by: Austin Shi

Foreign BPOs, call centers, and IT companies setting up business operations in the Philippines can opt for either PEZA or BOI registration. Registering with PEZA or BOI enables your company to avail of numerous tax incentives and exemptions, including but not limited to easier visa processing for expat employees, tax holidays of up to 4 years and other payment exemptions. In order to become eligible for these benefits, foreign companies must first comply with their respective registration agreements.

In a bid to boost the stock market, the Real Estate Investment Trust (REIT) Act was recently passed into law, marking the fourth legislative attempt to bolster economic growth and development in Philippine markets. The Real Estate Investment Trust (REIT) Act of 2009 (Republic Act No. 9856) promises to promote economic development in capital markets, democratize the distribution of wealth by increasing Filipino participation in the Philippine real estate market, enable the financing of infrastructure and other projects through the management of capital markets, and provide protection to the investing public.

Setting up a foreign-owned business in the Philippines is no walk in the park. A foreign-owned corporation must obtain the necessary permits and licenses, register with the proper government agencies, and make the required capital investments   before setting up business operations inside the country. Business Registration procedures in the Philippines are different for sole proprietorships, representative offices, branch offices, regional headquarters (RHQs), domestic corporations or subsidiaries. The type of business established by the foreign investor is determined by the kind of industry that he/she wants to engage in. Under the 1991 Foreign Investments Act (FIA), foreign investors are allowed to engage in any business enterprise, as long as it doesn’t fall under the foreign investments negative list established by the Philippine government, wherein foreign ownership is restricted to a small percentage of the company and the investor is required to establish a corporate presence inside the country.

Cyber Parks (Techno Parks, IT Parks, Ecozones) are ideal destinations for setting up a BPO or call center in the Philippines. Outsourcing companies prefer to locate business operations inside technoparks, mainly because of the large number of tax incentives and government exemptions available in these areas. Businesses established inside IT Ecozones are eligible for numerous benefits, including income tax holidays from 5-8 years, permanent residency status to foreign-based business owners and investors, as well as the payment of 5% tax on gross income after the company’s income tax holidays have expired. Government exemptions on capital equipment, the employment of foreign nationals, and gross income remittances are also readily available to foreign and locally-owned BPO companies in these areas. Metro Manila, considered as one of the top BPO destinations in the world, is home to a large number of these Cyber Parks, some of which include the Eastwood City Cyber Park in Libis, the McKinley Hill Cyber Park near Fort Bonifacio, UP-AyalaLand Technohub in PHILCOA, and the Northgate Cyber Zone in Alabang.