Taxation
& Incentives
BOI
Incentives
PEZA
Incentives
Philippine
Economic Zone Authority
The Philippine Economic Zone Authority (PEZA) assists in the national
effort to create employment opportunities, generate foreign exchange
and encouragae the dispersal of economic activities in the countryside
through the establishment of special economic zones (Ecozones).
PEZA was created under Republic Act. No. 7916 (R.A. No. 7916 or
the “Act”) otherwise known as the Special Economic Zone
Act of 1995. PEZA manages or supervises the operation of Ecozones
throughout the country. It is also responsible for the grant of
fiscal incentives available under the Act to investors locating
inside Ecozones as well as to developers/operators of these Ecozones.
Incentives
Given to Ecozone Enterprises
» Export enterprises
» Free trade zone enterprises
» Service enterprises
» Domestic market enterprises
» Pioneer enterprises
» Utilities enterprises
» Facilities enterprises
» Tourism enterprises
» Ecozone developers/operators
The
following are examples of the incentives being offered to companies
located in these Ecozones (subject to the nature of the enterprise):
» Tax-and duty-free importation of
capital equipment, raw materials, spare parts, supplies, breeding
stocks, and genetic materials
» Income Tax Holiday (ITH) of four
(4) years or six (6) years ffor non-pioneer and pioneer enterprises,
respectively
» A special tax rate of 5% of gross
income earned in lieu of all national and local taxes after the
availment of the ITH
» Tax credit for import substitution
» Exemption from wharfage dues, export
tax and import fees
» Tax credit on domestic capital equipment
» Additional deduction for incremental
labor expenses and training expenses
» Unrestricted use of consigned equipment
Requirements
for an Ecozone
Republict Act No. 7916 specifies the different requirements and
the processes that need to be undertaken in order to effect the
declaration of an Ecozone. The proposed area must meet the following
requirements:
1.The area being considered for Ecozone status must conform to the
following guidelines:
a. The proposed area has been identified as a regional growth center
in the Medium-Term Philippine Development Plan (MTPDP)
b. The proposed area has the required infrastructure such as roads,
telephones, and ports, and has the capacity to absorb further developments
c. The proposed area has available water and electric power supply
for use of Ecozone enterprises
d. The proposed area has vacant adjacent lands available for residential
housing and/or further commercial and industrial expansion
e. Skilled, semiskilled, and nonskilled trainable workers are available
f. The proposed area has significant incremental advantage over
the existing Ecozones and has potential profitability
g. The proposed area must be strategically located
h. The proposed area must be situated such that controls against
smuggling can be easily established
2.
The proposed Ecozone shall only be considered for Presidential Proclamation
upon submission of the following documents as defined under the
Act’s implementing rules and regulations,a s amended:
PEZA Application Requirements
(Documents required upon filing of application with PEZA)
a. Duly accomplished application form (except when the establishment
of the Ecozone is through PEZA initiative).
b. Project Feasibility Study which includes:
» Financial capability of the proposed
Ecozone developer/operator
» Existing land use of the project
location
» Status of land ownership
» Master development plan/overall
plan
Pre-Proclamation
Requirements
(Documents required prior to endorsement to the President for Presidential
Proclamation of the area as Ecozone)
a. Land Conversion Clearance Certificate from the Department of
Agrarian Reform (DAR) or Proof of Exemption from the Comprehensive
Agrarian Reform Program (CARP) with Department of Environment and
Natural Resources (DENR) certification of ecological soundness
b. Technical description of the area(s) sought to be proclaimed
as an Ecozone by the DENR-Land Management Bureau
c. Registration Certificate issued by the Securities and Exchange
Commission where appropriate
d. Proof of Ownership of land or long-term lease contract
e. Other requirements as may be prescribed by the Board
Post-Proclamation
Requirements
(Documents to be submitted to PEZA after the Presidential Proclamation
of the Ecozone but before any development of the Ecozone is undertaken)
a. Environmental Compliance Certificate (ECC) issued by the DENR-Environmental
Management Bureau (DENR-EMB)
b. Certification from the National Water Resources Board (NWRB)
that the identified source of water for the use of the Ecozone shall
not cause water supply problems for the adjacent communities
c. Detailed Engineering Plans for the development of the Ecozone
prior to construction
After
the proposed area has met the stipulated specifications and after
proper documentation has been submitted, PEZA will determine the
feasibility of the project. If the project is found feasible, PEZA
shall recommend to the President of the Philippines the proclamation
of the area as an Ecozone.
Upon
approval of its Ecozone status, the area must be developed within
five (5) years, unless specified for a longer period by PEZA. If
the proposed area is not developed or completed on schedule, it
shall be considered for agricultural use or any other use as described
in the existing land use plan.
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