investors with initial investments of US$ 150,000.00 or more;
  7. Special tax rate of 5% of gross income (measured as sales less direct costs) in lieu of all Philippine taxes after the ITH;
  8. Exemption from Branch Profit Remittance tax for PEZA-registered branches of foreign corporations; and
  9. Other incentives, as determined by the PEZA Board

Enterprises located in an ecozone, as well as the developers and operators of the zone, are entitled to these incentives available to BOI-registered enterprises, as well as to additional incentives available under the Act. Ecozones are essentially export-oriented. Enterprises located inside the zones are required to export 100% of their production but PEZA allows up to 30% of production in the Philippine domestic market.

Below are some of the required documents for obtaining PEZA registration:

  1. Project brief which entails the submission of additional documents to confirm the statements made therein
  2. Anti-graft certificate
  3. Board Resolution Authorizing the designation of a representative
  4. SEC Certificate of Registration
  5. Project feasibility study which includes reference documents and other information used for the study

To know more about this topic, please email info@domingo-law.com or call Atty. Joyce Domingo at +632-8231090 or +639175220680.