It is a glorious day for a company-applicant when, after all the tedious planning and persistent monitoring, a Certificate of Registration is finally issued to it by the Philippine Economic Zone Authority (PEZA). The Registrant would think that all the efforts exerted have successfully come to an end. However, ALL Registrants are reminded that being a PEZA-Registered Enterprise requires diligent compliance unto a continuous process. Conditions are set ranging from pre-registration, down to post-registration.
The registered enterprise is imposed with a list of post-registration conditions depending on the nature of its business activity or project. Among the many, two noteworthy conditions deemed indispensable, namely; (1) the processing of Application / Request for Adjustment/Approval of Actual Date of Start of Commercial Operations (SCO); and (2) the processing of Application / Request for Certification on VAT zero rating or available incentives or entitlement to 5% Gross Income Tax (5% GIT).
Processing an Application / Request for Adjustment/Approval of Actual Date of Start of Commercial Operations (SCO). This application usually follows immediately after the release of the Certificate of Registration. Ideally, this is done prior to the conduct of commercial operations by the Registrant. That is why, consideration of about one (1) month must be had solely to process this application. A notarized Certification on the date of actual start of commercial operations signed by the enterprise’s highest official and attested by the Zone Administrator/Manager/OIC to be submitted to PEZA within seven (7) days from date of actual start of commercial operations with its attachments, AND a proof of commercial transaction are the documents which will serve as requirements for this filing. The above given period will cover facilitation of the pre-requisite attached documents to the notarized Certification, such as, the Occupancy Permit to be issued by PEZA based on the requirements set in the National Building Code of the Philippines, together with the submission of the Environmental Compliance Certificate (ECC) from the Department of Environment and Natural Resources, as may be applicable. With regard to permits relating to the issuance of Occupancy Permit, it must be noted that one of the PEZA incentives available for Registrants is the exemption from payment of any and all local government imposts, fees, licenses or taxes, except real estate tax. This means that the Registrant need not apply for any permit required by the local government where the intended work place is located. Instead, the Registrant must necessarily apply these permits from the Office of the Building Official of PEZA. However, in case the Registrant has earlier secured the permits from the local government unit, the Registrant need simply attach these permits to the respective PEZA-issued forms which are provided in applying for the electrical, mechanical, electronics, architectural, sanitary, and plumbing. In determining the actual start of commercial operations (SCO), PEZA takes into consideration the indicated SCO date on the notarized Certification and compared it with the attached supporting documents required, such as, Proof of first commercial sale OR first importation of raw materials OR first importation/procurement of its operations equipment for companies whose actual SCO is later than were not able to start commercial operations on the date indicated in their application for registration of the Project. Determining the SCO is vital in identifying the start date to avail the incentive of Income Tax Holiday, as stated on the Memorandum Circular No. 2002-007 dated 04 April 2002 that, “For the purpose of establishing the starting date of a PEZA-registered economic zone export enterprise’s availment of its Income Tax Holiday (ITH) incentive, the date of the “Start of Commercial Operations” (SCO) shall be the date specified in its Registration Agreement with PEZA, or the verified actual date when it begins commercial production of its registered product, whichever comes first.” Procedurally, the Income Tax Holiday incentive cannot be availed by the Registrant without first determining the actual start of commercial operations subject to the approval of PEZA.
Processing of Application / Request for Certification on VAT zero rating or available incentives or entitlement to 5% Gross Income Tax (5% GIT). Given that the Registrant is enjoying several incentives, consequently, the latter will be asked by any or all of their suppliers for proof of availment of these incentives since these suppliers will be the ones to reflect the transaction made and to report to the Bureau of Internal Revenue. Thus, for those PEZA-registered locator enterprise entitled to VAT Zero Rating, they must file a request for VAT Zero Rating Certificates. Meanwhile, those PEZA-registered locator enterprises granted the Income Tax Holiday, the 5% Gross Income Tax and/or Tax and Duty Free Importation incentives must request for a Certificate of Available Incentives. Also, those PEZA-registered locator enterprises availing of the 5% Gross Income Tax (GIT) incentive shall file for a Certificate of Entitlement to 5% GIT. These Certifications may be requested through filing a Letter-Request, together with the supporting documents, such as, the complete and updated reportorial requirements set by PEZA; and the Audited Financial Statements and Annual Income Tax Return. While those with Local Sales, a Liquidation of Local Sales Authority is required. However, PEZA will accommodate early filing of these requests for those Registrants who are recently issued with the Certificate of Registration and the latter already transacts business with suppliers. In this case, PEZA can forego of the supporting documents which are not applicable to the recently registered enterprise. It must be stressed that securing these Certifications is not a pre-requisite in availing the aforementioned incentives as these incentives are automatically enjoyed upon date of PEZA Registration. Only that, these certificates are necessary to show proof of incentive to be reported by the suppliers to BIR.
To further discuss the above compliance, please set an appointment with us through telephone nos. (02) 551-9012 / 551-9013. We will be pleased to assist you in fulfilling your commitments with PEZA.
By: Atty. Leah Renna B. Dal