QuestionsQuestions (Republic Act No. 9400)
RA 9400 amends Republic Act No. 7227 (as amended), otherwise known as the Bases Conversion and Development Act of 1992, and provides for other related purposes such as tax and customs treatment for specified economic zones.
It provides that SSEZ shall operate as a separate customs territory ensuring free flow of goods and capital; allows tax/duty-free importation of raw materials, capital, and equipment; but removal/export to the rest of the Philippines is subject to customs duties and taxes. It also removes national/local taxes within the zone and replaces them with a 5% tax on gross income (3% to the National Government and 2% to SBMA for distribution to specified LGUs).
Such exportation/removal is subject to customs duties and taxes under applicable tariff and customs laws and tax laws of the Philippines.
A 5% tax on gross income earned by all business enterprises in the zone. Allocation: 3% to the National Government and 2% to SBMA for distribution to affected LGUs listed in the law.
It authorizes the creation of a CSEZ by presidential proclamation subject to concurrence of directly affected LGUs and generally following the Clark military reservations framework. The CFZ is declared a freeport zone (separate customs territory) with tax/duty-free import incentives, subjecting removals to customs duties/taxes. It also imposes a 5% tax on gross income in lieu of national/local taxes, with 3% to the National Government and 2% to the treasurer’s office of the municipality/city where the business is located.
The governing body is established by executive proclamation with powers/functions exercised by PEZA under PD 66, as amended. Limitation: it has no regulatory authority over public utilities; regulatory authority pertains to agencies created by law (e.g., ERC under RA 9136 and NTC under RA 7925).
PEZA is to register, regulate, and supervise all registered enterprises within the Special Economic Zones for purposes of administering these incentives.
Poro Point Freeport Zone (PPFZ). It is operated and managed as a freeport and separate customs territory ensuring free flow of goods and capital. Registered enterprises get incentives such as tax and duty-free importation of raw materials and capital equipment. No national/local taxes are imposed; instead, there is a 5% tax on gross income (3% National Government, 2% to the treasurer’s office of the municipality/city where located).
They are entitled to tax and duty-free importation of raw materials and capital equipment. In lieu of all national and local taxes except real property tax on land, they pay a 5% tax on gross income earned, remitted 3% to the National Government and 2% to the treasurer’s office of the municipality/city where located.
Registered business enterprises that will operate after the effectivity of RA 9400 within the JHSEZ are entitled to the same tax and duty incentives as provided under RA 7916, as amended.
They may only engage in acquiring, owning, holding, administering, or leasing real properties, and in other activities incidental thereto.
Conflicts are resolved in favor of the aforementioned zones. However, the CFZ and PPFZ are subject to specified paragraphs (d) through (i) of Section 12 of RA 7227, as amended.
They and their governing bodies are entitled to the same incentives until the expiration of their contracts entered into prior to the effectivity of RA 9400.
They administer and implement incentives granted to their registered enterprises and submit to the DOF their respective annual tax expenditures based on computed revenue foregone. DOF is to create a single database of incentives and monitor/review them and submit an annual report to the President.
It is perpetually barred from doing business in any freeport and special economic zone, in addition to penalties/sanctions under existing laws.