Question & AnswerQ&A (PEZA)
The Special Economic Zone Act of 1995 refers to Republic Act No. 7916, which governs the creation and regulation of special economic zones or ECOZONES in the Philippines.
ECOZONES or Special Economic Zones are selected areas with highly developed or with the potential to be developed into agro-industrial, industrial, tourist, recreational, commercial, banking, investment, and financial centers with fixed or delimited metes and bounds by Presidential Proclamations.
The PEZA Board of Directors has the authority to approve the application for registration of an ECOZONE Enterprise, typically by resolution of the Board.
Leases to aliens shall not exceed fifty (50) years, extendible once for a period not more than twenty-five (25) years; the land must be used exclusively for the approved investment purposes; and certain conditions such as proof of social and economic contribution must be shown for lease renewal.
They are entitled to exemption from national and local taxes and licenses, additional deduction for training expenses, incentives under the Build Operate Transfer Law, and other incentives available under the Omnibus Investments Code as determined by the Board.
Foreign nationals may not exceed five percent (5%) of the workforce in supervisory, technical or advisory positions unless authorized by the Secretary of Labor and Employment.
The 5% final tax on gross income is distributed as follows: 3% to the National Government, 1% to the Local Government Units affected by the ECOZONE, and 1% toward a development fund for municipalities outside and contiguous to each ECOZONE.
First violation incurs a basic fine of P500.00 plus daily fine of P50.00; the second violation has a P1,000.00 basic fine plus P150.00 daily fine; and the third violation has a P2,000.00 basic fine plus P200.00 daily fine.
Cancellation can occur due to failure to maintain registration qualifications, violation of the Act, Code, or Decree provisions, or violation of rules and regulations or registration agreement terms, including failure to implement project timelines.
Goods may only enter or exit the restricted areas upon prior approval or permit by the PEZA; applications must be filed in prescribed forms, and appropriate documentation like shipping and commercial papers must be submitted.