12

Enterprises
B01 an d PEZA Registered

ornniGus 'ln ve stm en t Code (!E

.O. '}\fo. 22 6
)
t Policies
Declaration of Inv es tm en
t f · al economy in consonance
To ac ce ler ate the soun. d de . vel opmen o the nation ance of a
. . .
an d obJ e~t 1ve s of eco no mic nationalism and in pursu
with the principle~ l of industries and the
fea sib le and practical dispersa
planne ? ec on om ica lly ditions which will
of sm al! . an d me diu m scale industries, under con are declared
promotion ura ge monopolies the following
co mp eti tio n an d dis co
encourage '
policies of the State:
estments in industry,
en co ura ge pri vate Filipino and foreign inv
1) The Sta te sh all economy which
ure , for es try , mi nin g, tou rism and other sectors of the amount of
agricult en t opportunities relative to the
e sig nif ica nt em plo ym estry,
shall: pro vid pro du ctiv ity of the land, minerals, for
es ted ; inc rea se
the capital be ing inv ve utilization of the
oth er res ou rce s of the country, and impro
aqua tic an d ployed in the
f; im pro ve tec hn ica l skills of the people em
products the reo nomy;
e a fou nta in for the fut ure development of the eco
enterprise; pro vid ate development of
ts of int ern ati on al competitiveness; acceler
meet the tes d volume and
ed reg ion s of the cou ntry; and result in increase
less de ve lop
onomy.
value of ex po rts for the ec
the well-
en su re the ho list ic de velopment by safeguarding
2) The Sta te sh all le. For this purpose,
of the so cia l, cu ltu ral an d ecological life of the peop whenever
being unities will be conducted
wit h aff ec ted co mm
co ns ult ati on
necessary.
_ute t~ the
ex ten d to pro jec ts wh ich will sig~ificantly ?ontrib
3) The State sh all which said ~roJects
nt of the se ob jec tiv es , fiscal incentives without
attainme required for
tab lis he d in the loc ale s, nu ~b er _and/o~ pace
may no t be es tive system shall be
um tio na l ec on om ic de ve lop me nt. F1s~al incen
na perf?rmance
optim
en sa te for ma rke t imperfections, . t? reward
devised to co mp ple to
om ic de ve lop me nt, be cost-eff1c1ent and be sim
tllfttrlbuting to ec on
ter.

470
 lp[Z{l R. e1,:,tt'n:/1_~11 ,.
B{)/ {lilt/ L . ,._,7 o/"1:1<'.1
tor as the prime mover for e
. rs the priv~t~. s_e~ is to be encouraged, with derecona'nic
4) The State c?ns1d\d private in1t1at1\vities to be generally adoptelJlation
growth. In this rega ,f business ac I 'Nher
f
and sel -reg
°
ulation 5 .
t social concern · pportive role, rather than a con, .
e
dictated by urg~nprincipally plaY a su limate and the incentives Withi Pet1tive
5) The State_ ~ha the framework, the c n Which
one, prov1d1~~ . t take place.
b siness act1v1ty is o
u e appropriate roles for local and f
th t there ar . . orei
The State recognize a ment of the Philippine economt and that it is 9n
6) ca ital to play in the develo~ to define these roles and provide the climate the
P
respons1 'b'l'ity
1 of Governmen . . for
their entry and growth. . dustrial peace is an essential element
th 1
?) The state recognizes ?t. ~ principal responsibility of the State to en Of
mic growth and that it is sure
econo ils
that such condition preva .
. tended to stimulate the establishment and as .
8) Fiscal incent_1ves shall be e; r rise and shall terminate after a period of si st
th
initial operations of f e e:gei~rati~n or start-up of operation unless a spec~fiot
more than 10 years rom r 11c
period is otherwise stated·

The foregoing declaration of investment policies shall apply to all investment

incentive schemes.

Composition of the Board of Investments

The Board of Investments shall be composed of seven (7) governors: The
Secretary of Trade and Industry, three (3) Undersecretaries of Tr~de and Industry
to be chosen by the President, and three (3) representatives from other
government agencies and the private sector. The Secretary of Trade and Industry
shall be concurrently Chairman of the Board and the Undersecretary of the
Department of Trade and Industry for Industry and Investments shall be appointed
by the President for a term of four (4) years: Provided, That upon the expiration of
his term, a governor shall serve as such until his successor shall have been
appointed and qualified: Provided , further, That no vacancy shall be filled except
for the unexpired portion of any term , and that no one may be designated to be
~ov~rnor of the Board in an acting capacity but all appointments shall be ad
mtenm or permanent.

Investment Priorities Plan

"lnve~tm~nt Priorities Plan" shall mean the over-all plan prepared by th e
Board which includes and contains:
1
) Thhe ~pe~ific activities and generic categories of economic activity
w erem investments a t0 b d. g
products and comm .r~ e encouraged and the correspon ind
pursuant thereto for tid1dt1es to. be grown, processed or manufacture
e omesttc or export market;
2
) Specific public utilities wh· . · de
and which shall be ich can qualify for incentives under this co. e
regional demands for :Pport~ by studies of existing and p~ospet;~e
8
servtees of such public utilities in the light 0
 Eo;~PE
level and st
economic a ructure of inc
~ R..ettisto-ett.,/"Llderj,rl,fe,s
0
r
facilities to p~ddtechnical fao~e, production t d /
o uce such se~~rs of the reg,io~! e, prices and relevant
3) Specific activitie ces; as well as the existing
Where th e potential f
petroleum basedsfuel ..
s or sources of or utilization of ind·
4) Such other informatio energy can be best pro~~~~ous no-
may deem ap propriaten, analyz es, data, guideli • ·
. nes or criteria as th B
Criteria for lnvestme t p . . e oard
. n nonty 0
No economic activity h eterminaf
is shown to be econo _s all be included in •tohn I
. t· t· m1cally t h . . .
e nvestme t Pnonty
inves tga ton and analys· b · ec nically and f . n Plan unless it
IS y the Board · manc1ally sound after th orough

The determination O f
Investment Priorities Pl preferred areas of in t
taking into account the v:~ shall be_ based on Ionv~~u~ent to b~ listed in the
along with market techni ule of s~c1al objectives a~d e clo~parat1ve ad_vantage,
' ca , and financial anal mp oymg economic criteria
yses.
The Board shall take into
1) Primarily, the eco ~ccount the following:
. . nom1c soundnes f th ..
economic internal rate of return· so e spec1f1c activity as shown by its
2) The extent of contribution of ' ..
3) Other indicators or compa t~n act1v1ty to a specific developmental goal·
4) M ra 1ve advantage- •
5) T;asured capacity as defined in Article 20·' and
•
e market and technical as e t s and ' considerations .
proposed to be included . p c of the activity

