In the Philippines, one of Asia’s fastest-growing economies, new projects which engage in preferred areas of investment can apply for a pioneering status. One of the main advantages of companies with a pioneering status in the Philippines is that they don’t need to pay income tax for six years.
Board of Investment registration
Taking full advantage of incentives provided by the government requires a few extra steps in addition to the regular process of company registration in the Philippines.
The two governmental institutes involved are the Philippine Economic Zone Authority (PEZA) and Board of Investment (BOI). Enterprises need to register with either of these two institutions to apply for the incentives in the Philippines.
PEZA manages and develops Special Economic Zones and focuses on businesses established in those areas and dealing with export.
BOI, on the other hand, promotes foreign investment and supports foreign investors in fields listed in the current Investment Priorities Plan (IPP) by offering several fiscal and non-fiscal incentives.
Who can apply for pioneering status in the Philippines?
Pioneering status requirements
Depending on your business activity, you first need to register your business with either of these institutes and only then you can apply for a pioneering status in the Philippines.
Companies striving for pioneering status must meet at least one of the following requirements:
- Involve the manufacturing or processing (not only assembly or packaging) of goods or raw materials that have not been produced in the Philippines on a commercial scale
- Use a design, formula, scheme, method, process or system of production or transformation of any element or raw material or product which is new and untried
- Engage in agricultural activities or services essential to the achievement of the country’s self-sufficiency program
- Produce non-conventional fuels or manufactures equipment which uses non-conventional sources of energy
- Conform to other specific criteria as provided for in the annually-drawn Investment Priorities Plan (IPP)
- IT companies with projects which introduce a significant innovation in technology or which cost as the current IPP requires and are set up in the first five years of activities
The determination of eligibility and communication with the governmental institutions can be lengthy and need extra attention. However, Emerhub’s consultants can ease your burden and handle the BOI and PEZA registrations on your behalf.
Contact us via [email protected] to start now.
Learn more about the ways to maximize the tax incentives in the Philippines.
The process of evaluation for pioneering status in the Philippines
The evaluation process for pioneering status in the Philippines consists of three steps:
#1 Creation and assembly of a Technical Panel
The Department of Science and Technology, which works closely with PEZA and BOI, will assess the qualification for pioneering status.
Firstly, the Department of Science and Technology will form a Technical Panel. The Panel will determine the project’s eligibility for pioneering status.
#2 Visit and validation
The second step is the visit and validation during which the Technical Panel visits the company and evaluates whether your project qualifies for pioneering status in the Philippines.
#3 Assessment of eligibility
In the third stage of the process, the Technical Panel decides whether the company is a pioneer in the Philippines or not.
Evaluation criteria for pioneering status in the Philippines
The basis for evaluating whether your company’s activities as pioneer or non-pioneer comes from the Investment Priorities Plan (IPP).
Also, note that the Board of Investments releases a new IPP every year. In case of absence of instructions, PEZA will define the criteria.
The criteria for determining pioneering status in the Philippines includes evaluation of:
- Technical viability of the products or processes
- The economic viability of the products or processes
- The extent to which technological advances are applied and adapted to local conditions
- Impact of productivity and efficiency
- Innovativeness/novelty of the product or methods or equipment to be developed
- The extent of technology transfer to local workforce and possibilities for commercial production
- What are the probable adverse effects of the resulting technology on the environment
Furthermore, you can later extend pioneer status to an Ecozone Export or Free Trade Enterprise. These, for example, ease restrictions on the import of raw materials and equipment.
How to apply for pioneering status in the Philippines
Not sure whether your investment project is also eligible for pioneering status in the Philippines?
Contact us to learn more. All you need to do to is fill out the form below. Our consultants will gladly help you unlock the benefits the Philippines offers to foreign investors.
Need help with company registration in the Philippines? Have a look at our complete guide on how to register a corporation in the Philippines, too.