By BERNIE CAHILES-MAGKILAT
The Philippine Economic Zone Authority (PEZA) has maintained its position against the proposed creation of the Fiscal Incentives Review Board under the still pending Corporate Income Tax and Incentives Rationalization Act (CITIRA) that will review the recommended incentives granted by investment promotion agencies (IPAs).
Instead the PEZA version of the CITIRA Bill stressed that all IPAs should be vested with the power to grant the tax incentives to registered enterprises that qualified under the Strategic Investment Priorities Plan.
It also stressed that the proposed CITIRA should not diminish, derogate nor limit the mandates and function of IPAs pursuant to their charters and applicable laws. The CITIRA should also not cause any delay in the function of IPAs to process project registration and evaluation of entitlement of incentives, it said.
Enterprises currently registered and granted with tax and duty incentives by IPAs will be entitled to the same incentives until the expiration of their contracts or registration agreements prior to the effectivity of the new law.
PEZA has also opposed to a provision in the bill, which puts a specific geographic area for the establishment of ecozones.
On the issue of income tax holiday (ITH), PEZA said that while under ITH, enterprises inside ecozones and freeports will be exempt from payment of any and all local government imposts, fees, licenses, permits or taxes except real property tax, while doing their construction, operation or production inside the special ecozone or freeport.
Other provisions state that machineries and equipment owned by the registered enterprise which are actually installed and operated in the ecozone or freeport for its registered operations will not be subject to real property tax for the first three years of operations of such machineries.
Registered enterprises in the National Capital Region shall be entitled to four years in ITH while adjacent provinces Laguna, Bulacan, Cavite and Rizal will be entitled to six years. All other areas are entitled to eight years ITH, based on PEZA regulations. After the expiration of the ITH, export enterprises and enterprises in support of exporters are entitled to seven percent tax on gross income in lieu of all national and local taxes except real property on land owned by developers.
The PEZA version of the CITIRA also batted for the garments, apparel, textile, leathergoods, footwear industries and ecozone developers to continue enjoying the five percent tax on gross income earned in lieu of all national and local taxes except real estate tax on land owned by developers which “shall be imposed for a period of 20 years (and) shall be remitted three percent to the national government and two percent to the host LGU.”
After the expiration of the ITH, registered export enterprises may elect to pay the reduced corporate income tax rate.
PEZA, which has maintained its original position that CITIRA bill would only result in the displacement of workers, has deleted a provision in the bill that seeks to establish a fund for affected workers.
The bill seeks to appropriate ₱500 million annually under the Department of Labor and Employment budget to provide cash grants and support programs to affected workers.