Tax incentives exempt businesses from paying certain local taxes, fees and charges. The following benefits are listed below: Over the past two decades, companies in developed countries have sought operational efficiency through outsourcing. As a result, outsourcing to the Philippines has become a viable option for businesses to reduce overhead costs without compromising quality. To boost the growth of the outsourcing industry, the Philippine government is encouraging foreign companies to invest in the country. This week, we discuss the benefits of a company registered by the Philippine Economic Zone Authority (PEZA). Duran & Duran-Schulze has helped many companies to obtain PEZA accreditation and establish their activities in PEZA ecozones. If you need more information about PEZA and its benefits, contact the lawyers of Duran & Duran-Schulze here. Here are the following benefits offered to businesses: 2. Pre-registration to take advantage of the benefits and incentives Companies registered under PEZA can enjoy the following benefits: If you outsource to the Philippines, one of the many advantages of this company is to reduce costs. You want a seamless experience in all aspects, especially in terms of your teams` transition. You`re probably eager to tap into the world-renowned Filipino talent pool and refocus on your core business functions. If you`re willing to take advantage of outsourcing, the last thing to worry about should be taking care of business permits and paying fees to government agencies. Instead of worrying about footwork and the possible hassles with old-school paperwork, you can jump for the good part by searching for that particular keyword instead: PEZA.
PeZA was founded in 1995 and has developed widely used programs that provide incentives and facilitate the creation and operation of BPO (Business Processes Outsourcing) companies and other qualified companies. The Agency has overseen the development of special economic zones or PEZA ecozones where accredited companies can operate and reap the many benefits of PEZA programs. What is recorded is the particular business activity in which the company will participate. If a company carries on more than one business activity, the registration of a commercial activity does not necessarily mean a record of all activities. This would mean that a registered company could not receive tax and other incentives in relation to unregistered activities. To avoid complications, one approach is to take over a business for each activity. Bir Revenue Regulations No. 12-97. Local taxes are defined under the heading “Regulation implementing section 24 of RA 7916”: When you can submit reports: Business Services Division Failure to transport or openly display required ECOZONE identifiers/passports: PEZA incentives To be eligible for PEZA accreditation, your company must be in the following sectors: Manufacturing export, Export of computer services (IT), Tourism, medical tourism, agro-industrial manufacturing for export, agro-industrial production of biofuels, logistics and warehousing services, development and operation of economic zones, suppliers of factories and public services. PEZA or Philippine Economic Zone Authority is an agency established by the Department of Commerce to promote and promote foreign investment as well as export-oriented enterprises and special services in the country.
These companies include foreign companies that want to outsource part of their business activities abroad in order to reduce costs. Related Video: A Look at Eastvantage Offices Accredited peZA Section 24. National and local tax exemption – With the exception of property taxes on land owned by developers, no local and national tax is levied on companies operating in ECOZONE. Instead, five percent (5%) of the gross revenue of all ECOZONE companies is paid and transferred as follows: Companies in the Philippines are mandated by the government to pay their tax obligations when or before their deadlines expire. Failure to comply will result in penalties, surcharges, interest and possible prosecution for tax evasion. In order to benefit from tax breaks and incentives from PEZA, a company must register with PEZA and locate its operations in one of PEZA`s areas, buildings, IT parks or technology parks. PEZA registrants should generally be export-oriented. Companies located in the zones must export 100% of their production. In some cases, PEZA may authorise the sale of up to 30% of production on the domestic market. Full foreign ownership of a PEZA company is allowed as long as it is not involved in activities on the negative list for foreign investment. PeZA permits and specific incentives are granted on a case-by-case basis. Applicants must submit an application to provide information on the capital structure, nationality of investors and a feasibility report in a format prescribed by PEZA.
Applicants can expect a quick turnaround time once the application is submitted. In order to meet current demands, PEZA has issued Memorandum Circular 2004-024 to inform all stakeholders in the economic zone. The memorandum circular contains the following: Our tax compliance services include the following processes: Registration with PEZA of economic zones is not an unlimited privilege. The issuance of the registration certificate by PEZA is subject to the conditions set out in the registration agreement, which are signed by the representatives of the company and peza. Example terms could be the amount of sales on an annual basis, the percentage of production exported – say 70%, the number of employees, reporting at regular intervals, compliance with environmental regulations and much more. Failure to comply with the terms and conditions may result in penalties or, in the worst case, removal of the registration certificate by PEZA during an appropriate process. Click here to use our reliable online services Each of these companies is entitled to its own incentives. To give you details, we will focus on exporting IT services below: More information as well as the complete and updated list of tax and non-tax incentives can be found on the PEZA website. We also provide a brief summary of our PEZA compliance services to help customers identify the options that best meet their organization`s needs.
These include agreeing on reporting requirements, renewing PEZA certification for accredited companies, applying for additional incentives, and seeking approval to start operating in the Philippines. 4. Specially defined tax and non-tax incentives. From 1986 to 1998, she represented agusan del Norte`s First District in the Philippine House of Representatives, where she was one of the authors of Republic 7916 or the Special Economic Zones Act of 1995, which created PEZA. (Garry S. Pagaspas is a resource speaker at the Tax and Accounting Center, Inc. He is a Chartered Public Accountant and holds a Bachelor of Laws degree who has been actively practicing taxation for nearly two (2) decades and has been a professor of taxation for more than five (5) years. He had assisted various taxpayers in tax compliance and management, resulting in tax savings through tax studies, opinions, consultations and other related services. For any comments, please email garry.pagaspas(@)taxacctgcenter.ph. . Company registrations.
We can help you in the complete registration of your legal entity – ordinary company, license to do business for foreign companies, foundations, non-stock and non-profit companies. We have already established and registered a number of companies – local and foreign – with the Securities and Exchange Commission and other government agencies. We can also help you get a successful registration with the Philippine Economic Zone Authority (PEZA). The establishment of the above-mentioned business operations is not automatic and prior registration is required. A new company may file an application form with the Securities and Exchange Commission (SEC) during the incorporation phase or after SEC approval. A number of documentation requirements apply to a specific type of activity to be recorded. This can include SEC corporate documents, business plan, and more. PEZA locators must be located in a specific ecozone to be eligible. For this purpose, an ecozone is a specific area registered by PEZA or a building accredited as an IT building.
If your business is one of the above operations, you may want to consider registering with PEZA for tax and other incentives. . If you want to establish a branch or subsidiary in the Philippines, you may need the help of experts. D&V Philippines is a high-end service company that accompanies you every step of the way: from obtaining your business licenses to setting up an accounting system, we have what you need. Several businesses in the economic zone registered with the Philippine Economic Zone Authority (PEZA) have contacted PEZA to find out if they are exempt from obtaining LGU permits and have to pay fees, licenses, local taxes, etc. .