An act providing for the legal framework and mechanisms for the creation, operation, administration, and coordination of Special Economic Zones in the Philippines Created the Philippine Economic Zone Authority (PEZA)
What are Special
economic Zones? Highly developed areas have the potential to be developed into: Agro-industrial Centers Industrial Centers Tourists/Recreational Centers Commercial Centers Banking Centers Investment Centers Financial Centers
Local Taxes and Licenses a) Gross Receipts Tax, VAT and Ad Valorem and excise taxes b) Franchise, common carriers tax/VAT and other OPT on public service utilities and enterprise *In lieu of these taxes EDO shall pay a 5% final tax on gross income.
Additional Deduction for Training
Expenses One-half (1/2) of the value of training expenses incurred in developing skilled or unskilled labor or for managerial or other management development programs from the 5% final tax due but not to exceed the national governments share of three percent (3%)
ECOZONE Export & Free Trade Enterprise
(EEFTE) Exemption from Duties and Taxes on Merchandise a) Importation on Capital Equipments b) Importations f Construction Materials, supplies and articles c) Importation of Specialized Office Equipment and Furniture d) Importation of Specialized Vehicles and Other Transportation Equipment e) Importation of Professional Instruments and Household Effects Exemption from National and Local Taxes and Licenses Additional Deduction for Training Expenses Exemption from Wharfage Dues, Export Tax
ECOZONE Domestic Market,
Facilities, Utilities and Tourism Enterprises ( EDMFUTE) Exemption from National and Local Taxes and Licenses Additional Deduction for Training Expenses
Tax Credit on Domestic Capital
Equipment 100% of the value of NIR taxes and customs duties that would have been waived on the machinery, equipment and spare parts, had these items been imported shall be given to the new or expanding EEFTE which purchases machinery, equipment and spare parts from a domestic manufacturer.
Income Tax Holiday
a) New Registered Pioneer Firms - Six (6) years from commercial operations. b) New Registered Non-Pioneer Firms - four (4) years from commercial operations. c) Expanding Firms - Three (3) years from commercial operation of the expansion. Income Tax Holiday for New Expansion Project =
*SALES shall be expressed in volume of homogenous products
and value in case of heterogeneous products. SALES of the registered product
Gross Income Taxation
The 5% Special Income Tax on Gross Income shall be directly paid and remitted a) 3% to the National Government b) 2% to the Treasurer Office of the Municipality or City where the ECOZONE registered enterprise is located Allowable Deductions ECOZONE Export, Free Trade and Domestic Enterprises a )Direct salaries, wages or labor expenses; b) Production supervision salaries; c) Raw materials used in the manufacture of products; d) Goods in process (intermediate goods); e) Finished goods; f) supplies and fuels used in production; g) Depreciation of machinery and equipment used in production and buildings owned or constructed by an ECOZONE Enterprise; h) Rent and utility charges associated with building, equipment and warehouses, or handling of goods; i) Financing charges associated with fixed assets
ECOZONE Developer/Operator, Facilities,
Utilities and Tourism Enterprises a)Direct salaries, wages or labor expenses; b)Service supervision salaries; c)Direct materials, supplies used or resold to another ECOZONE Enterprise; d) Depreciation of machinery, equipment and buildings owned and/or constructed; e)Financing charges associated with fixed assets; f) Rent and utility charges for buildings and capital equipment