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Wednesday, March 21, 2007
New law grants tax amnesty for firms in Luzon ecozones
CLARK FREEPORT, Pampanga -- President Gloria Macapagal-Arroyo on Tuesday signed into law two bills converting the former US base in Clark into a freeport zone and providing for a one-time tax amnesty for businesses in Luzon-based economic zones.
Arroyo, in a signing ceremony, signed Republic Act (RA) 9399 granting amnesty to all tax and duty liabilities incurred by companies operating within the special economic zones in Luzon and RA 9400, which amends the Bases Conversion and Development Act of 1992.
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Bases Conversion and Development Authority (BCDA) chairman Narciso Abaya said the signing of the twin bills removed constraints that stemmed from a Supreme Court (SC) ruling declaring as illegal the tax incentives provided to businesses operating inside freeports and economic zones.
He was referring to a July 29, 2005 ruling of the high court declaring that Clark and other former US military facilities in the country are not entitled to tax and duty free privileges enjoyed by those in the Subic Freeport and that investors in the affected areas should pay back taxes.
Abaya said they are now drafting the implementing rules and regulations (IRRs) for the new laws.
He said the laws would help propel the BCDA and its subsidiaries to greater accomplishments.
Under the one-time tax amnesty, affected companies would be given six months to pay P25,000 in lieu of their back taxes which dates back "to the time they availed of the tax incentive," explained Abaya.
The BCDA amendment, meanwhile, states that the Clark Development Corporation (CDC) would remain as administrator of the 4,500-hectare Clark freeport with the Clark International Airport Corp. (Ciac), which runs the Diosdado Macapagal International Airport (DMIA), as its subsidiary.
The law also declares Clark Freeport Zone (CFZ) investors entitled to the same tax and other duty-free privileges being enjoyed by their counterparts at the Subic Freeport.
At present, there are 389 foreign and domestic investors within CFZ, which brings in P24.33 billion worth of investments and employs 47,000 people mostly from Pampanga, Tarlac, and Bulacan.
Under the law, CFZ shall be operated and managed as a separate customs territory ensuring free flow or movements of goods and capital equipment within, into and exported out of CFZ, as well as provide incentives such as tax and duty-free importation of raw materials and capital equipment.
However, the law also states that goods moved from CFZ to other parts of the country would be subjected to customs duties and taxes under the Tariff and Customs Code of the Philippines.
It also reads that no national or local tax would be imposed on the registered businesses within CFZ except for the five percent tax on gross income earned. Three percent of which would go to the National Government and two percent to be distributed to the treasury of the municipalities or cities that are covered by CFZ.
The amendment to the BCDA Act would also apply to the Poro Point Management Corporation, John Hay Management Corp., and Bataan Technological Park Incorporated, which have also been declared special economic zones. (JMR/Sunnex)
For more Philippine news, visit Sun.Star Bacolod. (March 21, 2007 issue)
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