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3
GOVERNING LAW & REGULATIONS
• Republic Act No. 7916 (Special Economic Zone Act of 1995)
• R.A. No. 8748 (amending R.A. No. 7916)
• Presidential Decree No. 66 as amended
• PEZA Implementing Rules & Regulations
• Executive Order No. 226, as amended
• BIR Revenue Regulations No. 12-97, as amended
• BIR Revenue Regulations No. 11-05
• BIR Revenue Memorandum Circular No. 74-99
• PEZA Board Resolutions
4
Types of ECOZONE Enterprises
Export Enterprises Free Trade Enterprises Domestic Market Enterprises Facilities Enterprises Utilities Enterprises Tourism Enterprises Developer/Operator Service Enterprises Ecozone IT Enterprises and Parks
5
Incentives for Export & Free Trade Enterprises
Income Tax Holiday (Corporate Tax Exemption) Special 5% Tax Rate on gross income in lieu of all
national and local taxes, after the lapse of the ITH Exemption from Duties and Taxes
Tax Credit for Import Substitution (under Export
Development Act) Additional Deduction for Training Expenses (Labor
and Management)
Additional labor expense deduction
6
Incentives….
Exemption from Wharfage Dues, Export Tax, Impost,
and Fees
Tax Credit on Domestic Capital Equipment Tax and Duty-Free Importation of Breeding Stocks
and Genetic Materials Tax Credit on Domestic Breeding Stocks and Genetic
Materials Unrestricted use of Consigned Equipment
7
Permanent Resident Status for Foreign Investors and Family
Employment of Foreign Nationals
Exemption from SGS inspection
Simplified import-export procedures
Incentives….
9
Income Tax Holiday (ITH)
Exemption from income taxes for the ff period from the start of commercial operations:
New pioneer – 6 years* New non-pioneer – 4 yearsExpanding firms - 3 years
*May be extended up to 8 years for pioneers
10
Scope of ITH
Exemption from Corporate Income TaxMinimum Corporate Income TaxIAET on income from registered activities
However, ITH applies only on income from registered activity
11
Firm under ITH is not exempt from:
• Corporate income tax and MCIT on income from unregistered activities
• Final income tax on Passive Incomes• IAET on income from unregistered activities• VAT (subject to RMC 74-99 & RR 16-05)• Documentary Stamp Tax• Liability as withholding agent• Real Estate Taxes (machineries exempt for first 3
years from operation)
13
New Projects
New activities distinct from their registered operations
– Separate book of accounts– ITH applies only on the sale of the new
products
15
What does “expansion” mean?[Rule I, Sec. 2(w)]
Installation of additional facilities and/or equipment
Increase in production capacity Expansion may include modernization and rehabilitation which may or may not result in
increased capacity.
16
Expansion…..
Stages to be modernized should be identifiable;
and
Will result in any of the following:
increased productive efficiency reduced production cost upgraded product quality state of the art production
17
ITH applies only on incremental increase in production
Rate of income tax exemption=
Incremental sales of the registered product
Total sales of the registered product
*Sales - in volume of homogenous product
- in value of heterogenous product
18
Computation of incremental sales
Incremental salesIncremental sales
= Total sales - highest sales in last 3 yrs*= Total sales - highest sales in last 3 yrs*
*Highest sales attained for any one year within last *Highest sales attained for any one year within last 3 years prior to expansion3 years prior to expansion
*Sales - in volume of homogenous product*Sales - in volume of homogenous product
- in value of heterogenous product - in value of heterogenous product
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Computation of income tax exemption (homogenous products)
Total Sales = 100,000 units
Incremental Sales = 20,000 units
Rate of exemption = 20,000 = 20%
100,000
Gross Income = PhP 500,000.00
Exempt = Rate of exemption X Gross Income
= 20% X PhP500,000.00
= PhP 100,000
20
Computation of income tax exemption (heterogenous products)
Total Sales = PhP 100,000,000
Incremental Sales = PhP 20,000,000
Rate of exemption = 20,000,000 = 20%
100,000,000
22
ITH Extension
• Extension of the income tax holiday for one extra year each for qualifying under each of the criteria provided
• Extension year – any year within 3 years following the last year of ITH availment
23
ITH Extension Criteria
1. Capital equipment to labor ratio
Total imported or domestic
capital equipment_____ < US$10,000
Number of workers per worker
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Direct labor...
