Telexpress Manila is a PEZA REGISTERED COMPANY

 

§ Author: Janet Genio｜Telexpress Manila Center｜Finance & Admin Department Leader §

 

 

Nowadays many foreign businesses have chosen to outsource their workforce to save on operational expenses. Aside from the pool of highly-educated, English-speaking talents in the Philippines, doing business here proves to be beneficial for foreign entities as they can reduce overhead costs without sacrificing the quality of work.

The Philippine government to show support and encourage this “offshoring” business activity created incentives for them through PEZA.

 

 

 

 

To obtain tax breaks and incentives offered by PEZA, an enterprise must register with PEZA and locate their operation in one of the PEZA zones, buildings, IT Parks, or Technology Parks. PEZA registrants must generally be export-oriented. Full foreign ownership of a PEZA enterprise is allowed, provided they are not engaged in activities that appear on the Foreign Investment Negative List. PEZA approval and specific incentives granted are on a case by case basis.

Here is a summary of business activities that are eligible for PEZA Tax Incentives:

• Export Manufacturing
• Information Technology Service Export (including Call Centers)
• Tourism
• Medical Tourism
• Agro-industrial Export Manufacturing
• Agro-industrial Bio-Fuel Manufacturing
• Logistics and Warehousing Services
• Economic Zone Development and Operation
• Facilities Providers
• Utilities

 

Benefits of PEZA Registered Companies 

Ø  Fiscal Incentives: Just like any other country, taxation in the Philippines can be quite complex especially for foreign entities. Businesses registered under PEZA can enjoy the following tax incentives:

·         Income Tax Holiday (ITH) – 100% exemption from corporate income tax:

o    4 years ITH for Non-pioneer Project (Applicable to Manufacturing, IT, Tourism, Medical Tourism, and Agro-industrial Activities)

o    6 years ITH for Pioneer Project (Applicable to Manufacturing and IT activities only)

·         Upon expiry of the Income Tax Holiday, 5% Special Tax on Gross Income and exemption from all national and local taxes. (“Gross Income” refers to gross sales or gross revenues derived from the registered activity, net of sales discounts, sales returns, and allowances, and minus cost of sales or direct costs but before any deduction is made for administrative expenses or incidental losses during a given taxable period).

·         Tax and duty free importation of raw materials, capital equipment, machineries, and spare parts.

·         Exemption from wharfage dues and export tax, impost or fees.

·         VAT zero-rating on local purchases of goods and services, subject to compliance with BIR and PEZA requirements.

 

Ø  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 positions, and their spouses and unmarried children under twenty-one years of age. PEZA extends Visa Facilitation Assistance to foreign nationals and their spouses and dependents. 

 

  Telexpress Contact Center Inc. is a PEZA Registered Company for 5 years now, which is 100% exemption from corporate income tax (corporate tax here in PH is 30%). After this 5-year period we will start to pay 5% Special Tax on Gross Income. Our company also enjoying VAT zero-rating on local purchases of goods and services (VAT here is 12%).

Since we are not paying value added taxes on our purchases to our local suppliers, it is a great help to our company in saving cost at the same time we can be competitive in charging our client with service fee as we don’t have to pass to them the burden of paying additional VAT on our service fee. So being a PEZA registered company is a win-win for both our company and to our clients.