PEZA Taxation Policy and Incentives

Philippine Economic Zone Authority (“PEZA”) Tax Incentives

Fiscal and NonFiscal Incentives are availa!le to PEZAre"istered Economic Zone Export as may !e determined !y PEZA#

Fiscal Incentives$

Income Tax %oliday (IT%) & ' exemption *rom corporate income tax + years IT% *or Nonpioneer Nonpionee r Pro,ect - years IT% *or Pioneer Pro,ect IT% Extension years may !e "ranted i* Pro,ect Pro,ect complies .ith the *ollo.in" criteria/ (one criterion is e0uivalent to one IT% extension year)/ provided that the total IT% entitlement period shall not exceed ei"ht (1) years$

The avera"e net *orei"n exchan"e earnin"s o* the pro,ect *or the 2rst three (3) years o* operations is at least 4567/# and/ The capital e0uipment to la!or ratio o* the pro,ect does not exceed 456'/# to ' *or the year immediately precedin" the IT% extension year !ein" applied *or# *or# The avera"e cost o* indi"enous ra. materials used in the manu*acture manu*acture o* the re"istered re"istered product is at least 2*ty per cent (7) o* the total cost o* ra. materials *or the precedin" years prior to the IT% extension year# 3 years IT% *or Expansion pro,ect (IT% applies to incremental sales) 4pon expiry o* the Income Tax Tax %oliday & 7 5pecial Tax on 8ross Income and exemption *rom all national and local taxes (“8ross Income” re*ers to "ross sales or "ross revenues derived *rom the re"istered activity / net o* sales discounts/ sales returns and allo.ances and minus cost o* sales or direct costs !ut !e*ore any deduction is made *or administrative administrative expenses or incidental losses durin" a "iven taxa!le period) Tax and duty *ree importation o* ra. materials/ capital e0uipment/ machineries and spare parts#

Exemption *rom .har*a"e dues and export tax/ impost or *ees 9AT :eroratin" o* local purchases su!,ect to compliance .ith ;I< and PEZA re0uirements Exemption *rom payment o* any and all local "overnment imposts/ *ees/ licenses or taxes# %o.ever/ .hile under Income Tax %oliday/ no exemption *rom real estate tax/ !ut machineries installed and operated in the economic :one *or manu*acturin"/ processin" or *or industrial purposes shall !e exempt *rom real estate taxes *or the 2rst three (3) years o* operation o* such machineries# Production e0uipment not attached to real estate shall !e exempt *rom real property taxes Exemption *rom expanded .ithholdin" tax

NonFiscal Incentives$

5impli2ed Import & Export Procedures (Electronic Import Permit 5ystem and Automated Export =ocumentation 5ystem)# Nonresident Forei"n Nationals may !e employed !y PEZAre"istered Economic Zone Enterprises in supervisory/ technical or advisory positions# 5pecial NonImmi"rant 9isa .ith >ultiple Entry Privile"es *or the *ollo.in" non resident Forei"n Nationals in a PEZAre"istered Economic Zone$ Investor?s/ o@cers/ and employees in supervisory/ technical or advisory position/ and their spouses and unmarried children under t.entyone years o* a"e# PEZA extends 9isa *acilitation assistance to *orei"n nationals their spouses and dependents#

Philippine Advanta"e ;oard o* Investments (;BI) Tax Incentives