• Includes personnel actually engaged in the production of the registered product.
• Does not include line supervisors, warehousemen, quality control personnel, utility and maintenance personnel and subcontracted labor.
25
ITH Extension Criteria
2. Cost of indigenous raw materials ratio
Cost of indigenous raw materials > 50%Total cost of raw materials
*Average for preceding years
26
Indigenous raw materials...
• Local raw materials actually used as inputs in the manufacturing or processing of registered products
• Exclude chromite, gold limestone, copper and marble
27
ITH Extension Criteria
3. Net Foreign Exchange Earnings/Savings
NFEE or NFES > US$500,000
*Annual average during first three years of operation
28
Net foreign exchange earnings...
• Net forex earned from the export of products or services
Total forex proceeds minus
total forex costs (imported raw materials, depreciation of imported capital equipment, etc,)
29
Net foreign exchange savings...
• Net forex savings from domestic production and sale of products which used to be unavailable locally
Import value of local sales of the product
minus
Total forex cost (raw materials/depreciation
of imported capital equipment, etc.)
31
START OF COMMERCIAL OPERATIONS
For the purpose of the establishing the starting date of a PEZA-registered economic zone export enterprise’s availment of its ITH incentive, the date of the “Start of Commercial Operations” (SCO) shall be, whichever comes first:
• the date specified in its Registration Agreement with PEZA, or
• the verified actual date when it begins commercial production of its registered product.
32
START OF COMMERCIAL OPERATIONS
If PEZA enterprise cannot start CO on the date specified in its Registration Agreement with PEZA
1. Inform in writing the PEZA Administrator/Manager in the economic zone where it is located of the adjusted or new SCO date.
2. Subsequently, submit to the PEZA-Enterprise Regulations Department (ERD) a notarized certification of its actual SCO date, duly attested by the Zone Administrator/Manager, within seven (7) days from the actual SCO date.
33
START OF COMMERCIAL OPERATIONS
If PEZA enterprise does not start commercial operations on the SCO date, and also fails to notify the PEZA of its adjusted or new SCO date, or where the actual SCO date cannot be clearly verified or determined:
The date of the first importation of raw materials by the export enterprise shall be adopted as its SCO date, for the purpose of establishing the starting date of the ITH incentive.
PEZA may imposefines or penalties on the export enterprise for its failure to formally inform PEZA of its adjusted/new and actual SCO, as required.
34
START OF COMMERCIAL OPERATIONS
• PEZA shall automatically cancel the registration of an economic zone export enterprise which has not started actual commercial operations after one (1) year from the SCO date in the RA or the adjusted/new SCO submitted to PEZA.
• PEZA Board may re-instate upon filing of a written request provided that project Implementation has actually commenced, as may be evidenced by any of the following: – importation of production equipment and machinery; – payment of lease rentals on the project site or
acquisition of land for the project site; and/or – such other undertakings that will indicate that the
economic zone export enterprise is intent on implementing its PEZA-registered project.
36
Gross Income Tax Regime
• Exemption from all national internal revenue taxes and local government taxes except real property taxes on land owned by developers
• 5% on gross income from business activities within the ECOZONE in lieu of all taxes
37
NATURE OF THE 5% GIT
The 5% GIT is income tax in nature and a national internal revenue tax in character.
- Rev. Regs. No. 1-2000
38
NATIONAL TAXES DEFINED RR 12-97
“ NATIONAL TAXES” shall refer to all internal revenue taxes, including the regular income taxes, otherwise due and collectible from a registered ECOZONE enterprise under the National Internal Revenue Code and customs duties and import charges under the Tariff and Customs Code. National taxes shall, however, not include withholding taxes on salaries of employees or on income payments to persons other than a registered ECOZONE enterprise, subject to the withholding tax at source under Section 50(b) of the Tax Code, as amended.
