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Incentives to Regional or Area Headquarters, Regional Operating Headquarters, Regional Warehouses and Export Oriented
Enterprise
Regional or Area
Headquarters act as supervisory, communications and coordinating
centers for their subsidiaries, affiliates, and branches in the
region.
Regional Operating Headquarters are performing the following
functions:
• General administration and planning
• Business planning and coordination
• Sourcing/procurement of raw materials and components
• Corporate finance advisory services
• Marketing control and sales promotion
• Training and personnel management
• Logistics services
• Research and development services, and product
development
• Technical support and maintenance
• Data processing and communication
• Business development
Regional Warehouses is engaged in the following
activities:
• Serving as a supply
depot for the storage, deposit, safekeeping of spare parts, components,
semi-finished products, and raw materials including the packing, covering, putting up, marking, labeling, and cutting or altering to customer's specification, mounting and/or packaging into kits or marketable lots
• Filling up transactions and sales made by their head offices or
parent companies
• Serving as a storage or warehouse of goods purchased locally by
the home office for export abroad
Incentives to Regional
or Area Headquarters
- Exemption from income
tax;
- Exemption from branch
profits remittance tax (BPRT);
- Exemption from value-added tax (VAT)
sale or lease of goods and property, and
services to the RHQ is subject to 0% VAT;
- Exemption from all
kinds of local taxes, fees or charges
imposed by a local government unit,
except real property
tax on land improvements and equipment;
- Tax- and duty-free
importation of equipment and materials
for training and conferences needed
and solely used for the
RHQ/ROHQ functions, and which are not locally
available,
subject to prior BOI approval;
Incentives to Regional
Operating Headquarters
- Subject to preferential
income tax rate of 10% on taxable
income;
- Subject to applicable BPRT (generally 15%);
- Subject to VAT;
- Exemption from all kinds of local taxes, fees or charges
imposed
by a local government unit,
except real property
tax on land improvements and equipment;
- Tax- and duty-free importation of equipment and materials
for
training and conferences needed
and solely used for the
RHQ/ROHQ functions, and which are not locally
available,
subject to prior BOI approval.
Incentives to Regional Warehouses
Regional Warehouses has
the option to locate its operation at the economic zones. As such,
it shall be granted similar incentives available to PEZA-registered
companies.
EXPORT ORIENTED
ENTERPRISE (Export Development Act of 1994 RA 7844)
This law provides
incentives to exporters to encourage investments in the export
sector. Exporters are generally defined as earning at least 50% of
their normal
operating revenue from the sale of products or services abroad.
Features of the Export Development Act (EDA)
The following are the key features of EDA:
• Institutionalization of
the Export Development Council (EDC) to direct the export offensive;
• Privatization of export promotion functions that can be undertaken
by the
private sector, including the establishment of world-class Philippine
Trade Centers;
• Setup of a privately led Export Financing Institution whose
services shall be
devoted to supporting the financing needs of the export sector;
• Granting to exporters of much needed fiscal incentives, most of
them patterned after, but not as extensive as those in newly industrializing economies;
Incentives Available to Exporters Registered under EDA
EDA incentives are granted in addition to existing incentives from
other government
agencies such as the BOI and PEZA are as follows:
• Exemption from Presidential Decree No. 1853, or Advanced Payment
of Customs Duties;
• Tax credit for increase in current year's export revenues,
computed as follows:
Increase in Annual Export Revenue Tax Credit (in %)
First 5%
2.5
Next 5%
5.0
Next 5%
7.5
In excess of 15%
10.0
Tax Treatment of Foreign and
Filipino Employees of RHQs and ROHQs
Expatriate employees of RHQs
and ROHQs will enjoy the following incentives:
• Multiple entry visa;
• 15% preferential tax on gross compensation income
• Tax- and duty-free importation of personal and household
effects;
• Travel tax exemption.
The 15% preferential tax is
also available to Filipinos employed in an RHQ/ROHQ who occupy the
same positions as the non-Filipino employees. However, Filipino
employees have the option to be taxed at either 15% or the normal
rates of 0% to 32% depending on their net taxable income.
Contact Us
___________________________________
You're invited to call us to discuss
your company's legal matters. We shall be glad to talk with you over
the telephone, or in our office or yours, whichever is easiest for
you. You can also e-mail us at
gtalaw@gtalawphil.com and we shall get back to you
immediately.
GUZMAN TAÑEDO & ACAIN
Mile Long Building 316
Legaspi Village
Amorsolo Street
Makati City
Telephone: 8941441
TeleFax: 8124296
e-mail:
gtalaw@gtalawphil.com
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