PEZA Registration for a Foreign Manufacturer in the Philippines: How to Register

Foreign manufacturers may register with the Philippine Economic Zone Authority (PEZA) regardless of nationality. Under the PEZA Rules and Regulations implementing Republic Act No. 7916, any person, firm, association, partnership, corporation, or other business organization — regardless of nationality, control and/or ownership of working capital — may apply for registration as an Export or Free Trade Enterprise in an ECOZONE in any sector of industry, international trade and commerce. The exception is duty-free retailing and wholesale trading of imported finished products for the domestic market. If the investment falls within Lists A and B of the Foreign Investments Act of 1991, the nationality, ownership, or control requirements of that law apply.

Who may register and what may be registered

The Rules draw a distinction between enterprise types. An ECOZONE Export Enterprise engages in manufacturing, assembling, or processing and exports 100% of production, unless the PEZA Board prescribes a lower export percentage on terms it determines. A Domestic Market Enterprise sells finished products in the customs territory or authorized areas within the ECOZONE, and is subject to the export thresholds in the Rules where it exports only a portion of output.

The Rules also recognize Pioneer Enterprises — among others, enterprises engaged in manufacture, processing, or production (not merely assembly or packaging) of goods not produced in the Philippines on a commercial scale, or using a new and untried design, formula, scheme, method, or process. Applications for Developer/Operator, Domestic Market, Utilities, Facilities, Tourism, or Service Enterprises must comply with the applicable nationality, control, or ownership requirements under the Constitution, the Foreign Investments Act of 1991, and other laws.

The registration steps

1. Prepare and file the application. All applications must be made on forms prescribed by PEZA, duly accomplished in three (3) copies, and filed with PEZA upon payment of the corresponding filing fee.

2. Submit supporting documents. The applicant must submit a project feasibility study — or, if this is dispensed with, basic data on its technical, financial, marketing, and management capability to undertake the project. Also required are copies of the articles of incorporation and by-laws; a board resolution authorizing the filing, with a list of directors, principal officers, and major stockholders including bio-data; a list of machinery and equipment with capacity, ownership, and mode of procurement; company brochures and/or photographs of the product; and other documents, papers, or clearances PEZA may require depending on the nature of the business and the type of business organization.

3. Board action. Approval is by resolution of the Board, unless otherwise required by PEZA circulars or memoranda, taking into account the decentralization policy in the management, operation, and maintenance of each ECOZONE. The action is communicated in writing to the applicant.

4. Accept the terms and pay the fee. Within twenty (20) calendar days from receipt of the notice of approval, the applicant must submit a formal acceptance of the proposed terms and conditions of registration. For good cause shown, this period may be extended if the request is filed before the expiration of the period sought to be extended.

5. Execute the Registration Agreement and obtain the Certificate of Registration. The Certificate of Registration is issued only upon execution of the Registration Agreement by PEZA and the applicant, and once it is shown that the applicant has complied with all pre-registration requirements, submitted the formal acceptance, and paid the registration fee. In appropriate cases determined by the Board, the ECOZONE management or duly authorized PEZA offices may issue business permits and/or licenses in lieu of the Certificate of Registration after proper evaluation and payment of the corresponding fees.

What foreign investors should know about entry and incentives

Foreign citizens and companies owned by non-Filipinos in whatever proportion may set up enterprises in the ECOZONE, either by themselves or in joint venture with Filipinos, in any sector of industry, international trade and commerce within the ECOZONE, under Section 7 of Republic Act No. 7916. Their assets, profits, and other legitimate interests are protected, although PEZA may require a minimum investment in freely convertible currencies, and the new investment must fall under the priorities, thrusts, and limits provided in the Act.

On immigration, Section 10 of the Act provides that an investor whose initial investment is not less than One hundred fifty thousand dollars ($150,000), together with his or her spouse and dependent children under twenty-one (21) years of age, shall be granted permanent resident status within the ECOZONE, with freedom of ingress and egress without special authorization from the Bureau of Immigration. PEZA may also issue working visas, renewable every two (2) years, to foreign executives and other aliens possessing highly technical skills that no Filipino within the ECOZONE possesses, as certified by the Department of Labor and Employment.

On taxation, Section 24 of the Act provides that no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE; in lieu of paying taxes, five percent (5%) of gross income earned by all businesses and enterprises within the ECOZONE is remitted to the national government, shared three percent (3%) to the national government, one percent (1%) to affected local government units, and one percent (1%) for a development fund for municipalities outside and contiguous to each ECOZONE.

Registration is facilitated through a one stop shop

The Rules require a one stop-shop center to be established in the ECOZONE to facilitate the registration, licensing, and issuance of permits to ECOZONE Enterprises. All government agencies involved assign their respective representatives in the ECOZONE for this purpose, which consolidates much of the coordination a foreign manufacturer would otherwise handle across several agencies.

Frequently asked questions

Can a 100% foreign-owned company register with PEZA? Yes. Under the PEZA Rules, any person, firm, association, partnership, corporation, or other business organization may apply for registration as an Export or Free Trade Enterprise regardless of nationality, control, and/or ownership of working capital, except for duty-free retailing and wholesale trading of imported finished products for the domestic market. If the investment falls within Lists A and B of the Foreign Investments Act of 1991, that law's nationality requirements apply.

What documents are needed for PEZA registration? A project feasibility study (or basic data on technical, financial, marketing, and management capability), articles of incorporation and by-laws, a board resolution authorizing the application with the list of directors, principal officers, and major stockholders, a list of machinery and equipment, company brochures and/or product photographs, and other documents or clearances PEZA may require.

How long does it take to get the Certificate of Registration? The Rules do not fix a total processing period. The Certificate of Registration is issued upon execution of the Registration Agreement and once the applicant has complied with all pre-registration requirements, submitted the formal acceptance within twenty (20) calendar days from receipt of the notice of approval, and paid the registration fee.

Practical takeaways

• A foreign manufacturer may apply for PEZA registration regardless of nationality, control, or ownership of working capital, subject to the Foreign Investments Act of 1991 where the investment falls within Lists A and B.
• Applications are filed with PEZA on prescribed forms in three (3) copies, with the corresponding filing fee, supported by a feasibility study or basic project data and corporate documents.
• Approval is by Board resolution; the applicant must accept the terms within twenty (20) calendar days from notice of approval, extendible for good cause if requested before the period lapses.
• The Certificate of Registration issues only upon execution of the Registration Agreement and payment of the registration fee; in appropriate cases, business permits or licenses may be issued in lieu of the Certificate.
• Registered enterprises operating within the ECOZONE pay the five percent (5%) tax on gross income in lieu of national and local taxes under Section 24 of Republic Act No. 7916.

Primary sources

The rules discussed above are drawn from the following primary sources, as published in the Official Gazette and the national statute book.

• REPUBLIC ACT NO. 7916 - AN ACT PROVIDING FOR THE LEGAL FRAMEWORK AND MECHANISMS FOR THE CREATION, OPERATION, ADMINISTRATION, AND COORDINATION OF SPECIAL ECONOMIC ZONES IN THE PHILIPPINES, CREATING FOR THIS PURPOSE, THE PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA), AND FOR OTHER PURPOSES

• PEZA, June 01, 1995

• REPUBLIC ACT NO. 10083 - AN ACT AMENDING REPUBLIC ACT NO. 9490, OTHERWISE KNOWN AS THE "AURORA SPECIAL ECONOMIC ZONE ACT OF 2007"

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.