39
National Taxes Defined
All internal revenue taxes due and collectible under the National Internal Revenue Code,
Income Tax (RCIT, MCIT)Transfer taxesVAT and other Percentage TaxExcise taxesDocumentary Stamp Tax (*under BIR Review)
Exception: Withholding taxes on salaries of employees or on income payments to persons other than a registered ECOZONE enterprise, subject to the withholding tax at source
40
DST EXEMPTION*
ORIGNAL ISSUANCE OF SHARES
• Prior to PEZA registration – subject to DST
• After PEZA registration – exempt– Shareholder pays DST if he is not enjoying
exemption– Shareholder is exempt is nonresident
(BIR Ruling No. DA-111-06-15-01)*Under reconsideration
41
BPRT ON INDIRECT REMITTANCE OF BRANCH PROFITS
• Increasing the head office’s assigned capital to its Philippine branch by transferring net profits of the branch to the Assigned Capital account shall be subject to the 15% branch profit remittance tax (BPRT). Although the profits from operations will not be physically remitted to the head office abroad, the transfer to Assigned Capital is an indirect remittance to the head office.
• (BIR Ruling No. DA 039-2005, January 28, 2005)
42
NO EXEMPTION FROM MERALCO FRANCHISE TAX FOR PEZA ENTERPRISES
PEZA-registered enterprises under 5% GIT not exempt from amount passed on by Meralco and other electric utilities as franchise tax.
– The franchise tax is imposed on electric utilities; not passed on to the buyer as tax, unlike VAT
(BIR Ruling No. DA-120-2005, April 6, 2005)
43
GROSS INCOME DEFINITION (RR 11-2005, March 31, 2005)
Gross sales or gross revenues derived from business activity within the ECOZONE, net of sales discounts, sales returns and allowances and minus costs of sales or direct costs but before any deduction is made for administrative, marketing, selling and/or operating expenses or incidental losses during a given taxable period.
Deleted : [Allowable deductions from gross income]
Replace with: Direct costs included in the allowable deductions to arrive at gross income
44
GIE for PEZA ENTERPRISES(RR 11-2005, March 31, 2005)
Decrease in Goods in Process Account (Intermediate goods)
Decrease in Finished Goods Account
Depreciation of machinery and equipment used in production, and of that portion of the building owned or constructed [by an ECOZONE Enterprise] that is used exclusively in the production of goods
Rent and utility charges associated with building, equipment and warehouses [or handling goods] used in production
Financing charges associated with fixed assets used in production the amount of which were not previously capitalized
45
Allowable Deductions
1) For ECOZONE Export Enterprise
a. Direct salaries, wages or labor expenses
b. Production supervision salaries
c. Raw materials used in the manufacture of products
d. Decrease in Goods in Process Account (Intermediate goods)
e. Decrease in Finished Goods Account
f. Supplies and fuels used in production
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g. Depreciation of machinery and equipment used in production, and of that portion of the building owned or constructed [by an ECOZONE Enterprise] that is used exclusively in the production of goods
h. Rent and utility charges associated with building, equipment and warehouses [or handling goods] used in production
i. Financing charges associated with fixed assets used in production the amount of which were not previously capitalize
For ECOZONE Export Enterprises……….
Allowable Deductions …..
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2) For ECOZONE Developer/ Operator, Facilities, Utilities Enterprises :
a. Direct salaries, wages or labor expensesb. Service supervision salariesc. Direct materials, supplies used or resold to
another ECOZONE Enterprised. Depreciation of machinery, equipment and
buildings owned or constructed e. Financing charges associated with fixed assetsf. Rent and utility charges for buildings and capital
equipment
Allowable Deductions …..
