How Startups Benefit from PEZA

The Philippines is home to billions worth of foreign investments. No wonder why startups continue to flourish, making the country the next startup hub in Asia. In Q2 2016 records, the country’s total approved foreign investments is reported to have risen by 11.5% compared with figures from Q2 2015.

Among the investment promotion agencies tasked to help prospective investors establish their startup business in the Philippines is the Philippine Economic Zone Authority or PEZA.

PEZA was established in 1995 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.”  It oversees the development of IT Parks or areas that house world-class and environment-friendly infrastructures, support facilities, and other amenities for enterprises in IT-related fields.

Benefits of PEZA Accreditation

Included in the mandate of PEZA is the granting of incentives to companies that register for accreditation, provided they operate in PEZA Zones. These zones, which include IT Parks and economic zones in manufacturing, agro-industrial, tourism, and medical tourism, among others, are key areas located nationwide and have been identified as central drivers of the Philippine economy.

PEZA’s fiscal and non-fiscal incentives are designed to help startup investors obtain the best return on their capital. Here’s a rundown of the benefits that PEZA-accredited enterprises are entitled to.

1. Fiscal Incentives exempt firms from paying taxes and other local fees or charges, including:
  • Income tax holiday (ITH) – Corporate income tax is waived 100% for the first four to six years of operations
  • Special income tax – Upon expiration of the ITH, a preferential 5% tax exemption is applied to gross income
  • Tax and duty-free importation – Applicable to importation of raw materials, capital equipment, machinery, and parts
  • Zero percent VAT – When purchasing local goods or services for use in the business activity
  • Exemption from payment of local government taxes and fees for permits or licenses
  • Exemption from local business and real property taxes
2. Non-fiscal Incentives include services and assistance for firms’ operations and entry into the market, such as:
  • Simplified import-export procedures
  • Hiring of non-resident foreign nationals for supervisory, technical, or advisory positions
  • Special non-immigrant visas with multiple entry privileges for non-resident foreign employees and their spouses and children below 21 years old
  • Visa facilitation assistance for foreign employees and their spouses and dependents

Startups in the Philippines, whether local or foreign, help keep the business landscape in the Philippines alive and progressing. With these PEZA benefits, the Philippines is indeed ideal for setting up your startup business and should get you going to add to the next batch of the country’s valuable investors.

Ron Cullimore | Head of Client Services

Ron Cullimore | Head of Client Services

Ron Cullimore is a deeply experienced customer service and recruitment professional. His expertise covers client experience and engagement, service management, business development, offshoring and recruitment strategy for start-ups, SMEs, corporations and multinationals. Ron was previously a management professional at Optus, a large Singaporean/Australian Telco, where he was involved in managing and recruiting local talent for their BPO operations in the Philippines. Eventually Ron relocated full-time from Australia to Manila and he joined the executive search and headhunting specialists, Manila Recruitment. His passion lies in providing well-rounded recruitment solutions to teams with specialist recruitment needs in the Philippines.
Ron Cullimore | Head of Client Services

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