Question & AnswerQ&A (EXECUTIVE ORDER NO. 829)
As of January 1, 2003, PEZA issues original LOAs for Farm-Out/Sub-Contracting with validity periods of 3, 6, 9, and 12 months.
The filing fees are as follows: P1,200.00 for 3 months, P1,800.00 for 6 months, P2,400.00 for 9 months, and P3,000.00 for 12 months.
Yes, LOAs can be extended every three months with a filing fee of P600.00 per extension, provided that the maximum validity period does not exceed certain limits depending on the type of enterprise (up to one year for PEZA registered economic zone enterprises and CGMW operators, and six months for non-economic zone enterprises without CBMW).
The maximum validity period for such LOAs is six months.
Machinery and equipment lent must be used solely for the farm-out/sub-contracting arrangement and returned at the end of the LOA validity period, unless there is a valid LOA and transfers of goods continue, in which case keeping periods are allowed depending on the sub-contractor's status.
The sub-contractor may keep such machinery and equipment indefinitely as long as valid LOAs exist and farm-out arrangements continue.
These services involve PEZA Police accompanying raw materials, parts, components, goods, and machinery transferred tax and duty-free through customs territory to ensure compliance and security during transfer.
They may post surety bonds to cover taxes and import duties on the materials and equipment during transfer.
Economic zone contractor enterprises must arrange PEZA Police Transshipment services or post surety bonds covering taxes and duties during the return transfer of processed outputs and machinery.
They must post surety bonds covering taxes and duties for the entire sub-contracting period from removal to return to the economic zones.
It supersedes EPZA General Circular No. 83-002 dated January 18, 1983, PEZA Memorandum Circular 2000-01 dated November 14, 2000, and all other EPZA/PEZA orders and circulars governing movement of materials and goods under farm-out/sub-contracting arrangements.
The contractor enterprise must apply for a new LOA after the maximum validity period of the existing LOA has expired.