Phil. Economic Zone Authority
 

 

PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA)

     PEZA incentives are being made available to qualified enterprises under the auspices of R.A. No. 7916, otherwise known as the Special Economic Zone Act of 1995. This law was signed by President Fidel V. Ramos into law on February 24, 1995 to foster economic growth through the development of special economic zones all over the country.

Special Economic Zone Act of 1995

     The Special Economic Zone Act of 1995 created PEZA and endowed it
     with the following powers and functions:

  • Operation, administration, management, and development of ecozones;
  • Registration, regulation, and supervision of enterprises within the Ecozones in an efficient and decentralized manner;
  • Coordination with local government units.

TAX INCENTIVES

     The following tax incentives are available to all qualified investors in LISP III, Cebu Light Industrial Park and Hermosa Ecozone Industrial Park as authorized by the Philippine Economic Zone Authority (PEZA).

ECOZONE EXPORT ENTERPRISE
     (A company that exports at least 70% of its production)

  1. INCOME TAX
    • Special incentive of five percent (5%) final tax based on gross income which is net of allowable deductions as defined by law. This is in lieu of national and local government taxes. Effectively, this is generally equivalent to a five percent (5%) tax on gross profit, since allowable deductions include the cost of raw materials, supplies, labor, and depreciation expense.

      or
    • INCOME TAX HOLIDAY

      - Pioneer projects - 6 Years
      - New Non-Pioneer projects - 4 Years
      - Expansion projects - 3 Years

      (Projects locating in less developed areas may enjoy a six year income tax holiday regardless of status, pioneer or non-pioneer, or type of project, new or expansion).

      After the Income Tax holiday, the investor is entitled to the special incentive of 5% final tax alternative described above.
  2. Tax-exempt importation of capital equipment and raw materials.
  3. Tax-exempt importation of construction materials subject to certain conditions.
  4. Tax-exempt importation of specialized office equipment and furniture.
  5. Tax-exempt importation of specialized vehicles and transportation equipment including spare parts.
  6. Tax and duty-free importation of professional instruments and household effects (for foreign nationals employed).
  7. Tax credits for import substitutions.
  8. Exemption from wharfage dues, export tax, impost or fee on export products.
  9. Additional tax deduction for training expenses.
  10. Tax credit on domestic capital equipment.
  11. Additional tax deduction for labor expenses.

ECOZONE DOMESTIC MARKET ENTERPRISE

  1. Exemption from local and national taxes. In lieu thereof, five percent final tax on gross income earned which is net of allowable deductions such as the cost of raw materials, supplies, labor and depreciation expense.
  2. Additional tax deduction for training expenses.
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Board of Investments
Phil. Economic Zone Authority

Link to PEZA Web Site

  • For more information on the Philippine Economic Zone Authority ("PEZA"), please visit their web site at: www.peza.gov.ph