Tax Notes: Submission of new PEZA requirement

TIMTA, which stands for Tax Incentives Management and Transparency Act, is aimed to monitor and evaluate the fiscal incentives granted by investment promotion agencies (IPAs) such as the Philippine Economic Zone Authority (PEZA) and Board of Investments. Various government agencies are involved in the implementation of TIMTA and are assigned with defined responsibilities.

One of these agencies is the National Economic Development Authority (NEDA), which is tasked to conduct a cost-benefit analysis on the investment incentives given to registered business entities to determine the impact of tax incentives on our economy. The results of the analysis will be further discussed among the Department of Finance, Department of Trade and Industry, IPAs, Department of Budget and Management and Joint Congressional Oversight Committee to address fiscal exposure and optimize social benefits of such incentives.

In response to NEDA’s role under TIMTA, PEZA Memorandum Order No. 2017-009 was recently issued to require all PEZA-registered entities and ecozone developers or operators, in-cluding those entitled only to duty and tax exemption on importation and/or VAT zero-rating of local purchases, to submit the new PEZA compliance requirement, which contains the following information:

1. registered activities, including dates of registration;

2. actual investments showing total assets and stockholders’ equity;

3. percentage share of equity ownership of local and foreign investors;

4. employment details, including the employees’ compensation package; and,

5. other benefits from registered projects showing taxes remitted to the Bureau of Internal Revenue and the respective local government unit.

The new compliance requirement covers both taxable years 2015 and 2016; hence, each PEZA-registered entity shall submit two sets of the report, representing each taxable year, to PEZA. The soft copy of the report in excel format, including a scanned copy of a one-page certification that is signed by the two highest responsible officials of the PEZA-registered entity, shall be submitted via e-mail to the Enterprise Services Division through esd@peza.gov.ph.

Deadline of submission of the report is on or before July 31, 2017. Non-compliance will subject the PEZA-registered entity to penalties at P100,000 for the first violation, P500,000 for the second violation and revocation of registration for the third violation.

The new compliance requirement is a supplement to the TIMTA Annual Incentives Reports under PEZA Memorandum Circular No. 2016-035, which were submitted to PEZA last November 15, 2016 for taxable year 2015, and December 15, 2016 and January 14, 2017 for taxable year 2016. (P&A Grant Thornton)