PEZA provides a new economic zone authority VISA for foreign workers

The Philippines Economic Zone Authority (PEZA) announced a new requirement for foreign employees working in the Philippines. They are now required to possess a new PEZA visa if they currently are employed by a company registered with PEZA. This significant update was implemented in November 2021, clarifying that foreign workers and investors who wish to conduct their business in the Philippines must acquire a PEZA visa replacing the previous 47(a)(2) visas.

PEZA is an investment promotion agency (IPA) that helps foreign investors streamline their investments in the country. PEZA is among 19 IPAs that offer specific fiscal and non-fiscal incentives, ranging from exemptions to value-added tax (VAT), income tax holidays, and many more.

When applying for a PEZA visa, a ten (10) day waiting time is required for the application to be processed, which is a definite improvement from the previous one month waiting time. Afterwards, the visa received will be valid for two years, with workers having the option for renewal once for another two years, but the maximum validity period will only last for four years; once this period is exhausted, a reapplication for a PEZA visa is needed.

Workers with a valid 47(a)(2) visa and working under a PEZA-registered company can continue to use their 47(a)(2) visas until they expire; afterwards, they need to apply for a PEZA visa, given that they still meet the qualifications for working in the Philippines. Any applicant that wishes to replace an expired 47(a)(2) visa with a PEZA visa must be informed that they will be considered a new PEZA visa applicant.

PEZA Requirements

A.) For foreign nationals working under a PEZA-registered company

1. Notarised application form
2. Notarised company letter addressing the PEZA Director General signed by the company’s President or Chief Executive that commits to the following:
   • Reasoning as to why the employment of the foreign worker is deemed essential for the operations of the company
   • A document signed by the company stating that the foreign worker will train the Filipino employees of the company. This is known as Undertaking for an Understudy Program in training Filipino workers
   • An organisational chart of the sponsoring company
   • An endorsement letter from the PEZA Zone Manager to the Director-General of the PEZA
   • Evidence that the foreign employee has no pending case against them in the country they last resided for the past five years or in the Philippines
   • Upon termination or cessation of employment, the company must notify PEZA and must surrender the employee’s work permit to the Bureau of Immigration

B.) For applicants that are dependent(s) on the foreign employee

Any dependent(s) of foreign employees are required to submit the following documents:

1. A notarised application forms
2. Photocopy of the passport of the dependent(s)
3. Birth certificate and marriage certificate with English translation
4. A notarised affidavit of support/guarantee executed by the PEZA-registered company’s President or Vice President

C.) Procedural requirements

Once the applicant’s documents have been verified, the registered PEZA enterprise/business will then apply for the PEZA visa on behalf of the applicant to the PEZA zone administrator in the ecozone where the enterprise is located. Additionally, IT (Income Tax) companies and medical tourism enterprises found in Metro Manila will have to submit to the manager of the office zone within the PEZA head office.

D.) Fees

There are some processing fees needed for the PEZA visa:

1) For the principal applicant:

• New visa - PHP 5,000
• Renewal of visa - PHP 5,000

2) For dependent applicant

• New visa - PHP 3,000
• Renewal of visa - PHP 3,000

PEZA visa approval and denial

PEZA announced that their visas would be approved or denied within five (5) working days in their head office. PEZA ensures that legitimate reasons will be shared for the denial if the application gets rejected. When receiving the receipt of the PEZA endorsement, the Bureau of Immigration (BIR) will give an order giving the conversion of the applicant’s temporary visa to a PEZA visa within five working days. Afterwards, PEZA will issue a PEZA visa card that will initially remain valid for one year but must be renewed yearly for the duration of the corresponding PEZA visa.

Why deny PEZA visas?

The BIR then lists down the main reasons for denying PEZA visa applications, such as:

1. The foreign employee having a delinquent record in the Philippines
2. The misrepresentation of facts in the application form
3. Submitting fraudulent documents
4. The applicant is being deported or has a pending deportation case against them
5. The applicant has violated their condition of stay
6. The applicant is deemed a threat to national security

End of employment PEZA visa downgrading 

Upon the end of their employment, PEZA visa holders must downgrade their PEZA visa to a 9(a)-tourist visa, valid for 59 days (about two months). The mandatory cancellation of the PEZA visa would soon follow. Then the foreign employee needs to obtain an ‘order of cancellation’ from the PEZA and leave the country before the expiration of their tourist visa. Additionally, the foreign employee’s sponsor needs to notify the PEZA within five days after the employee’s end of employment with the company.

Outsourcing to Payroll Services in the Philippines

We understand that it can be quite tedious to keep up with the continuous changes to payroll guidelines.  Our HR and payroll services are designed to meet the requirements of companies that are seeking a consistent and reliable service that is scalable and flexible.

The modern workforce has myriad HR needs and, above all, wants to know that they will be paid on time and accurately. Keeping updated with the latest regulations, we help in the delivery of streamlined and compliant payroll and HR processes.

Our Payroll experts at Forvis Mazars in the Philippines can give a guiding hand to both employers and payroll practitioners through the changes step-by-step, ensuring a seamless transition. To contact us, you can click the link HERE or click on the box below this page.