Nonetheless, the philosophy behind PEZA eco-zones is not just merely about encouraging foreign direct investments. Instead, the eco-zones are created to reflect sustainable development in the Philippines like that of Lakeside EvoZone in Laguna. Operating on PEZA zones are not only about reducing operating costs, it is also about improving occupant productivity, enhancing asset, boosting profits and optimizing economic performance lifecycle.
Aside from PEZA zones, there are also PEZA approved companies and PEZA approved buildings. The companies and buildings go through a rigorous process of accreditation before it can be declared as PEZA approved. The President is the one to proclaim if an area (or zone) is an eco-zone, but the agency will declare if the company or building is approved. As of June 30, 2013, there are 289 economic zones in the country:
- 2 medical tourism parks/centers
- 17 tourism economic zones
- 18 agroindustrial economic zones
- 65 manufacturing economic zones
- 187 IT parks/centers
Evidently, not all kinds of businesses are registrable. PEZA chooses which among the business operations may register as an eco-zone. If your business falls in any of these categories, then you should consider registering with PEZA and reap the benefits of doing such.
Upon registration, the business activities that an entity engages into are registered and not necessarily the entity. If a firm engages in more than one business activity, separate registrations for each activity are required. This means the firm will not qualify to the incentives for its non-registered business activities.
One-stop and non-stop shops
As a one-stop shop, PEZA issues:
- Building and occupancy permit
- Import and export permit
- Non-immigrant visa
- Environment clearance
PEZA also employs harmonized customs processes since it has a memorandum of agreement with the Bureau of Customs. It also has a memorandum of agreement with the Department of Environment and Natural Resources. Business permits are waived for companies operating in PEZA zones.
As a non-stop shop, PEZA provides 24/7 continuous service to companies. All officials are on-call 24/7.
Fiscal and non-fiscal incentives
- Income tax holiday
Tax holidays are provided in specific durations such as 3, 4 and 6 years. The tax holiday is also subject to extension under specific circumstances. PEZA registered companies are not liable to pay 30% income tax.
- Special income tax
Upon the tax holiday expiration, PEZA registered companies are liable to pay 5% special income tax. The percentage is based on the company’s defined gross income wherein only specific expenses (as enumerated) are deductible from gross sales.
- Value added tax
Purchases of goods and services required for the utility of the registered activities receive 0% VAT.
PEZA registered companies are exempted from withholding taxes on payments of the local buyers from the otherwise customs territory. These are also exempted from paying government fees including permits and licenses.
- Duty free import
Further, the non-fiscal incentives include simplified import-export procedures, employment of foreign nationals and issuance of special non-immigrant visas to the employees. Apart from state-of-the-art building and facilities, the eco-zones are fully-secured and with adequate, un-interrupted power and water supplies.
Economic growth and development has a huge impact on the natural environment. The Earth’s ecosystem is now approaching a critical stage if it is not at it already. Our government, including all of us, must do its share. Urbanization is challenging, but we can always look for ways to conserve our resources. If it means operating businesses on eco-zones where consumption is strictly regulated, then so be it.