The Philippine Economic Zone Authority (PEZA) administers special economic zones for export enterprises — manufacturing plants, IT-BPM offices, logistics hubs, and other qualifying businesses that generate foreign exchange. In exchange for operating inside a designated zone, PEZA-registered companies receive a tax incentive package that has made the Philippines a competitive location in Southeast Asia for export-oriented investment.
Who qualifies for PEZA
PEZA registers export enterprises — companies that sell at least 70% of their output abroad (for manufacturing) or provide services to clients outside the Philippines (for IT parks and service ecozones). The key categories include:
- Manufacturing in PEZA ecozones (processing, assembly, packaging for export)
- IT-BPM in PEZA IT parks or IT buildings (software development, BPO, KPO, shared services)
- Logistics in PEZA logistics centres
- Tourism enterprises in PEZA tourism ecozones
- Agro-industrial in PEZA agro-industrial zones
100% foreign ownership is generally permitted for these export activities, and export-enterprise status means the US$200,000 minimum paid-in capital rule does not apply. See the 100% foreign ownership guide and minimum paid-in capital page for the supporting rules.
The incentive package under CREATE MORE
The CREATE MORE Act (Republic Act 12066, signed 2024) updated the incentive regime. For PEZA-registered export enterprises:
Income Tax Holiday (ITH): Full exemption from corporate income tax for a period based on the enterprise’s SIPP tier and location — ranging from four to seven years from the start of commercial operations, with longer periods for enterprises in Less Developed Areas.
Post-ITH: 5% Special Corporate Income Tax (SCIT): After the ITH, qualifying PEZA enterprises pay 5% SCIT on gross income earned (GIE) in lieu of all national and local taxes. GIE is gross sales or receipts minus the cost of sales and activity-specific allowable deductions. The 5% rate replaces the standard 25% corporate income tax, local business taxes, and most other national taxes — a material advantage for high-margin export businesses.
Post-ITH alternative: Enhanced Deductions (EAED): CREATE MORE gave PEZA enterprises the option to elect the Enhanced Deductions regime instead of the 5% SCIT. EAED allows the standard corporate income tax rate with enhanced above-the-line deductions — including 100% deduction for R&D expenses, 50% additional deduction on training, and 50% on domestic inputs, among others. Companies elect between SCIT and EAED at the end of their ITH based on which produces the lower effective tax.
Duty and VAT exemptions:
- Duty-free importation of capital equipment, spare parts, raw materials, and supplies
- VAT zero-rating on local purchases of goods and services directly attributable to the registered activity
- VAT zero-rating on sales to other PEZA-registered enterprises within the same zone
The PEZA registration process
- Choose a PEZA zone or IT park — your office must be inside an accredited PEZA location. PEZA publishes a current list of accredited ecozones and IT buildings.
- Secure a lease inside the zone (or a letter of intent from the developer).
- File a PEZA application — company background, project description, projected employment, investment amount, and export forecast.
- SEC incorporation — for new companies, typically done in parallel with or immediately after PEZA approval in principle.
- PEZA Board resolution — PEZA approves registration and specifies your registered activity and incentive period.
- PEZA Certificate of Registration — the document that entitles you to the package.
Allow six to ten weeks from application to Certificate of Registration. PEZA incentives carry ongoing reporting obligations — annual compliance reports, employment data, and export monitoring. Failure to sustain the export threshold can result in cancellation and claw-back of incentives.
Chamberlain manages PEZA applications alongside company incorporation — one engagement, one fixed fee. Book a consultation or see our pricing page for what’s included.
Frequently asked questions
What incentives does PEZA give?
PEZA-registered export enterprises receive an Income Tax Holiday (ITH) for a period based on their tier, followed by a 5% Special Corporate Income Tax (SCIT) on gross income earned — or, under CREATE MORE, the option to switch to Enhanced Deductions. Duty-free importation of capital equipment and VAT zero-rating on local purchases also apply.
Can a foreigner own a PEZA company 100%?
Yes. Export enterprises — the primary category PEZA registers — are generally eligible for 100% foreign ownership and are exempt from the US$200,000 minimum paid-in capital requirement under the Foreign Investments Act.
Do you have to operate inside a PEZA zone?
Yes. PEZA registration requires your registered activity to be conducted from a PEZA-accredited ecozone, IT park, or building. This is the key operational constraint that distinguishes PEZA from BOI registration.