Qualifications for a Registered Enterprises

To be e~titled to registration under the Investment Priorities Plan an appl' t

must satisfy the Board that: • ,can

1) ~e is a citizen of the Ph~lippines, in case the applicant is a natural person, or

tn -~as~ of a partnership or any other association, it is organized under
Phthppme laws and that at least sixty percent (60%) of its capital is owned
and controlled by citizens of the Philippines; or in case of a corporation or a
cooperative, it is organized under Philippine laws and that at least sixty per
cent (60%) of the capital stock outstanding and entitled to vote is owned and
held by Philippine nationals as defined under Article 15 of this Code, and at
least sixty per cent (60%) of the members of the Board of Directors are
citizens of the Philippines. If it does not possess the required degree of
ownership as mentioned above by Philippine nationals. the following
circumstances must be satisfactorily established:
a. That it proposes to engage in a pioneer projects as defined in Article _17
of this code, which. considering the nature and. extent_ of capital
Nlqllilem8nts, processes, technical skills and relative business nsks

472

"1 .ts.I
 /p£Zfl Re4istere/Eue,c .
BOI 1v1;/; L J ?¼~
ard of such a nature that the a .
8
. . the opinion of the ~ be readily a_nd adequately ri?'labie
involved. ,s ,n ity thereof cann rcant is exporting at least sev lea by
measured capa:ais · or, if the. apPt~e export requirement herein enty Per
Philippin; )na:,~s tot~I produc!1on, cases under such conditioniroviaed
cent (70 Yo ~ , d in meritorious determine; anator
may be re ~ce the Board may
limited incentives as .. .
. the status of a Ph1lrppme nauo
· If to attain f th d t nai
That it obligates ,tse . . thirty (30) years rom . e a _e of registr~ .as
b. defined in Article 15, w1_th~nas the Boar~ may require ta_kmg into acc~1on
or with such longer peno ject· provided, That a registered ente ~nt
the export potential of the ro erc~nt (100%) of its total productio/Pnse
which exports one hund~e m~nt· need
not comply with this require '
. a e in is one that is not within the acti 1 ..
c. That the pioneer ;~~;~~ti~n or other laws of the Philippines t; ~~s
reserved b~ . eth orporations owned and controlled by Philip . e
Philippine c1t1zens or c Pine
citizens;
The applicant is proposing to enga~e . ~n a pref~rr~d project listed or
2) authorized in the current Investment ~nont1es Plan ~1thin a reasonable time
to be fixed by the Board or, if not so l1st~d: at least fifty p~rcen~ (50%) of its
total production is for export or it is an existing_ p~odu~er w~1ch will export part .
of production under such conditions and/or limited incentives as the Board
may determine; or that the enterprise is engaged or proposing to engage in
the sale abroad of export products bought by it from one or more export
producers; or the enterprise in engaged or proposing to engage in rendering
technical, professional or other services or in exporting television and motion
P!ctures and musical recordin gs made or produced in the Philippines, either
directly or through a registered trader. ·

3) The _app_licant is capable of operating on a sound and efficient basis of ·

contributing t~ the national development of the preferred area in particular
and of the national economy in general; and

4) If the applicant is engaged or .

accounting system
profits or losses
ad: r
other than preferred ro· t pr~poses ~o engage m undertakings or activities

of
u~~~ O _,t h~s mst~lled or undertakes to install an
e~ch identify th~ investments, revenues, costs, and
separately from the aggr prte_rred proJect undertaken by the enterprise
losses of the whole enterpe~a e mveSlment, revenues, costs and profits or
~referred project if the n~e or to establish a separate corporation for each
implementation of this Cod oa rd should so requ ire to facilitate proper
e.
 .. .
cert1f1cat~ of Registration
A registered enterpris
Bo; 1u,/rr/ I - , .
"L '/y__t1i.dcrt1(
'-- 7
--
f - _ , 1 ;
.
tfcrjn.fr~i
•
. d
registra tion un er the seal Of
e Under th·
is Code shall b .
th e Board of Invest e issued a certificate of
chairman and/or such oth
d designate for the p er officer or employee fmthents and the signature of its
an urpose Th . 0 e Board as 1t may e
the Board may determine and ~halles~~=1ficate shall be in such form and ~~~w:;
' among other matters:
1) The name of the registered .
2) The preferred area of . enterprise;
. t investment in h'
proposing o engage; w 1ch the registered enterprise is
3) The nature of the activity it . .
. is undertaking or .
pioneer or non-pioneer, and the re . pro~os1ng to undertake , whether
4) The other terms and conditio t
O
g 1st ered capacity of the enterprise·
virtue of the registration. ns e observed by the registered ent~rprise by

INCENTIVES TO B01 REGISTERED ENTERPRISES

st
All regi er~d enterprises shall be granted the following incentives to the
extent engaged m a preferred area of investment"
'
1. Income Tax Holiday. -

a) For six (6) years from commercial operation for pioneer firms and four (4)
years for non-pioneer firms, new registered firms shall be fully exempt
from income .taxes l~vied by the National Government. Subject to such
guidelines as may be prescribed by the Board, the income tax exemption
will be extended for another year in each of the following cases:
i. the project meets the prescribed ratio of capital equipment to number
of workers set by the Board;
ii. utilization of indigenous raw materials at rates set by the Board;
iii. the net foreign exchange savings or earnings amount to at least
US$500,000.00 annually during the first three (3) years of operation .

The preceding paragraph notv~dthstandin~, no _registered pioneer firm may

avail of this incentive for a period exceeding eight (8) years.

· d f three (3) years from commercial operation , registered

b) For a ~eno. o all be entitled to an exemption from income taxes
ex~anding fir~\sh I Government proportionate to their expansion u_nder
levied by the a iona dT as the Board may determine; Provided,
such terms and con I ions . d within which this incentive is availed of
however, That. during t~e ~e~i'o t be entitled to additional deduction for
by the expanding firm it s 8 no
incremental labor expense.
. 7 (14) notwithstanding, registered firms shall not
· · n of Article
c) The prov1s10 tension of this incentive.
be entitled to any ex