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DEDUCTION FOR ROYALTIES
Dependent on the nature of the royalty payment
• Royalties relating to a system or license supporting general and administrative functions or operations
• Royalties related to use or transfer of technical information and manufacturing know-how – cost of manufacturing goods sold– E.g., Product design, logo, formula, or process
50
FOREX GAINS, REJECTS, SECONDS, SCRAPS & WASTES
GENERAL RULE:
“INCIDENTAL INCOME” TAXABLE LIKE
THE PRINCIPAL ACTIVITY
PEZA Memorandum Circular No. 2005-032
September 15, 2005
51
FOREX GAINS, REJECTS, SECONDS, SCRAPS & WASTES
GENERAL RULE – “INCIDENTAL INCOME” TAXABLE LIKE THE PRINCIPAL ACTIVITY
ACTIVITY INCENTIVE SCHEME
TAX ON “INCIDENTAL
INCOME”
REGISTERED 1o ACTIVITY
5% GIT 5% GIT
REGISTERED 1o ACTIVITY
ITH TAX-EXEMPT
UNREGISTERED/ OTHER ACTIVITIES
NONE RCIT
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INCOME FROM: TAX TREATMENT
FOREX GAIN
PRODUCTION REJECTS & SECONDS
RECOVERED WASTES/SCRAPS FROM RAW MATS, PACKAGING, OTHER DIRECT/INDIRECT MATERIALS & SUPPLIES
UNPROCESSED, UNUSED, OBSOLETE OR “OFF-SPECS” PRODUCTION INPUTS
SAME AS
TAX ON
PRINCIPAL
ACTIVITY
RCIT
54
INCOME NOT RELATED TO THE REGISTERED ACTIVITY (RR 20-02; RMC 32-05)
Regular internal revenue taxes apply as follows:• 20% final income tax on interest from Philippine Currency
bank deposits and yield or any other monetary benefit from deposit substitutes, and from trust funds and similar arrangements
• 7.5% tax on foreign currency deposits • 5%/10% capital gains tax or ½ % stock transaction tax, as
the case may be, on the sale of shares of stock
55
INCOME PAYMENTS OF REGISTERED ENTITIES (RR 20-02; RMC 32-05)
Enterprise shall withhold tax on, among others:• Dividends paid to the shareholders of a registered
enterprise• Interest payments to creditors of such registered enterprise
(regardless of any tax provision for grossing up of taxes), and other such payments shall be subject to the appropriate rate of tax imposable on the recipient of such income.
56
EXEMPTION OF PEZA-REGISTERED
ECONOMIC ZONE ENTERPRISES
FROM LGU PERMITS AND LOCAL TAXES,
LICENSES AND FEES
PEZA MEMORANDUM CIRCULAR NO. 2004-024
24 September 2004
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EXEMPTION FROM LOCAL TAXES
1. All PEZA-registered economic zone locator enterprises, which are entitled to any or all 3 fiscal incentives [ i.e., Income Tax Holiday Incentive; the option to pay to pay the special 5% Tax on Gross Income, in lieu of all national and local taxes except real property taxes on land owned by developers (5% GIT incentive); and / or tax-and duty-free importation of machinery and equipment, raw materials, supplies, spare parts and other production inputs], including Logistics Facilities Enterprises, are exempted from having to secure all LGU permits.
58
EXEMPTION OF PEZA ENTERPRISES FROM LGU PERMITSLegal Basis:
Republic Act No. 7916: “The Special Economic Zone Act of 1995”’as amended by R.A. No. 8748
• Section 13. General Powers and Functions of the Authority expressly vests PEZA with the power to “… operate, administer, manage and develop the ECOZONE” and “…register, regulate and supervise the enterprises in the ECOZONE in an efficient and decentralized manner”. This provision echoes
• Section 7 of R.A. No. 7916 which provides that the ‘ECOZONE shall be developed, as much as possible, into a decentralized, self-reliant and self-sustaining industrial, commercial / trading, agro-industrial, tourist, banking, financial and investment center with minimum government intervention” and that the ‘ECOZONE shall administer itself on economic, financial, industrial, tourism development and such other matters within the exclusive competence of the national government”.
59
EXEMPTION FROM LOCAL TAXES
2. PEZA-registered economic zone enterprises availing of the Income Tax Holiday incentive are exempted from payment of all local taxes, licenses, imposts and fees, except real estate taxes; provided that these enterprises shall also be exempted from payment of real property taxes on machineries and equipment they acquire for use in their production operations, during the first 3 years use of such machinery and equipment.
60
LOCAL TAX EXEMPTION OF FIRMS UNDER ITH• Legal Basis:
Republic Act No. 7916: “The Special Economic Zone Act of 1995”, as amended by R.A. No. 8748
• Section 23. Fiscal Incentives provides that “Business establishments operating within the ECOZONES shall be entitled to the fiscal incentives as provided for under Presidential Decree No. 66, the law creating the Export Processing Zone Authority, or those provided under Book VI of Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987”.
Executive Order No. 226, “The Omnibus Investment Code of 1987”• “Article 78. Additional Incentives. – A zone enterprise shall also enjoy all the incentive
benefits provided in Article 39 hereof under the same terms and conditions stated therein. In addition, zone registered enterprises shall also be entitled to the following:
• (a) Exemption from Local Taxes and Licenses. – Notwithstanding the provisions of law to the contrary, zone registered enterprises shall, to the extent of their construction, operation or production inside the zone be exempt from the payment of any and all local government imposts, fees, licenses or taxes except real estate xxx machineries owned by zone registered enterprises which are actually installed and operated in the Zone for manufacturing, processing or for industrial purposes shall not be subject to the payment of real estate taxes for the first three (3) years of operation of such machineries xxx”
• (b) Production equipment or machineries, not attached to real estate, used directly or indirectly, in the production, assembly or manufacture of the registered product of the zone registered enterprise shall be exempt from real property taxes.”
