The Philippine Economic Zone Authority (PEZA) intends to preserve the incentives already granted to locators and backs the extension of the sunset provision on their preferential tax treatment.
Tereso Panga, director-general of PEZA, told reporters the agency believes any incentives granted to companies that registered with investment promotion agencies (IPAs) prior to the enactment of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) should be honored and respected.
Panga said there is a pending bill extending the sunset provision by three years for registered companies.
“We’re running the numbers, we are looking at the time when the locators will be graduating to the regular corporate income tax (CIT) rate. And at a time when we’re up against other economies offering a much lower CIT rate, we need to make some adjustments so that we can be more competitive especially in attracting investments , in keeping the ones that are already here,” Panga said.
The sunset clause of up to seven years allows companies registered with IPAs pay a preferential 5 percent tax on gross and then graduate to CIT rate thereafter.
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According to Panga, the separate customs territory (SCT) status vested in the ecozones is most crucial to PEZA’s attraction and facilitation of investments. Locators get to enjoy additional incentives on top of their income tax holiday and special tax rates such as tax and duty-free importation, zero value added tax (VAT) rating on local purchases, and VAT exemption on inter-zone sales/constructive exportations.
