Question & AnswerQ&A (Republic Act No. 7922)
The short title of Republic Act No. 7922 is the "Cagayan Special Economic Zone Act of 1995."
The government policy is to actively encourage, promote, induce and accelerate sound and balanced industrial, economic and social development through the establishment of special economic zones and free ports to provide jobs, increase productivity, and improve living conditions, especially in rural areas.
The special economic zone covers the entire area embraced by the Municipality of Santa Ana and the islands of Fuga, Barit, and Mabbag in the Municipality of Aparri, Province of Cagayan.
They are entitled to the existing fiscal incentives provided under Presidential Decree No. 66 (the law creating EPZA) or those under Book VI of Executive Order No. 226 (Omnibus Investments Code of 1987). Additionally, no local or national taxes shall be imposed; instead, a 5% tax on gross income is remitted to the government with specific distributions.
2% goes to the general fund of the national government; 1% to the Province of Cagayan; 0.5% shared by affected municipalities based on their income from business activities; and 1.5% to the Cagayan Economic Zone Authority.
The Cagayan Economic Zone Authority (CEZA) is the body corporate created to manage and operate the Zone.
The corporate franchise shall expire 50 years after the first day of the 5th calendar year after the law’s effectivity, unless extended by Congress.
The Board has 15 members including: the Secretary of Trade and Industry (Chairman), 4 other national government representatives, the mayors of Aparri and Santa Ana, 2 labor representatives, 4 business/investment representatives from the Zone, and 2 private sector residents of the municipalities.
The President of the Philippines appoints the board members. Except for business sector representatives, appointees must be Filipino citizens, of good moral character, and competent in relevant fields such as business, banking, shipping, port operations, engineering, or law.
CEZA can adopt a corporate seal, contract, buy, sell property; raise funds; approve and regulate business operations; operate public utilities and infrastructure; run tourism and recreational activities; promote environmental protection; enforce pollution control; provide security; form subsidiaries; issue rules and exercise necessary powers for the Zone's development.
Foreign investors with capital investment of not less than US$150,000 and their immediate family may be granted permanent resident status within the Zone, allowing freedom of entry and exit without special Bureau of Immigration authorization. CEZA grants this status and issues renewable working visas to certain foreign executives and technicians.
In case of conflicts relating to the Zone (except defense and security matters), the decision of CEZA will prevail over the municipalities.
The Commission on Audit assigns a full-time auditor and assistants to CEZA and its subsidiaries to audit their operations. The COA renders an annual report on CEZA’s activities to the President and Congress.
The other provisions not affected shall remain in full force and effect, pursuant to the Separability Clause.