474
 / n £Zfl Rettistcre./E1tt
BOI /L,illL r . J o/ri.e,
Expense. - For the first five
duction for Labor terprise shall be allowed an (5) Year
2. Addition~! ~~ion a registere_d ~me of fifty percent (50%) of t:dditianas
from r~gis~ m the taxable inct ·n the number of direct labor f e Wage 1
deduct1o~d~;g to the i~creme~oj~ct meets the prescribed ratio ~; Skille~
correspok'lled workers if the pkers set by the Board: Provided ihcaPita1
and_ uns \ to number of wor doubled if the activity is locat~d _at this
equipmen . shall be 1n I
additional deduct1~ndefined in Art. 40. ess
developed areas a . .
. Imported Capital Equipment. _ With·
T ax and Duty Exempt10~ _ot n of this Code, importations of machine in five
3. th effect1v1 Y rt f ry an
(S) years from e com anying spare pa s o new and expand· d
equipment and ~c
registered enterprise
i
5 II
be exempt to the extent of one hu 1ng
a toms duties and national internal reventdred
percent (100%) of e ~~s d That the importation of machinery e tax
th
payable thereon: Provi neyi~g spare parts shall comply with the folio ~nd
equipment and accompa Wing
conditions: ufactured domestically in sufficient quantity
a) They are not man bl . . , of
ble quality and at reasona e prices, -
compara onably needed and will be used exclusively by th
b) Th~yt ared reenat!rprise in the manufacture of its products, unless prioer
reg1s ere f th rt r tT ·
approval of the Board is secured . ~r te pa ~ 1~e u 11zat1on of said
•ipment in a non-registered act1v1ty o max1m1ze usage thereof or
equ
the proportionate taxes and duties· are pa1'd on th e s~ec1'f'1c equipment
and machinery being permanently used for non-registered activities;
and
c) The approval of the Board was obtained by the registered enterprise
for the importation of such machinery, equipment and spare parts.

In granting the approval of the importations under this paragraph, the

Board may require international canvassing but if the total cost of the
capital equipment or industrial plant exceeds US$5,000,000, the
Board shall apply or adopt the provisions of Presidential Decree
Numbered 1764 on International Competitive Bidding.

If the_ registered enterprise sells, transfers or disposes of these

machine~,. equipment and spare parts without prior approval of th e
Boa rd ~ithm five (5) years from date of acquisition, the register~d
~nterpnse and the vendee, transferee, or assignee shall be solidanly
hable to pay twice the amount of the tax exemption given it.
8
tThhe ?a~d shall allow and approve the sale transfer or disposition of
e said items ·th· . '
i t0 wi mthe said period of five (5) years if made: .
· anoth er registered enterprise or registered dome stic
·u· froducer enjoying similar incentives·
. ,or reasons Of '
iii. for pt,rpose proven technical obsolescence; or d the
0peratig,18 ~ of rep~cement to improve and/or expan
the regiStered enterprise.
 . l30 J u{ PEZc-1 ~i. sfc rei £11fer/ri.si:.s
. u
,

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,aX ACred it on ~om esti c Capital
tax credit equivalent t
.
Equipment
· t I
O
one hundred percent (100%) of the value of the
.-,atona I m erna revenue taxes and
ms duties that would have been waived
or the m~chine ry equipment and iu::o
sna/1be given to the new and ex pand P . e parts , had these items been imported
• · 1ng · reg·is tere d enterprise which purchases
rrachinery . equi pme nt and spare
a domestic manufacturer : Provided
That (a} Tha t the said equi pme nf arts fr~m
hinery and spare parts are reasonably
needed and will be used excl , _mac
by the registered enterprise in the
anufacture of its products unles usiv~ly
part-time utilization of said , equi ~~no~
111 approval of ~he Board is secured for the
a non-registered activity to maximize
usage ther eof; (b) that the equ ip~ ~t in
d have qualified for tax and duty-free
,rnportation und er paragraph (3) hen ~oul th
, (c) at the approval of the Board was
obtained by the registered enterpr~r~of nd
(d) that the purchase is made within
five (5) years from the date of effer~~ ·. a th tered enterprise
' ells transfers or disp oses of
th c ivrty of e Code . If thet regis d
ese mac hine ry eq ·
S · . '. u~~men an spare parts, the
provisions rn the preceding paragra Ph f or such drsposrtron shall apply.

Contractor's T .
1. Exemption from ax. - The registered enterprise shall be
exempt from the paym e t f
n ° contractor's tax, whether national or local
.

2. Simp lificationof of Cus toms Procedure · - c ustoms proce dures for the
·m orta tion . and supplies, and
1 P eqw pme nt, spare parts , raw materials
ente rpris es shal l be simplified by
exports of proc esse d products by registered
the Bure au of Customs.

- Provisions of existing laws

3. Unre_stricted . Use of C?nsigned Equipment.
and spare part consigned to any
no~1thstandrng , ~ac hrne ry, equipment
ect to restrictions as to period of use of
registered ente rpris es shall not be subj
parts Provided , that the appropriate re-
such mac h iner y, equ ipme nt and spare
rtation is otherwise covered under
export bon d is post ed unless the impo
Provided, further, that such consigned
subs ectio ns (3) and (13) of this Article.
of the registered enterprise.
equi pme nt shal l be for the exclusive use
d or otherwise disposed of by the
If such equ ipme nt is sold , transferre
ision of Article 39 (c) (3) shall apply.
registered ente rpris e the related prov
covering the proceeds of such sale,
Outward rem ittan ce of foreign exchange
only upon prior Central Bank approval.
transfer or disp ositi on shal l be allowed

Subject to the provisions of Section 29

4. Emp loym ent of Fore ign Nationals . -
amended , a registered enterprise may
of Com mon wea lth Act Num ber 613 , as
ni~al o~ advisory ~ositions_ f~r a
employ fore ign natio nals in supe rviso ry, ~ech
its reg1stratIon , extendible for limited
period not exce edin g five (5) year s from
ided , however, That when the
periods at the disc retio n of the Board: Prov
enterprise is owned by foreig~
majority of the capi tal stoc k of a registered
r and general man ~ger or their
investors, the posi tion of president, trea su:e
nals beyo nd the penod set forth
equ1Valents may be retained by foreign natio
herein.

476
 BOI~ pt,Ut l3 ~ ' - -IU:o/'"isl,j
ntract within the purview of
er employm~nt c~ildren under twenty-one (2 1) this
. nationals und and unmarn~d c 9 of commonwealth Act Nurn Years
Fore1~~e their spousesluded by section 2 nter and reside in the Philipbered
int:;~. V.:ho are not e;~I be permitted ~of;reign nationals. Pines
o amended, s I yment of sue
6d1 ~n'ga~he period of emP o . . . os as understudies of fo .
un •n F1llpin . re1g
·se shall tra1 d technical ski 11 s and shall sub ~
d enterpn rvisory an rnit
A ~egiste~e administrative_, ~up~ the Board.
nationals in such training 0
annual reports on t·,c Materials. - The importation
nd Gene ) f of
. Breeding Stocks a . ithin ten ( 10 years rom the date
5. Exemption o\s and genetic mat_enal~ ;e enterprise shall be exempt fro111 i1:
bre~dmg sto~ commercial operation o reeding stocks and genetic rnatena1
reg1strat1~nd~ties: Provided, That/suchb~ainable locally in comparable qualify
taxes(/) not locally available and or oably needed in the registered activity·

