Blockchain and cryptocurrency companies, the Philippines welcomes you with open arms. And tax breaks.
On Wednesday, Reuters reported that the Philippine government is opening the special economic zone to allow cryptocurrency and blockchain operators “to take advantage of tax perks while generating employment,” a move indicating that the country is looking to emulate the much-lauded Silicon Valley in California to give grist to the blockchain mill. It has to be noted that the reputation of cryptocurrencies has taken a bit of a beating of late with the wild swings in prices as well as several ICOs that either went bust before they started or were immediately identified as frauds and scams with investors losing several millions of dollars.
Raul Lambino, chief of the Cagayan Economic Zone Authority (CEZA), told the news agency that they are authorizing at least 10 companies to enter the Cagayan Special Economic Zone, where a financial services technology hub will be created. CEZA manages the special economic zone, which has always been noted for innovative business concepts like a freeport.
Lambino said the companies can offer cryptocurrency mining, ICO or exchange services. The initial group of operators were made up of Japanese, Hong Kong, Malaysians, and Korean companes, according to the CEZA chief.
Lambino, however, clarified that crypto-to-fiat and fiat-to-crypto exchange transactions must be done outside of the country “to avoid infringing Philippine regulations.” This is a common problem in many Asian countries that has seen lots of business move away from countries such as Hong Kong and Japan due to strict regulation.
Companies who set up in the Special Economic Zone are required to create employment in exchange for tax breaks. They will also be required to invest no less than $1 million over a two-year period and pay up to $100,000 in license fees. There are also plans to build a fintech and blockchain university to churn out suitably qualified employees for companies setting up in the area, according to the report.
CEZA’s announcement comes on the heels of reports that the Philippines Security and Exchange Commission is also looking to regulate the mining market, having issued a note on cryptocurrency Cloud Mining Contracts, in which it insisted that these be classified as securities.
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