BOI vs PEZA Registration in the Philippines
Carpo Law & Associates tax lawyers can help determine your company’s eligibility for tax incentives, and assist you in compiling and processing the necessary documentation for BOI or PEZA Registration in the Philippines. We will also assist your company in determining which type of registration is more suitable for your aims and purposes.
Below is a table that carefully assesses the advantages and disadvantages of BOI or PEZA Registration in the Philippines.
BOI (Board of Investments)
Physical Location:
Companies are not require to relocate to a designated zone
Eligibility:
Any new or existing firm is eligible for BOI benefits
Documentation:
- (3) copies of BOI application Form 501
- (3) copies of project report and supporting documents
Filing Fee
Application for Registration
- Project costs not exceeding P4 million ………. P1,000.00
- Project costs exceeding P4 million (but not over P20 million) ………P2,000.00
- Project costs exceeding P20 million (but not over P50 million) ………P3,000.00
- Project costs exceeding P50 million ……..…P4,000.00
Export Commitment
- For Filipino citizens, there is no export commitment
- For more than 40% foreign-owned companies, at least 70% of total services must be exported
- For firms that engage in pioneer activities, 100% of activities may be invested in domestic markets provided that the firm complies with requirements under the Foreign Investments Act (FIA). [Paid-up capital of at least USD 200,000 which may be lowered to USD 100,000 for projects that involve advanced technology as determined by the Dept. of Science and Technology and hire at least (50) direct employees]
- Three (3) to eight (8) years income tax holidays;
- Four (4) to six (6) years exemption from local business taxes for pioneer and non-pioneer industries;
- Exemption from taxes and duties on imported spare parts
- Exemption from wharf dues and export tax, duty, impost and fees
- Tax exemption on breeding stocks and genetic materials
- Tax credits
- Additional deductions from taxable income
- ICT Services: software development, computer graphics, animation
- ICT-enabled Services: business that can be delivered through the use ICT infrastructure [call centers, contact centers, legal transcription, medical transcription, engineering, design, back-office operations, business process outsourcing]
- ICT-support Services: business that supports the development of ICT Services [R&D Centers, Incubation Centers, Educational/Training Institutions, Community Access Facilities, Internet Service Providers]
- Submission of BOI application
- Project Outline
- Feasibility Report
- Five-year Financial Plan
Turnaround Time: 5 to 21 days
PEZA (Philippine Economic Zone Authority)
Physical Location:
Companies are required to relocate operations inside the PEZA IT Zone or PEZA building
Eligibility:
Any new or existing firm is eligible for PEZA benefits, as long as it closes all operations outside PEZA zones and relocates inside a PEZA designated location
Documentation:
- Project brief – entails the submission of additional documents to confirm the statements made therein
- Anti-graft certificate
- Board Resolution Authorizing the designation of a representative
- SEC Certificate of Registration
- Project feasibility study – includes reference documents and other information used for the study
Filing Fee
Application Fee
- Application of New Project (Non-Pioneer)……..P3,600.00
- Application of New Project (Pioneer)……………P6,000.00
- Registration
- Registration of New Projects…..P6,000.00
Registration
- Registration of New Projects…..P6,000.00
Export Commitment:
- There are no export commitments for registrable IT services
- For Filipino citizens, at least 50% of total services must be exported
- For foreigners, at least 70% of total services must be exported
- Offshore profit remittances, not subject to remittance tax;
- Income Tax Holiday for four (4) years for Non-Pioneer IT Enterprises, or six (6) years for Pioneer IT Enterprises;
- After the ITH period, the option to pay a special 5% tax on gross income earned, in lieu of all national and local taxes, except real property taxes on land owned by developers;
- Exemption from payment of import duties and taxes on imported machinery and equipment and raw materials;
- Additional deduction equivalent to 50% of training expenses, chargeable against the 3% share of the national government in the special 5% tax on gross income;
- Permanent resident status for foreign investors with initial investments of US$ 150,000.00 or more;
- Special tax rate of 5% of gross income (measured as sales less direct costs) in lieu of all Philippine taxes after the ITH;
- Exemption from Branch Profit Remittance tax for PEZA-registered branches of foreign corporations; and
- Other incentives, as determined by the PEZA Board.
- Software Development and Application: including programming and development of system software for business, media, e-commerce, education, entertainment, and many others
- IT-enabled Services: Call centers, Data Encoding, Transcribing and Processing, Directories, etc.
- Content Development for the Internet and other forms of media
- Knowledge-based and computer enabled Support Services: Engineering, Architectural design services, and Consultancies
- Business Process Outsourcing (BPO)
- IT research
- Other IT-related services
- PEZA application is submitted
- PEZA application is evaluated
- Application is presented and reviewed before the PEZA board
Turnaround Time: depends on the availability of the PEZA board