:~d (~)
ar~ t ~asonable prices; (2) reason
approved by the Board. .
. St cks and Genetic Materials. - A tax
.
,

6 Tax Credit on Domestic Breed

nd
mle~ent (100%) of the value of national
' credit equivalent to one hu re p duties that would have been waived on
nd
internal revenue taxes a cus;om~aterials had these items been imported
nd I
the breedi_ng stocks a _stge~e~ ~nterprise which purchases breeding stocks
shall be g1~en to th_e regi e domestic producer: Provided , a) That said
and ger:ienc materials fror:n ~aterials would have qualified for tax and duty
bree?ing sto~ks andd getnheenp\eceding paragraph; b) that the breeding stocks
free 1mportat1on un er . · t d t· ·t ) h
and genetic materials are reasonably needed in the re~Is ere ac IvI y_; c t at
ered fent~~ptnst~; and
the approval of the board has bee_n obtained by the reg1st_
d) that the purchase is made wi~hin ten (10) y~ars from date o regIs ra ion or
commercial operation of the registered enterprise.

7. Tax Credit for Taxes and Duties on Raw Materials. - Every registered
enterprise shall enjoy a tax credit equivalent to the National Internal Revenue
taxes and Customs duties paid on the supplies, raw materials and semi-
~anufactured products used in the manufacture, processing or production of
its exp~rt products and forming part thereof, exported directly or indirectly by
the registered enterprise: Provided , however, that the taxes on the supplies,
~a~ materials and semi- manufactured products domestically purchased are
indicated as a separate item in the sales invoice .
8. Nothing herein shall be c t ·d .
fixed percentage of ons rue as to preclude the Board from setting a
duties of raw mater~;~o~ sales as the approximate tax credit for taxes and
materials in the industry. ased on an average or standard usage for such

9. Access to Bonded Manufactu . .

export oriented enterprises sh:~g/Trading Warehouse System. - Registered
I
warehousing system in all have access to the utilization of the bo nded
areas required by the project subject to such
 Bo; «11/PEZf[ ._ /- .
. .
gu1del1nes as may be . ,Y
R.er1l<lter~ Earuu
Issued b th
Bureau of C ustoms · · consultation with the
Y e Board upon prior

1o Exemption from Taxes and D .

required supplies and spare
tax and duty free by a regist
P~~: fon lmp~rted Spare Parts. - Importation of
or cons,~ned equipment or those im orted
warehouse shall be exempt e;ect enterprise with a bonded manufaturing
revenue taxes payable thereo .ro; c_ustoms duties and national internal
percent (70%) of production . n, rov1ded, However, That at least seventy
· IS exported· Pr ·d d f
pa rt s .and supplies are not locall . , ov, e , urther, that such spare
quantity and comparable qualit . ~ av~ilable at reasonable prices, sufficient
and supplies shall be used onr. rov,ded, finally, That all such spare parts
th
the registered enterprise under {~~h e b~ nd ed manufacturing warehouse of
may impose. requirements as the Bureau of Customs

11. Exemption from Wharfage Dues and

- The provisions of law t th any Export Tax, Duty, Impost and Fee.
. d . 0 e contrary notwithstanding exports by a
r~g.tere 7n~~?nse of its non- traditional export products sh~II be exempted
o I s non- ra I iona 1 export products shall be exempted from any wharfage
dues. and any export tax, duty, impost and fee.

NON-FISCAL INCENTIVES
1. Employment of foreign nationals A registered enterprise may be allowed to
employ foreign nationals in supervisory, technical or advisory positions for five
(5) years from date of registration. The position of president, general manager
and treasurer of foreign-owned registered enterprises or their equivalent shall
however not be subject to the foregoing limitations.
2. Simplification of customs procedures for the importation of equipment, spare
parts, raw materials and supplies and exports of processed products.
3. Importation of consigned equipment for a period of 10 years from date of
registration, subject to posting of a re-export bond. .
4. The privilege to operate a bonded manufacturing/trading warehouse subJect
to customs rules and regulations.
 jJ( )/ tf//1 I .Fl/,If .L/
Rct1,6lereZE.,ue.rk
j ¼~

f :E11 te,yrises
P!EZ?l 'Rf8isterea ·
Declaration of Policios ant to translate Into practical re ..
)Olicy of the gover_n~he 1987 Constitution, namely: a11t1es
It is t11o dccl,nrd tcies and man?at~ inensable role of the private se
the tollow1ng Slnte pol0 gnizcs the ind ,sp d provides incentives to n ctor,
1) "The Statr r8 ~ nterprise, an eeded
5 prrvato e
encouraget "(Soc. 20, Art. 11) f rential use of Filipino labor, darn .
investsnt1e;: \hr1II promote the pre ~s and adopt measures that help ~stk1c
.:) The cl ( roduced goo , ae
materials and locally P Art. XII)
them competitive." (Sec. 12 , .
. . the government shall actively encoura
In pursuance of these policies, nd and balanced industrial, economic Qe,
d celerate a sou . . b t th I and
promote, induce an ac . order to provide JO s o e peop e especial!
social development of th~ country ~~eir productivity and their individual and tarn/
those in the rural are~s, mcre::e level and quality of their living condition throu~~
income, and thereby improve th e of special economic zones in suitable and
O
the establishn:ent, _among ~rrys, and through measures that shall effectively
strategic locations in the cou n . . t nts
attract legitimate and productive foreign mves me .

DEFINITION OFTERMS: .
spec1a. 1 economic· zones (SEZ) - hereinafter referred
. to as the ECOZONES,
. . with
. areas
are. selected
highly developed or which. have !he _potential to be. dev~loped into agro-industnal, mdustn~I,
tourist/recreational, commercial, banking, investment and financial centers. An ECOZONE may contain
any or all of the following: industrial estates (IEs), export processing zones (EPZs), free trade zones, and
tourist/recreational centers. The ECOZONE "shall be managed and operated by the PEZA as a
SEPARATE CUSTOMS TERRITORY. The term "Customs Territory" means "the national territory
of the Philippines outside of the proclaimed boundaries of the ECOZONES except those areas
specifically declared by other laws and/or presidential proclamations to have the status of special
economic zones and/or free ports."

