Philippine Economic Zone Authority director-general Tereso Panga said over the weekend the entire economic zone industry, including investors, lauded the issuance of the revised revenue regulation that widens the list of incentives offered to qualified projects/activities of registered business enterprises.
“The revised revenue regulations gives justice to the real intent and spirit of the CREATE law, which is to incentivize qualified investments and to streamline and clarify the guidelines on the availment of VAT zero rating/exemption incentives by RBEs,” Panga said.
“With the restoration of our ecozone export-oriented locators’ incentives, including VAT zero rating/exemption on goods and services that are directly and exclusively used in their registered activity, this will improve their bottomline and capacity to reinvest in the country,” he said.
PEZA said the VAT zero rating, as amended by the Bureau of Internal Revenue, would attract new investors to take advantage of the incentives and benefits offered by the Corporate Recovery and Tax Incentives for Enterprises Act.
PEZA said that as locators are spared from the VAT refund process, the regulation would also benefit local suppliers who are no longer required to apply with the BIR for the VAT zero rating of their transactions.
The certification issued by investment promotion agencies will be the basis for availing of the VAT zero rating incentive. This will strengthen the role of IPAs in investment facilitation and exercise of regulatory functions over RBEs, according to PEZA.
PEZA said another key reform in the revised RR is the provision for a negative list, which limits to six cost items the VATable goods and services to be imposed on RBEs. These activities identified in the RR include janitorial services, security services, financial services, consultancy services, marketing and promotion and goods used or services rendered for administrative operations such as human resources, legal and accounting.
A positive consequence of this is that RBEs will be encouraged to source more from the local market instead of importing from abroad, to sustain their operations, given the wider coverage of allowable goods and services for VAT zero rating, Panga said.
“We will continue to collaborate with our partner agencies and industries as we try to restore the incentives for support to export activities and address the remaining industry issues on cost allocation for VATable administrative expenses,” he said.
PEZA vowed to support the conduct of BIR audit and IPAs’ approving authority for projects and policy-making powers, the flexi-work scheme for ecozone locators and protection for existing RBEs pursuant to the sunset provision of the CREATE law.