Question & AnswerQ&A (Republic Act No. 10032)
PEZA-registered enterprises within ECOZONES are generally subject to a 5% special tax on gross income earned, in lieu of all taxes except real property tax.
Customs Territory means the national territory of the Philippines outside the proclaimed boundaries of ECOZONES, except areas declared as special economic zones or free ports by other laws or proclamations.
Such sales are considered indirect exports and are subject to 0% VAT pursuant to Sec. 106(A)(2)(a)(5) of the NIRC and related provisions.
Sales of services are subject to zero percent (0%) VAT under the 'cross border doctrine' of the VAT system according to VAT Ruling No. 032-98.
These sales are exempt from VAT pursuant to Sec. 109, in relation to Sec. 236 of the NIRC, regardless of the buyer's tax status or the cross border doctrine.
Such sales are treated as technical importations by the buyer, who is liable for import taxes (including VAT and excise tax), while the PEZA enterprise pays the 5% special tax on gross income earned.
Income derived from excess sales is subject to normal income tax under the NIRC, computed through the method of general apportionment.
No, such intra-ECOZONE sales of goods are exempt from VAT under Sec. 109(q) of the NIRC in relation to RA No. 7916.
The sale of services is exempt from VAT or any percentage tax pursuant to Sec. 24 of RA No. 7916.
Such sales are subject to 0% VAT under the cross border doctrine, as the purchased services eventually support goods destined for export or treated as importation.
No, the Circular serves as sufficient basis and compliance for the zero-rating of VAT on such sales without requiring prior approval per Revenue Regulations No. 7-95.
It covers sales of goods, property, and services between suppliers from the Customs Territory and PEZA-registered enterprises within the ECOZONE, including intra-ECOZONE sales and sales outside the ECOZONE.