Industrial estate. (IE) - r~fers to a tract of land subdivided and developed according to a comprehensive
plan_under a urnfi~d continuous management and with provisions for basic infrastructure and utilities,with
?rindustries.
w,th?ut pre-built standard factory buildings and community facilities for the use of the community of

Export processing zone (EPZ) 8 · 1· d · • · · 1

outside customs territo - . specia iz~ industrial estate located physically and/or admirn_stra!lvey
processing zones are a~::~~o~mantly or_iented ~o export production. Enterprises located mexport
0
other import restrictions. import capital equipment and raw materials free from duties, taxes and

:ree trade zone - an isolated oliced .

imported goods may be unloa~ed f ~rea ad~acent to a port of entry (as a seaport) and/or airport where
otherwise manipulated without b . or im~ed1ate transshipment or stored repacked sorted mixed, or
f .
eing subiect to ·import duties. ' ' ' • rted
goods rom the free-trade area to a f However movement of these irnpo
non- ree-trade · ' ·
. . . area in the country shall be subject to import duties.
Enterpnses within the zone are grant d
8
Preferential tax t I nient.
reatment and immigration laws are more e

479
r,.._1t,11
 .
BO/ rvufPE_7 A
<L7 1
y· c
~Ctdcr,,an :fu
&s f cr et(/
I
Special economic zon
. . h es were grant d . .
incentives sue as under RA 7227 e. special territory various tax and duty
and. Development ~-ct of 1992" to e~therw1se known ~s the "Bases Conversion
Sub1c and Clark military reserv r hance the benefits to be derived from the
9400 to effectively extend th a ions. RA 7227 was later amended under RA
Freeport Eco~omic Zone (Clar: F~8z~e ~enefits. enjoyed in Subic to the Clark
customs territory separate and ct· r· und er this law, Clark FEZ is considered a
Thus, as opposed to importatio is ~net from the ~hilippine Customs territory.
customs territory, which are full;\~~~o and es~~bh~hments in the Philippines
importations into and establishment~ect to Ph1hp~in_e customs and tax laws,
Enterprises) enjoy special inc r . loc~ted within the Clark FEZ (FEZ
More specifically Clark FEZ e ~n iv~s, including tax and duty-free importations.
7,
the zone and a 5%0 prefer, 18~r~nses shall be entitled to the Freeport status of
. nd en mcome tax rate on its gross income in lieu of
nat1ona~ a local t~xes (Secretary of Finance and CIR vs. Ecozone Plastic
Enterpnse.s Corporation, GR No. 210588 dated Nov. 29, 2016 and RMC 38-2017
dated Apr,/ 7, 2017).

Business establishments operating within the ECOZONES shall be entitled to

the fiscal incentives as provided for under Presidential Decree No. 66, the law
creating the Export Processing Zone Authority, or those provided under Book VI
of Executive Order No. 226, otherwise known as the Omnibus Investment Code of
1987.

Furthermore, tax credits for exporters using local materials as inputs shall
enjoy the same benefits provided for in the Export Development Act of 1994.

TAXATION OF PEZA REGISTERED ENTERPRISES

Generally, PEZA registered enterprises are taxable as follows:

■ INCOME TAX HOLIDAY(ITH)

e istered enterprise shall be exempt from the payment of income

PEZA r gd f
taxes reckone ram
the scheduled start of commercial operations,
. ) .
as follows:
N . cts with a pioneer status for six (6 years,
◊ ew prot t ith a non-pioneer status for four (4) years;·
◊ New proJec s w
.
◊ Expansion projects for three (3) years.

SE shall mean a registered enterprise

PIONEER ENTERPRI
recessing or production, and not merely in the
• engaged in the manufacture,d p ducts commodities or raw materials that have
of goo s, pro ' · I seaIe,· or
assembly or packaging. d . the Philippines on a commerc1a
not been or are not being produce m .
me method, process or system of production ?r
which uses a design, formulat, schbesta~ce or raw materials into another raw material
• t· of any elemen ' su ·1· . . or
transforma ion . . nd untried in the Phi 1ppmes,
or finished goods which is new a

480
 / p£.Z/f l?.{f1lcn,[ {~1lei• .
BOI 1{111£ L 7'111~L . . , ,

. forestry and .mining activities and/or s

f gncultura 1, h
Pursuit. o aspects Of food processing
. th
w enever appro . ervic
·t Pna1 es
d in the
• engag.e th e industna1a . onsultation with e appropna e Departrne e, Pre
including b the Board, .1n c the attainment of the national goal in rei n_ 1, lole
determ1nedd ~ighlY essenbal to d agricultural program for self sutr ,ation lo
feasible an 'fi national food an ic1ency a a
declared spec1 '\ts of the project; or nd
h social bene I
ot er . fuels or manufactures equipment Wh'
nvent1ona 1 rt 1ch ut·
h. h produces non-co f nnergy or uses or conve s to coal or oth 111~
• w ic I urces o ll'I' . ·t od f er n 8
non-conventiona so sources of energy ~n I s pdr tu~ 10,n, manufacturin on.
Ventional fuels or 'd d That the final pro uc in any of the f 9 or
con f ns Prov1 e , . d . oreg •
processing opera 10 . ·11 . valve substantial use an pro~essing of dornesr 0in g
instances, involves or wi ,i"ble· taking into account the risks and rnagn·i ic raw
materials whenever avai; That the foregoing definitions shall not in I Ude 01
investme;t: Provid~d, fu~ e:, granted to less-developed-area enterprises ~ny _Way
limit the rights and mcen ive rov1ded
under Title V, Book I, hereof.

m . shall include all registered producer enterprises other th an

Non-pioneer enterprise
pioneer enterprises.

• 5% SPECIAL TAX ON GROSS INCOME

AFTER THE ITH PERIOD, PEZA registered enterprises are subject to

50, s c·ai Tax on Gross Income and IN LIEU of all taxes , national and local
,o pe , "G I ,, f '
except real property tax (RMC 74-99). . ross n~~me re ers to gr~ss sales
or gross revenues derived from the registered act,vJty, 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)

GROSS INCOME shall refer to Gross sales/revenues derived from business activify
within the ecozone, net of sales discounts, sales returns and allowances minus cost of
sal~s or direct ccists_but before any deduction is made for administrative, marketing,
and/or operating expenses or incidental losses during a given taxable period
selling 74-99)
(RMC

Tax PH~~::g~~:r~!~;~rprises are required to sec_ure their Certificate of Income

Annual Income Tax Ret/te ~~ Incentives, respectively, for attachment to. their
th
incentives. rn wi e BI R as proof of their entitlement to their tax

Th~ tax incentives shall a .

