Pasay City – The Philippine Economic Zone Authority (PEZA) has shed light on the issue of monitoring the actual investments of its registered business enterprises following the report released by the Fiscal Incentives Review Board (FIRB) last 15 June 2022.
“In view of the negative comments that PEZA received online due to the misleading press release issued by the FIRB, we are issuing this clarification to explain how PEZA monitors the actual investments of our registered business enterprises,” said PEZA Director General Charito ‘Ching’ Plaza.
She noted, “We find the press release of the FIRB misleading and misinforming because it deliberately mentioned that PEZA “does not track the inflow of actual investments made by registered business enterprises (RBEs) since the implementation of the Corporate Recovery and Tax Incentives for Enterprises (CREATE Act)” when this is entirely untrue.”
Investment data monitoring under CREATE
The PEZA Chief and its Operations and Policy departments explain the following context and processes in view of investment data monitoring that are being done accordingly after the CREATE Law was passed and took effect on 11 April 2021.
Section 305 of the CREATE Law provides that all RBEs shall file with their respective Investments Promotion Agencies (IPAs), among others, a complete annual benefits report which shall include data such as, but not limited, to the approved and actual amount of investments, approved and actual employment level and job creation. The IPAs are required to submit to the Bureau of Internal Revenue (BIR) and the FIRB Secretariat the Consolidated Annual Tax Incentives Report (ATIR) and Annual Benefits Report (ABR) which includes the approved and actual amount of investments. This will be the first submission of all the IPAs, including PEZA, to the FIRB of the ATR and ABR.
On 28 April 2022, the FIRB issued an advisory to all the IPAs and RBEs that the updated templates for the ATIR and ABR were already available in its website.
To formally inform our RBEs, PEZA issued Memorandum Circular (MC) No. 2022-033 dated 10 May 2022, entitled “Submission of Tax Incentives Management and Transparency Act (TIMTA) Report using the Updated ATIR and ABR” and MC No. 2022-033 dated 19 May 2022, entitled “Supplemental Guidelines on Report Submission of ATIR and ABR under MC No. 2022-031.” These MCs are posted in the websites of PEZA.
On 06 June 2022 under Advisory No. 005-2022, the FIRB released an adjusted date on the submission of the IPAs, thus:
“Submission of the IPAs and OGAs Consolidated Annual Tax Incentives and Annual Benefits Report to the BIR and the FIRB Secretariat:
- Tentative submissions to be accepted on or before 14 June 2022; and
- Amended and final submissions to be accepted on or before 15 July 2022, without the imposition of any penalty.”
Accordingly, all the IPAs including PEZA, have until 15 July 2022 within which to submit to the FIRB the reports as required under the CREATE Act. Unfortunately, the FIRB Secretariat irresponsibly singled out PEZA among all the IPAs when all have yet to submit the reports on the actual investments by their RBEs since the deadline is still next month.
To reiterate, this is the first submission of all IPAs to the FIRB of the said reports since the law took effect in April 2021. Therefore, the statement of Department of Finance Assistant Secretary Juvy Danofrata is baseless and meant to discredit PEZA and its valued RBEs. We can only surmise that this is because PEZA took a stand against the FIRB when the PEZA Board approved the 70/30 Work-from-Home Arrangement after 31 March 2022 for our IT/BPO enterprises.
Monitoring of data prior to CREATE
Prior to the enactment of the CREATE Act, PEZA monitors the actual investments of its RBEs by conducting validation and/or confirmation of the entitlement the Income Tax Holiday (ITH) incentive granted by the PEZA Board to our RBEs. This is to ensure that the committed investments of the RBEs as stated in their agreements/contracts with PEZA were fulfilled.
In case the RBE fulfilled its investment commitments stated in its Agreement with PEZA, we issue a Notice of ITH Confirmation. For RBEs which failed to meet its commitments, PEZA downgraded the ITH incentive to 5% Gross Income Tax (GIT) incentive.
“We acknowledge that under the CREATE Act, the FIRB now exercises policymaking and oversight functions over all the IPAs. However, the FIRB Secretariat, which acts as support services to the FIRB, has no authority over the IPAs which have their own governing Board. Accordingly, we urge the FIRB Secretariat headed by Asec. Danofrata, to release only factual and accurate information to the public and the Board,” said Plaza.
She noted, “We are proud to share that PEZA remains to be the top contributor among Investment Promotion Agencies in terms of investments, export income, and jobs generation that trigger development and socio-economic progress in the regions.”
Specifically under the Duterte Administration and the leadership of Plaza, PEZA was able to generate a total of PhP 807.8 Billion of investments from 2,462 projects and USD$ 300.6 Billion of exports with 105 economic zones proclaimed during this period. #