BIR cuts tax exemptions of ecozone investors
THE Bureau of Internal Revenue (BIR) has tightened the rules on tax exemptions enjoyed by enterprises operating in economic zones.
In a memorandum, Commissioner Lilian B. Hefti said income realized by an enterprise that is unrelated to its registered activities shall be subject to the regular internal revenue taxes.
The directive is aimed at clarifying the tax treatment of income earned from unregistered activities by enterprises registered under the Bases Conversion and Development Act of 1992 and the Philippine Economic Zone Act of 1995 or Republic Act 7916.
As part of its drive to plug tax leakages, the BIR is running after businesses that continue to enjoy tax perks even after their privileges have lapsed.
The tax bureau would zero in on Philippine Economic Zone Authority (PEZA)-registered businesses and manpower services that are enjoying income-tax holidays.
PEZA-registered businesses only pay the government five percent of their gross income earned in lieu of all national and local taxes for a given period. However, the Department of Finance said the government has been remiss in monitoring businesses whose tax holidays already lapsed and a number of these investors still enjoy the perks beyond the mandated period.
Apart from the five percent preferential tax based on gross income earned, an enterprise also has to pay real property tax.
“Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ecozone,” the directive read.
Of the tax on gross income earned by an enterprise, three percent will be remitted to the national government and two percent to the municipality or city hosting the ecozone. By Chino S. Leyco, Manila Times
In a memorandum, Commissioner Lilian B. Hefti said income realized by an enterprise that is unrelated to its registered activities shall be subject to the regular internal revenue taxes.
The directive is aimed at clarifying the tax treatment of income earned from unregistered activities by enterprises registered under the Bases Conversion and Development Act of 1992 and the Philippine Economic Zone Act of 1995 or Republic Act 7916.
As part of its drive to plug tax leakages, the BIR is running after businesses that continue to enjoy tax perks even after their privileges have lapsed.
The tax bureau would zero in on Philippine Economic Zone Authority (PEZA)-registered businesses and manpower services that are enjoying income-tax holidays.
PEZA-registered businesses only pay the government five percent of their gross income earned in lieu of all national and local taxes for a given period. However, the Department of Finance said the government has been remiss in monitoring businesses whose tax holidays already lapsed and a number of these investors still enjoy the perks beyond the mandated period.
Apart from the five percent preferential tax based on gross income earned, an enterprise also has to pay real property tax.
“Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ecozone,” the directive read.
Of the tax on gross income earned by an enterprise, three percent will be remitted to the national government and two percent to the municipality or city hosting the ecozone. By Chino S. Leyco, Manila Times
Labels: bir, economic zone, tax
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