61
EXEMPTION FROM LOCAL TAXES
3. PEZA-registered economic zone enterprises availing of the 5% GIT Incentive are exempted from payment of all national and local taxes, except real property tax on land owned by developers.
62
LOCAL TAX EXEMPTION OF FIRMS UNDER THE GIT REGIMELegal Basis:
Republic Act No. 7916: “The Special Economic Zone Act of 1995”, as amended by R.A. No. 8748
• Section 24. Exemption from National and Local Taxes.• Except for real property taxes owned by developers, no taxes, local and
national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprise within the ECOZONE shall be paid and remitted. . .x x x. . .
• Bureau of Internal Revenue’s Revenue Regulations No. 12-97: “Regulations Implementing Section 24 of RA 7916 defines “local taxes”
• i. “Local Taxes” – shall refer to all local taxes, business taxes, real estate taxes, and other taxes, fees and charges imposed by local government units pursuant to the Local Government Code of 1991, as amended.”
63
SALE OF REAL PROPERTIESBIR Rulings
FIRM UNDER ITH REGIME– RCIT on gain if ordinary asset– 6% CGT if capital asset– DST
FIRM UNDER GIT REGIME– 5% on the net gain– No DST; DST payable by buyer if buyer is not
exempt
64
PEZA RULES ON IT ENTERPRISES, PARKS AND BUILDINGS
PEZA Board Resolution No. 00-411, December 29, 2000
65
IT ENTERPRISES QUALIFIED FOR INCENTIVES
1. Software development and application, including programming and adaptation of system softwares and middlewares, for business, media, e-commerce, education, entertainment, etc.;
2. IT-enabled services, encompassing call center, data encoding, transcribing and processing; directories; etc.;
3. Content development for multi-media or internet purposes;
4. Knowledge-based and computer-enabled support services, including engineering and architectural design services, consultancies, etc.;
66
IT ENTERPRISES QUALIFIED FOR INCENTIVES
5. Business process out-sourcing using e-commerce;
6. IT research and development; and
7. Other IT related service activities, as may be identified and approved by the PEZA Board.
67
INCENTIVES TO IT ENTERPRISES
1. ITH - 4 years for non-pioneer, 6 years for pioneer 2. After ITH, 5% tax on GIE, in lieu of national and local
taxes, except RPT on land owned by developers;3. Exemption from import duties and taxes on imported
machinery and equipment and raw materials;4. Additional deduction equivalent to 50% of training
expense, chargeable against the 3% share of the NG5. Permanent resident status for foreign investors with initial
investments of US$ 150,000 or more6. Employment of non-resident aliens required in the
operation of IT enterprises; and7. Other incentives, as may be determined by the PEZA
Board.
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IT BUILDINGS
• Required facilities (minimum)
1. High speed fiber optic telecommunication backbone and high-speed international gateway facilities or wide-area network (WAN); or any high -speed data telecommunication system that may become available in the future;
2. Clean uninterruptible power supply; and3. Computer security and building, monitoring and
maintenance systems .
69
IT PARKS & BUILDINGS
• IT Parks may be located within or outside Metro Manila
• IT building can only locate within Metro Manila.
70
IT PARKS & BUILDINGS
• An IT park or building in Metro Manila may be an existing, new or proposed complex or building with a minimum available business floor area of 5,000 sq. m. (excluding parking areas and roof gardens).
• Owners or developers of PEZA-registered IT Parks and Buildings in Metro Manila, except those already proclaimed prior to the approval of these guidelines including facilities providers, shall not be entitled to PEZA incentives.