enterprises during period f . PPly to registered operations of ECOZONE
are subject to the NIRC o r~g_1strat1on with PEZA. Any unregistered operations
f u prov1s1ons th F
rom nrelated Activities will b .' us WT and CGT will apply. Net Income
e subJect to 30% RCIT.
Withholding Ta xe s
·
pE ZA reg istetred compan ies are exe t f rom creditable withholding tax
f . rations H mp
except or unr eg, s ered ope ~w eve r, PEZA registered compan
ies are not
bei ng a Wit hho ldi~ ncy withholding
exempted from g _gent. There may be deficie
by BIR if th
tax to be
ass ess ed
' ges ere will be f a,·1 ~re to withhold (e.g. Fringe Benefit
·th h o Id"1ng Ta x on Wa E
al suppliers)
rax, Wi e~t e~~ ~~ :_ed Withholding Tax from loc
ZA reg iste red
on the pa rt of PE
om e Ta x (RR 12 97 as amended by RR 1-2000)
sharing of 5% Gr os s Inc •
of all
En ter pri ses shall, ·in lieu ui taxes ~except real property
tax on land
), pa y a tax e
owned by de vel op ers I om ~a rne d .
red and dis trlu ~!d en t to S 1/o b_ased on gross inc
Said tax sha ll be sha (3%) and to
ere the r . to th e n~t,o~al government
the tre asu rer 's off ice wh (2%). In case the
ic Zo ne (EC OZ oeJ 1st ~red_ enterprise is located
Special Ec on om
is s1tuat~~ a~d encomsha passes the territorial
·urisdiction of mo re tha n on (1) ~) re of each city or
e city or murncIpallty, the
J . . . th 2 pai d by ECOZ ON E ent erprises shall be
e % ~pe cia l . tax the subject.
munrci~allty _fro m rd imp lem enting PE ZA regulations on
co an ce wit h the
determined in ac
rmits and Lo ca rfa xe s
En ter pri ses from LGU Pe
Exemption of PE ZA Re g. 4-024) '
Me mo ran du m Cir cu lar 200
Licenses an d Fe es (PE ZA
which are entitled to
zon e loc ato r enterprises,
All PE ZA reg iste red eco and local taxes except
inc en tive s [1T H , 5% GIT in lieu of national
any or all 3 fisc al and duty-free
pe rty tax ow ne d by dev elo per s, an d/o r tax
real pro pe rty pro re parts and
ch ine ry an d eq uip me nt, raw materials, supplies, spa
importation of ma En ter pri ses , are exempted
er pro du ctio n inp uts ], inc lud ing Log isti cs Facilities
oth
LG U per mit s.
from ha vin g to se cu re all
are exe mp ted from
iste red en ter pri ses , ava ilin g of 1TH inc ent ive
PE ZA reg ate taxes;
tax es, lice nse s, imp ost s and fees, exc ep t real est
payment of all loc al fro m pa ym en t of real
se en ter pri ses sha ll als o be exe mp ted
provided tha t the uir e for us~ in their
on ma ch ine rie s an d eq uip me nt the y acq
property tax es chi ner y and
ns du rin g the firs t 3 yea rs of use of suc h ma
production op era tio
equipment.
incentive are
reg ist ere d en ter pri ses , ava ilin g of the 5% GIT
PE ZA tax
es, exc ep t real pro per ty
ted fro m pa ym en t of all na tio na l an d loc al tax
exemp
owned by de ve lop ers

482
 . ~ .d R..1:4is fe,,r£E1z-ter,ar .
/'
l p£il ,_ .J ./ ¼e,i
lJ 01 I( //It 0
• "t" )
erations/act1v1 1es made by
•stered ~ the separate customs
(frofl'l re9~utside o
f sales · to or · f m Cust
TM ENT o ·ses 111 supplier ro oms Territ
TA X TREA d enterprr vat R.e9- ory
·stere bY a
pEZA re9~MC 74.99). ies Made_ r rise which is subject to
i
territory eatrnent of sad Enterprisegistered ente ~t real property tax:
0
51/o
1. Tax p~ZA Registe_re a pEZA rfe all taxes, excte export hence, considered
to a suyer ,s reu
I o · direc ' t as
a) If th~ regime, in eated as 1n 226 (Omnibus 1nves ment Code)
special tax f Goods - tr at) under EO rated sale (0% vat) under "era
sale o le (0% v d as zero ss
o rated sa nsidere
zero rvice - co
Sale of Se "
o border doctrine terprise which is not subject to 5%
.15 a pEZA regist~r~1 t~~axes under NIRC: .
) If the Buyer . hence, subJe . d"rect export, hence, considered as
1
b special tax reg:~·s _ treated as ~~ 226 (Omnibus Investment Code)
o Sale of ~ ale (0% vat) under zero rated sale (0% vat) under "cross
zero rate s. considered as
o Sale of serv_1 ce,,-
border doctrine .
V t Exempt Supplier from Customs
I Made by a a
Tax Treatment of Sa es . d Enterprise .
2. Territory to a PEZA Reg1stere and services by a vat exempt supplier from
Sale of Goods, property . t ed enterprise is vat exempt regardless of
. tO PEZA reg1s er . t t
customs territory a . t d enterprise is subJect o axes under the
whether or not th~ ~Ez~;e~ise~~=I O
tax regime or a registered manufacturer-
0
NIRC taxes ~, enJoymbg d pdoctrine" of the vat system to the contrary
·exporter the Cross or er
notwithstanding.

3. Tax Treatment of Sales Made a PEZA Registered Enterprise h b h II b

a. Sale of Goods - Treated as "technical importation". Sue uyer s a e
treated as importer thereof and shall be imposed with the corresponding
import taxes (i.e; vat, excise taxes, as the case may be).

The registered enterprise gross income therefrom shall be subject to 5%

special tax regime. Provided; however, that its sales in the Customs
Territory do not exceed the threshold allowed or permitted for such sales.

FISCAL INCENTIVES to PEZA-Re . .

gistered Econom,c Zone Enterprises
1. ECONOMIC ZONE EXPORT M
a) Income Tax Holiday (1TH) ~NU~ACTURING ENTERPRISE
o 4 1001/o exempt· f
0 Years 1TH for Non • ion rom corporate income tax
6 Years 1TH fo p· -pioneer Project
1TH Extension years r roneer Project
(one criterion ; . may be granted ·t p . •
entitlement pe ~ ~quivalent to one IT~ roJect complies with the following cntena,
0
The aver:e ~~all no~ exceed eig~t(t;nsion year), provided that the total !TH
(3) Years of o t f?re1gn exchan
Perat,ons is at least ts soo,ooo;
) Y~ars:
e$arn1ngs of the project for the first three
and
 73()/ ,1111(/>/_/, 'l R ·. / -
L' The capital e . L Vt/t.dl'rct( L1ril1r n iic.5
US$10 ooo quipment to 1...__7
b . ' to 1 for th labor ratio f
T~mg applied for. . e year immediatelyo the _project does not exceed
o r ~ ~verage cost of inct· preceding the 1TH extension year
rritory egIs ered product . igenous raw mat .
materials for the pr~~ a~ least fifty per ~:1~:s used in the manufacture of the
NOTE: 3 years 1TH f edmg years prior to th 1i50%) of ~he total cost of raw
to 5 % or Expansion proje t f H ex~ens1on year.
b) Upon expiry of the In c ( TH applies to incremental sales)
ed as exemption from all na~i~me Tax Holiday _ 5 a;. S .
de) or gross revenues de . nal and local taxes (~G pec1al Tax on Gross Income and
.. cross sales returns and allonved from the registere;oss _l~come" refers to gross sales
any deduction is mad wances and minus cost o act1v1ty , n~t of sales discounts,
given taxable period) e for administrative expen: sales _
or _direct costs but before
c) Tax and duty free im o . es or incidental losses during a
to 5%
and spare parts. p rtation of raw materials ca . .
d) Exemption from wh rf ' pital equipment, machineries
ed as VAT . zero-rating
·
e) ofalocal
age purch
dues and expo~ tax,
impost or fees
de) re~uire~ents ases subject to compliance with BIR and PEZA
··cross
f) Exemption from payment f
or taxes. However, whileo u~~~/~~ all local gove~nment imposts , fees, licenses
estate tax, but machineries installedome dTax Holiday, no exemption from real
manufacturing, processing or f . an operated in the economic zone for
estate taxes for the first th or i;dustrial purposes shall be exempt from real
Production equipment not ~ee h( ) years of operation of such machineries
from property taxes a ac ed to real estate shall be exempt from reai
ss of
r the g) Exemption from expanded withholding tax
turer-
ntrary 2. INFORMATION TECHNOLOGY ENTERPRISE
• Tax Holiday (1TH) - 1000,
a) Income . 10 exemption
· from corporate income tax:
4 years 1TH for Non-pioneer project
• 6 years 1TH for Pioneer project

