Mandaue to review tax break of PEZA firms

CEBU, Philippines — Companies in Mandaue City registered with the Philippine Economic Zone Authority (PEZA) but have shifted to other businesses may lose their tax incentive.

The Mandaue Council has passed a resolution authored by Councilor Jimy Lumapas requesting City Treasurer Regal Oliva through Mayor Jonas Cortes to review all establishments in the city that are registered with PEZA and recall the tax holiday from those that did not meet PEZA objectives.

This after the city received reports that some business establishments that have been granted PEZA accreditation and had been enjoying tax holidays in Mandaue are shifting to other business ventures outside of the mandated export-oriented and IT requirement.

Lumapas said Mandaue has long established ecozone areas to cater to special business establishments with PEZA accreditation.

PEZA is an agency of the Philippine government that aims to promote investments, extend assistance, grant incentives, and facilitate business operations of investors in export-oriented manufacturing and service facilities within areas proclaimed as PEZA Special Economic Zones (ecozones).

Section 24 of the Special Economic Zone Act provides that business establishments duly registered with PEZA are entitled to a holiday from its income tax and the local taxes.

Lumapas said that due to its conveyance of full foreign ownership, many foreign companies setting up outsourcing operations are enticed to base their operation in a PEZA zone to avail of tax incentives.

“The tax holidays made easily available to establishments within the ecozones prompted other business establishments to seek favorable consideration from this August Body, as a Resolution to that effect will form part to their PEZA application,” a portion of Lumapas’ resolution reads.

Lumapas added that Mandaue shall exercise its power guaranteed by law to grant the tax holiday to PEZA accredited establishments but may also facilitate for its recall when the purpose of which is tainted with clear bad faith. (FREEMAN)