• IT parks outside Metro Manila shall have a minimum land area of 5 hectares. They shall be entitled to the following incentives:
71
IT PARKS & BUILDINGS
IT parks outside Metro Manila shall have a minimum land area of 5 hectares. They shall be entitled to the following incentives:
1. ITH 4 or 6 years for IT zones located in less developed areas listed in the IPP, on income locator IT enterprises and related operations;
2. After ITH, the option to pay a special 5% tax on gross income earned from locator IT enterprises and related operations, in lieu of national and local taxes, except real property taxes on land owned by developers;
3. Permanent resident status of foreign investors with initial investment of US$ 150,000 or more; and
4. Employment of non-resident aliens required in the operation of IT enterprises
73
VAT TREATMENT
PEZA- REGISTERED
WHETHERITH,5%, OR
RCIT
PEZA-REGISTERED
5%
PEZA- REGISTERED
ITHOr
RCIT
G & S
EXEMPT
S
G
0%
EXEMPT
G & S
0%
EXEMPT
VAT- REGISTERED
VAT- EXEMPT
G & S
VAT
74
INCOME TAX TREAMENT
PEZA- PEZA- REGISTEREDREGISTERED
WHETHERWHETHERITH,ITH,5%,5%,
GOODSGOODS
INCOME5% or ITHRCIT on excess over threshhold
BUYERBUYERFROM FROM
CUSTOMSCUSTOMSTERRITORYTERRITORY
SERVICSERVICEE
INCOME->RCIT
76
Shall be paid and remitted as follows:
Payment of 5% Gross Income Tax
Three percent (3%) to the National Government
Two percent (2%) to the treasurer’s office of the municipality or city where the enterprise is located
- Rev. Regs. No. 1-2000
77
• After payment of 3% of the 5% tax to the BIR, all copies of the returns shall be stamped received .
• The enterprise pays 2% of the tax to the concerned city / municipal treasurer.
- Rev. Regs. No. 1-2000
Returns and Payment of the Tax
78
•Quarterly ITR - within sixty (60) days after the close of each of the first three (3) quarters
•Final adjustment ITR covering the entire taxable year - not later than the fifteenth (15) day of the fourth (4th) month following the close of its taxable year, whether calendar or a fiscal year accounting period.
- Rev. Regs. No. 1-2000
Returns and Payment of the Tax
79
Returns and Payment of the Tax
Quarterly and final adjustment income tax returns shall be accomplished in 5 copies showing among others:
1. Gross income for the period
2. Amount showing the 5% tax on such gross income earned
3. Amount representing the 2% share of the city/municipality
80
4. In case the enterprise occupies a parcel of land situated within the territorial boundaries of two or more cities/ municipalities, the area of land within the jurisdiction of each city/municipality and the share from the tax of each city / municipality.
Note: PEZA shall issue certification as to the exact share of the concerned cities/ municipalities from the 2% tax as allocated under the implementing rules of PEZA.
Returns and Payment of the Tax
81
Additional Attachments to the Return
All ECOZONE establishments shall secure on an annual basis a certification from PEZA stating that:
1. the establishment is a bona-fide PEZA-registered establishment entitled to the 5% special tax on gross income;
2. Whenever applicable, the percentage allocation of the 2% share in case of overlapping municipalities / cities.
- Rev. Regs. No. 1-2000
82
The power to audit & assess the 5% special income tax shall be under the exclusive jurisdiction of the Commissioner of Internal Revenue.
- Rev. Regs. No. 1-2000
Tax Examination
83
Authority of the BIR Commissioner over PEZA enterprises expanded to include the power -
To abate, cancel, or compromise the payment of the said tax
To implement special voluntary payment program/s for last priority in audit, subject to the approval of the Secretary of Finance in cases where such approval is necessary.
- Rev. Regs. No. 27-02
Tax Examination
84
Payment of Deficiency Tax
• Three-fifth (3/5th) ) or sixty percent (60%) of the 5% special income tax assessed, inclusive of increments shall be collected by the Commissioner or his duly authorized representative.
• Two-fifth (2/5th) or forty percent (40%) thereof shall be collected by the concerned city/municipality
– The same proportionate tax share shall be observed in case of abatement, cancellation, compromise or implementation of a special voluntary payment program.
- Rev. Regs. No. 27-02
85
Refund/Credit of Erroneously Paid 5% Special Tax
1) In the case of the 3% tax share of the National Government – Shall be refunded or credited by the BIR
2) In the case of the 2% tax share of the city / municipality– Shall be refunded by such city/ municipality.
- Rev. Regs. No. 27-02
90
NOLCO during ITH
Accumulated net operating losses incurred or sustained during the period when a person enjoys exemption from
income tax shall not qualify for purposes of NOLCO.
- Rev. Regs. No. 14-01