all be 1TH Ex~en~ion_ year ~ay be granted if Project complies with the following criteria
nding (on~ cntenon 1~ equivalent to one 1TH extension year,), provided that the total 1TH
entitlement period shall not exceed eight (8) years:
o The average net foreign exchange earnings of the project for the first three
0 5% (3) years of operations is at least US$500,000; and
o The capital equipment to labor ratio of the project does not exceed
toms US$10,000 to 1 for the year immediately preceding the 1TH extension year
ales. being applied for 3 years 1TH for Expansion project (1TH applies to
incremental sales)
Upon expiry of the Income Tax Holiday - 5% Special Tax on Gross Income and
b) excemption 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 equipment and parts.
· eria, c) Exemption from wharfage dues on import shipments of equipment.
1TH d) VAT zero-rating of local purchases of goods and se~ices, including \and-based
e) telecommunications, electrical power, water bills, and lease on the
....... building, subject to compliance with Bureau of Internal Revenues and PEZA

requirements

484
 ✓p£Zfl 151utere/E,ujr«e. f)
lJ O/ tf 1' overnment imposts, fees, lice
d all 1ocal g Holiday, no exemption from nses
t of anY a~corne fax erated in the economic 2'.on/ea1
. from paym:,e un?ertaiied an~ op urposes shall not be subject for e.c<
f) ExemptionHowever, w_ eries ,ns industrral p e (3) years of operation of s to 6.
a)
or taxes. but machrn in9 or for the first thr\ed to the real estate shall llch
estate tax,. g process taxes for t not attac be
manufact:;nr~al esta!en equiprnen
payment. productro taxes. . tax.
machineries. real propertY withholdrnQ
exempt from expanded ERPRISE .
Exemption from cAfOR ENT TH (as qualified under the Nati
g) C zoNE LO Holiday' I ona1
c6NOMI e TaX 7 . EC
3
TOURISM E ars of 1ncom
4
· a) Four ( ) t~riorities Plan) S'¾ special Tax on Gross Income and
1nvestmen fax Holiday - "~ross Income" refers to gross sale 1.a. f
■
expiry of the ln~oma~ and 1ocal tax~s ~red activity , net of sales discountss
st
b) Uponption from all natr?n d from the regi st of sales or direct costs but befor'
exem s derive d minus co . .d t I I e
gross revenue I ances an . xpenses or inc1 en a asses during a
do:
~:1es returns a~d al for administrative e
·on is ma
any de duct, ·od) . ui ment
reri
given taxable importation of capital eqf ~oods and services, including land-
c) Tax and dui~~~~ on local purc~ases e~ and water bills ■

d) VAT Zero . ations electric pow ' ■

based telecommunic d d ~ithholding tax
e) Exemption from expan e
7.b.
4 MEDICAL TOURISM ENTERPRISi Holiday on income solely from servicing foreign
■

. a) Four (4) years of Income ax

patients.
Holiday - 5% Special tax on Gross Income upon in
b) u expiry of the Income Tax
. pon . 1 d local taxes. ("Gross Income" refers to gross sa 1es or gross
lieu of all natrona an . . f I d. t I
revenues derived from the registered act1v1ty_, net o sa es b1sfcoun s, sa es re_tur~s
and allowances and minus cost of sales or direct costs but e _ore any _deduct1on 1s
made for administrative expenses or incidental losses during a given taxable
period). .
c) Tax and duty-free importation of medical equipment, . including spare parts and 7.c
equipment supplies, required for the technical viability and operation of the
registered activity/ies of the enterprise.
d) VAT Zero Rating on local purchases of goods and services, including land-
based telecommunications, electric power, and water bills
e) Exemption from expanded withholding tax

5. AGRO-INDUSTRIAL ECONOMIC ZONE ENTERPRISE

a) Four (4) years ·of Income Tax Holiday
b) Upon expiry of the Income Tax H . .
exemption from all nation I d i°llday - 5% Special tax on Gross Income and
sales or gross revenues\ a~ ocal taxes • ("Gross Income" refers to gross
discounts, sales returns and er:~ed from the registered activity net of sales 7.
1

but_before any deduction,·s maado~ances and minus cost of sales or direct costs
dunng ::i • e ,or ad · · •
c) T r given taxable period) ministrat1ve expenses or incidental losses
ax and duty free im .
stocks, farm im I Port~tion of producti . .
machineries. Pements including spa on equipment and machineries, breeding
d) Exemption from re parts and supplies of the equipment and
e) VAT Zero Ratinexport taxes, Wharfa
based telecomm~nf" />cal PUl'Chas~~ du~s, impost and fees.
O
ca ions, electric Pow 900ds and services including la nd .
er, and Water bills. '
 /]()/ t/11t[f)/_'~<t 1 j,>, . --
f) Exe~ption from pa o/'•/,n·/ / .11/,/r
1
n :H'. i
Business Permit Yment of local '-
' permit Ion th e Exercise
Certificate Fee, Sanita of profe fe_es such as Mayor's Permit
government
ECONOMIC ZONE L ry nspection Fee, and Gar~=~oen~ccupatlon/Calling, Health
6- OGISTIC ee
a) Exemption from dut" S SERVICES ENTER
to ~
or for packinl~~ and _taxes on raw mate~RISE .
registered Export Mgan~:enng_. cutting, alterin1al~, semi-finished goods for re-sale
to PEZA-registered ex actunng Enterprises f~r ~r subsequent sale to PEZA-
b) VAT Zero Rating port enterprise. ' direct export or for consignment
t on raw t .
ma enals
s orage and shippin g to be sourced for che ckl ng, packing, visual Inspection,
locally

