PEZA flags ‘more restrictive’ import tax rules under CREATE
THE Philippine Economic Zone Authority (PEZA) raised possible problems its locators might encounter with new import tax rules after the implementation of a new law that cuts corporate income taxes and rationalizes incentives.
The investment promotion agency foresees “certain issues” once the law is implemented, noting that it expects rules on the duty-free import of capital equipment and raw materials to be more restrictive, PEZA Deputy Director General for Operations Harriet O. Abordo said in a statement Tuesday.
The implementing rules and regulations (IRR) of Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act have yet to be released after the lapse of the May 17 target date.
PEZA incentives for investors usually include the duty-free importation of raw materials, but the agency is expecting new limitations on the scope of exemptions.
“Certain issues in implementation are anticipated since the IRR is now more restrictive on the coverage of tax and duty-free importation of capital equipment, raw materials, supply, and VAT-zero rating,” she said, noting that the scope of items eligible for exemption has effectively narrowed.
PEZA in April also flagged the potential exit of registered investors after a provision that would have allowed them to apply for extended incentives for the same activity was vetoed. President Rodrigo R. Duterte called the provision “fiscally irresponsible” and unfair to taxpayers and enterprises with no incentives.
PEZA has, however, welcomed the signing of CREATE.
“Now that the CREATE is here, we have to move forward, thereby, it is very imperative for us to make this work. After all, we have one overriding objective: to generate investments so we can create jobs for our countrymen,” Ms. Abordo said. — Jenina P. Ibañez