Get Adobe Reader

In order to view PDF files, you need to install Adobe Reader. Please click here to download a free copy of Adobe Reader.

BIR-PEZA MOA on availment of incentives

BIR-PEZA MOA on availment of incentives

The Bureau of Internal Revenue (BIR) and the Philippine Economic Zone Authority (PEZA) have finally signed on March 1, 2007 the Memorandum of Agreement (MOA) intended to effectively administer the grant of incentives to PEZA-registered enterprises.

The MOA enumerates the following procedures and responsibilities:

PEZA-registered enterprises

1.      Annually secure and attach to its annual income tax return (ITR) a PEZA certification of its registration and entitlement to the ITH or 5% GIT incentive. 

2.      Within 30 days from the due date of the ITR or the actual date of filing, whichever comes later, submit to PEZA a copy of the ITR stamped “received” by BIR, with the required attachments (e.g., Audited Financial Statements).

PEZA

1.      Within one year from receipt, endorse the ITR to the BIR together with a report covering its evaluation of the following:

    • applicability of the ITH/5% GIT on a per registered activity / project basis
    • incomes that should not be covered by ITH / 5% GIT, if any
    • actual percentage of export sales.

2.      Require registered enterprises to register with the appropriate BIR Revenue District Offices (RDOs) having jurisdiction over the head office, branch or facility.

3.  Annually furnish the BIR the following:

    • On or before January 31, an alphabetical master list of PEZA-registered enterprises which are entitled to ITH and/or the 5% GIT incentive, including the specified information on their registration and activities.
    • Not later than July 31, an update of information in (a) above, including newly registered enterprises, as well as their compliance with the ITR submission requirement

BIR

  1. Review the evaluation submitted by PEZA within one year prior to the prescription of the three-year period to assess.
  2. Transmit findings of deficiency taxes to the RDO for collection.
  3. Conduct immediate audit of enterprises that did not comply with the required submissions and enforce collection of taxes arising from invalidated incentives.
  4. Inform PEZA if its findings within 30 days from approval by concerned BIR official.
  5. Furnish PEZA copies of pertinent issuances and rulings within 30 days from issuance.
  6. Issue a Revenue Memorandum Circular to implement the provisions of the MOA.

An inter-agency Working Group shall be created within 30 days from signing of the MOA to oversee the implementation of the agreement, establish an incentives database and resolve related issues.

These compliance requirements for PEZA enterprises are not really new.  These are just reiterations of the requirements already provided in the PEZA Rules and Regulations.  Hence,   PEZA will still be required to submit to BIR the ITRs and its evaluation of the compliance of the registered enterprises for taxable years 2004 and 2005. 

PEZA companies are therefore well advised to secure the required certification and submit these, together with their ITRs.  PEZA’s deadline for the 2004 and 2005 returns are July 31, 2007 and May 31, 2008, respectively.
 
A copy of the MOA  is attached for your reference.

P&A Tax Alerts are intended to keep our clients up to date with  significant tax developments.  We welcome your suggestions and feedback so that the Tax Alerts may be even more useful to you.  If you have comments, or if you would require assistance, or if you would like to be included in our mailing list,   please contact our Tax Knowledge Center:

Lina Figueroa at  T: 887-9458

Senen Qui zon at T:  887-9471,