7. ECONOMIC ZONE DEVELOP ER/ OPERATOR

7.a. Manufacturing Economic Z

Special 5% Tax on G one Developer/ Operator
except real pro rty ross Income and exem r f
Income" refer pte tax on land owned by tt ioEn r~m_all national and local taxes

:~~m~~:~ei~:f:;d,:~~;
s o gross sales e cornm1c Zone Develo ("G '

d;~=~to~i:l:\~\s':e~~::· :~les:~~~~! ~:t.~::~~:~d

incidental losses during a giJen ta:ac~;on is_ made for administrative expenses or
VAT Zero rating of local purc hases e period)
E .
xempt1on from expanded withh o Id"mg tax

7.b. IT Park Developer/ Operator

Gross
Tax on tax . from all national and local taxes,
Income an~ exemption
except real5%property
Special on land
refers to gross sales or gross re~wne bJ t~e IT Park Devel~per. ("Gross Income"
sales discounts, sales returns anednu~i5 enved from t~e registered activity , net of
costs but before an d . . a owances and minus cost of sales or direct
losses during a give~ ta:~~~1~:r;~d)ade for administrative expenses or incidental

• VAT Zero rating of local purchases

Exemption from expanded withholding tax

7.c. Tourism Economic Zone Developer/ Operator

• Special 5% Tax on Gross Income and exemption from all national and local taxes
':,xcept real pro~.erty tax on land owned by the Tourism Economic Zone Developer. '
( 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).
• VAT Zero rating of local purchases
Exemption from expanded withholding tax
•
7 d. Medical Tourism Economic Zone Developer I Operator
• Special 5% Tax on Gross Income and exemption from all national and local taxes,
except real property tax on land owned by Medical Tourism Zone Developer.
roross Income" refers to gross sales or gross revenues derived from the
registered activity . net of sales discounts, sales returns and allowances and minus
aoat of sales or direct costs but before any deduction is ~ade for administrative
11,1nses or incidental losses during a given taxable penod).
VAT Zero rating of tocal purchases
In QIID"'I from expanded withholding tax

486
 . 1P£.z:4 'R_vj1dcrc/(=~1fer,;,.,"'
B{Jl tf/l J J ( ,i

operator .
veloper 1 m tion from all _national a~d local
ic zone oe me and e)(e ~gro-lndustnal Economic Zon taxes
. 1Econo m 1nco d bY the e
ales or gross revenues derived f
·
Agro-lndustna on Gross d owne
7.e~ Special 5% ra;rtY ta)( on .!anefers to gross: sales returns and allowances arorri
nd
except real ~~~oss income rsaleS discoun~ 'anY deduction is made for
Developer. ( d activity , net of sts bUt befor during a given taxable period) N
th~ registere f sales or direc~ cidental 1osses 1
minus cost _o e)( enses or in ases
administrative rnt of local purc~hholdinQ ta)(
VAT Zero ra I xpanded w1
• Exemption from e O erator . . 2
eveloper I P mption from all national and local t
·c zone D and exe E
b the Retirement conom1c one
• z axes
,
R tirement Econom 1 Gross income
7.f. e Special 5% Tax ontax on land owned r:ss sales or gross revenues derived from
except real propertY come" refers t~ g nts sales returns and allowances and
("Gross 1n s d1scou , . • d
Developer. f 1"ty net of sa Ie b fore any deduction 1s ma e for
the registeredf a~~~ 0 r'direct costs butl eses during a given taxable period)
minus cost o sa or incidental os
. . t· expenses I purchases
admin1stra ive .
VAT Zero rating of locad d withholding tax
Exemption from expan e

8 FACILITIES ENTER~~!SES rise .

. Economic zone Fac1l1t1es Enterp nd exemption from all national and local taxes
8 .a. T Gross Income a by developers. ("G ross Income " refers to '
• · Special 5% ax on d ned
· except real property tax on~:; d~:ed from the registered activity , n~t of sales
gross sales or gross reven d llowances •and minus cost of sales or direct costs but
discounts, sales r~tur~s and: for admi nistrative expenses or incidental losses
before any deduction 1s ma
during a given taxable period)
VAT Zero rating of local purchases
Exemption from expanded withholding tax

8. b. IT Park Facilities Enterprise

■ Special 5% Tax on Gross Income and exemption from all national and local taxes,
except real property tax on land owned by developers. ("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 ad ministrative expenses or incidental losses
during a given taxable period)
• VAT Zero rating of local purchases
• Exemption from expanded withholding ta x

8.c. Retirement Economic Zone Facilities E t .

• specia· I 5o,,o Tax on Gross I n erpnse
except real property ta ncome and exemptio n from all national and local taxes,
I
g~oss sales or gross re:;~ an~ o~ned by develope rs . ("Gross Income" refers to
discounts, sales returns an~e: enved from the_reg istered activity , net of sales
110
·s m d f wances and min us co st of sales or direct costs but
before any deduction 1
d · · a e or ad · · •
unng a given taxable period} mmistrat1ve expenses or incidental losses
• VAT Zero rating of 1
• Exemption from expocadl purchases
an ed withhold"1ng tax
9. ECONOMIC ZONE UTILI
• Special 5% Tax on ~ES ENTERPRISE
except real property ross Income and- es
gross sales or tax on land OWnecl bexemptio n from all national and local tax
911oss l'eVenues deri\lei J develop~rs. ("Gross Income" refers to
rn the registered activity , net of sales
 lJ()J «11t(PE_? . 1 r 1- .
-<LL 'R.ttJt~fteret( El!fl11JrL.6&:S
discounts, sales returns and J J
d d . a11 owances a d .
t,cfore any e uct1on is made fo d . . n minus cost of sales or direct costs but
· · r a rnin1st t·
during a given taxable period) ra 1ve expenses or incidental losses
VAT Ze'.o rating of local purchases
• Exemption from expanded withh 0 Id '
ing tax
oN~FISCAL INCENTIVES:
N plified Import-Export Proced
1. s,rn
Automa
ted Export O . ures (Electronic Import Permit System and
ocumentat1on System).

2_Non-resident f~reig~ nationa~s may be employed by PEZA-registered Economic

zone Enterprises in supervisory, technical, or advisory positions.

3_special Non-ln:imigra~t Visa ~ith Multiple Entry Privileges f~r the following n_on~
resident foreign nationals in a PEZA-registered Economic Zone Enter~nse.
1nvestor/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
tlleir spouses and dependents.

488