What is PEZA? And why does working with a PEZA accredited company benefits you?

PEZA or the Philippine Economic Zone Authority according to their website peza.gov.ph/index.php/about-peza;

PEZA – attached to the Department of Trade and Industry – is the Philippine government agency tasked to promote investments, extend assistance, register, grant incentives to and facilitate the business operations of investors in export-oriented manufacturing and service facilities inside selected areas throughout the country proclaimed by the President of the Philippines as PEZA Special Economic Zones.

Official PEZA Website

PEZA was established when the Philippine Economic Zone Act or R.A 7916 is enacted by former president Fidel V. Ramos. This act grants Fiscal and Non-Fiscal Incentives to PEZA registered Economic Zone enterprises.

According to PEZA, these fiscal benefits include;

• A 100% exemption from corporate tax –Income Tax Holiday
• 4 years ITH for non-pioneer project
• 6 years ITH for Pioneer project
• 5% Special Tax on gross income and exemption from all national and local taxes.
• Tax and duty free importation of equipment and parts.
• Exemption from wharf age dues on import shipments of equipment.
• VAT zero-rating of local purchases of goods and services 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.

Non-Fiscal Incentives

• 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. 

As of Nov. 30 2017, there are 262 Information Technology Parks/Centers that are accredited by PEZA. Metro Manila being the major city having 155 IT centers followed by Cebu with 35 IT centers. With the rest of the ecozones distributed in the whole country. Bulacan has 2 registered IT Centers. Virtual Colony is located in Bulacan. Virtual Colony aims to provide more job opportunities for their fellow Bulakeño that a PEZA accreditation will guarantee.

PEZA aims to boost investors in multiple industries.  According to PEZA, Virtual Colony is eligible for said benefits as the industry is one of PEZA’s supported industries.

IT (Information Technology) Service Export –  IT service activities, of which 70% of total revenues is derived from clients abroad.  (“IT Service Activities” are activities which involve the use of any IT software and/or system for value addition). Among the IT Service activities eligible for incentives are: IT-enabled services such as business process outsourcing, call centers, data encoding, transcribing and processing, etc.; software development and application, including programming and adaptation of system softwares and middlewares; for business, media, e-commerce, education, entertainment, etc.; content development for multi-media or internet purposes; and others. Eligible firms shall qualify for registration as “IT Enterprise.” 

These benefits enable PEZA accredited companies to charge clients a lower cost than those non-PEZA registered companies.