Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 66)
The policy is to encourage and promote foreign commerce to make the Philippines a center of international trade, strengthen export trade and foreign exchange, hasten industrialization, reduce unemployment, and accelerate national development by establishing export processing zones in strategic locations.
The Export Processing Zone Authority (EPZA) is created to operate, administer, and manage the export processing zones.
The principal office of the Authority shall be maintained in the Greater Manila Area, with branches established as necessary elsewhere in the Philippines.
The Authority can operate and manage export processing zones, construct infrastructure, regulate enterprises in the zones, grant leases and franchises, fix fees and charges, regulate movement of cargo and merchandise, contract indebtedness, and generally perform necessary acts to carry out its purposes.
The Board is composed of seven members: four ex officio members (Deputy Governor of the Central Bank, Vice-Chairman of the Board of Investments, Undersecretary of Finance, and Undersecretary of Trade and Tourism) and three members appointed by the President with the consent of the Commission on Appointments, with the President designating the Chairman who also serves as Administrator.
Members must be Philippine citizens, of good moral character, integrity, responsibility, and recognized competence in relevant fields avoiding conflicts of interest and partisan political activities.
They are exempt from customs and internal revenue taxes on merchandise brought into the zone for processing and exported goods; enjoy net operating loss carry-over; accelerated depreciation of fixed assets; exemption from export tax; priority foreign exchange assistance, among others.
Violators face imprisonment of five to ten years, fines of 5,000 to 10,000 pesos, and revocation of permits and privileges. For corporate offenders, responsible officers may be penalized and alien officers deported. Government employees abetting violations may be disqualified from public office.
Foreign nationals may be employed in foreign-owned enterprises within the zone in supervisory, technical or advisory positions not exceeding 5% of the total personnel within the first five years, with specific exceptions for key officers in majority-foreign owned enterprises.
The Authority has eminent domain powers to acquire rights of way or any property by purchase, negotiation, or condemnation for establishing export processing zones, housing projects, and related infrastructure.
Purchases and contracts, except for personal services, shall be done through competitive public bidding, with exceptions for emergencies and small amounts not exceeding ten thousand pesos per purchase and fifty thousand pesos monthly for emergency purchases.
Yes, the Authority is exempt from all taxes, duties, fees, imposts, and charges, including income taxes, franchise taxes, real estate taxes, and customs duties on import of capital goods, although these exemptions may be lifted after five years if the Authority becomes self-sustaining.