REGULATIONS IMPLEMENTING SECTION 4 OF RA. NO. 8748, ENTITLED “AN ACT AMENDING REPUBLIC ACT NO. 7916,” OTHERWISE KNOWN AS THE SPECIAL ECONOMIC ZONE ACT OF 1995, AMENDING FOR THIS…

SECTION 1.       Scope . — Pursuant to Section 4 of
Republic Act No. 8748, amending R.A. No. 7916 as implemented by Revenue
Regulations No. 12-97, these Regulations are hereby promulgated to amend
the provisions of the aforesaid Revenue Regulations No. 12-97 in
respect of sharing, distribution and manner of disposition of the two
percent (2%) share of local government units from the five percent (5%)
special tax on gross income earned, in lieu of all taxes, except the
real property tax, imposed on PEZA-registered enterprises registered
under and operating pursuant to the Special Economic Zone Act, as
implemented by the Philippine Economic Zone Authority (PEZA).

SECTION 2.       Sharing and Distribution of the Proceeds From the 5% Special Tax Paid by PEZA-Registered Enterprises. —
Pursuant to Section 24 of R.A. No. 7916, as amended by R.A. 8748,
PEZA-registered enterprises shall, in lieu of all taxes (except the real
property tax on land owned by developers), pay a tax equivalent to five
percent (5%) based on gross income earned, which shall be shared and
distributed as follows:

(a) To the National Government	30 %
(b) To the Treasurer’s Office of the Municipality or City where the registered enterprise is located	2 %

SECTION 3.       Rules of Apportionment . — In case the
Special Economic Zone (ECOZONE) is situated and encompasses the
territorial jurisdiction of more than one (1) city or municipality, the
share of each city or municipality from the 2% special tax paid by
ECOZONE enterprises shall be determined in accordance with the
implementing PEZA regulations on the subject. The Philippine Economic
Zone Authority (PEZA) shall issue certification as to the exact share of
the concerned cities or from the 2% tax as allocated under the
implementing rules of PEZA.

SECTION 4.       Nature of the 5% Tax and Extent of Tax Exemption.—

The above 5% tax is imposed on “gross income earned” hence, income
tax in nature and a national internal revenue law in character.
Registered ECOZONE enterprises shall be exempt from all other taxes,
national or local, except the real property tax on land owned by
developers, pursuant to Section 24 of R.A. No. 7916, as amended by R.A.
No. 8748.

SECTION 5.       Returns and Payment of the Tax. —

(a) Quarterly and Final Adjustment Tax Return. — Every ECOZONE
registered enterprise subject to the herein 5% special income tax shall
file a quarterly and a final adjustment income tax return showing, among
others, (1) its “gross income earned” for such period; (2) the amount
representing the 5% tax on such “gross income earned;” (3) the amount
representing the aforementioned 2% share of the city/municipality; (4)
in case the enterprise occupies a parcel of land situated within the
territorial boundaries of two or more cities/municipalities, the area of
land within the jurisdiction of each city/municipality and the share
from the tax of each city/municipality.

The aforesaid enterprise shall file quarterly income tax return
within sixty (60) days after the close of each of the first three (3)
quarters and a final adjustment income tax return covering the entire
taxable year, not later than the fifteenth (15th) day of the fourth
(4th) month following the close of its taxable year, whether a calendar
or a fiscal year accounting period, in accordance with Title II, Chapter
XII, of the National Internal Revenue Code of 1997: Provided, however,
that it shall prepare and accomplish at least five (5) copies thereof
for filing, as follows: (1) Original and duplicate original copies
thereof for filing with the duly authorized representative of the
Commissioner of Internal Revenue, for the purpose of payment of the
aforementioned 3% share of the National Government; (2) two (2) copies
thereof for the purpose of payment of the aforesaid 2% share of the
city/municipality; and (3) one (1) copy thereof for the file of the said
enterprise: Provided, further, that if two or more
cities/municipalities are entitled to a share in the two percent (2%)
tax share of cities/municipalities, as many copies shall be accomplished
for the purpose of filing at least two (2) copies thereof with the
concerned cities/municipalities.

(b) Filing Procedure. — The ECOZONE enterprise shall present and
submit its aforementioned tax return to the duly authorized
representative of the Commissioner of Internal Revenue. After payment of
the 3% tax share of the National Government, all copies thereof shall
be stamped received The said duly authorized representative of the
Commissioner shall secure the original and duplicate original copies
thereof for BIR purposes. The remaining copies thereof shall be returned
to the said enterprise, one (1) copy thereof for its file, and the
remaining copy, duly stamped received by the said authorized
representative, shall be submitted to the concerned city/municipal
treasurer.

(c) Additional Attachment. — The said enterprise shall submit with
its quarterly income tax return a separate schedule showing (1) the
“gross income earned” for the quarter without, however, showing the
details on how the same has been computed; (2) the 5% special tax due
thereon; (3) the 3% tax share of the National Government; and (4) the
share of each city/municipality from the 2% tax share of cities and
municipalities. The same schedule, in addition to its duly audited
financial statements, shall be submitted with its annual final
adjustment return: Provided, however, that for this purpose, the said
schedule shall show the details how its “gross income earned” has been
computed. Provided, finally, that all ECOZONE establishments shall
secure on an annual basis a certification from PEZA that (1) the
establishment is a bona-fide PEZA-registered establishment entitled to
the 5% special tax on gross income and that (2) whenever applicable, the
percentage allocation of the 2% share in case of overlapping
municipalities/cities.

SECTION 6.       Authority to Issue Any Deficiency 5% Special Income Tax Assessment. —

(a) Jurisdiction. — Pursuant to Section 6 of the National
Internal Revenue Code of 1997, in relation to R.A. No. 7916, as amended
by R.A. No. 8748, the power to audit and assess the herein 5% special
income tax shall be under the exclusive jurisdiction of the Commissioner
of Internal Revenue or his duly authorized representative.

(b) Distribution and Collection of the Deficiency Tax Assessed.
— Three-fifth (3/5th) or sixty percent (60%) of the 5% special income
tax assessed, inclusive of increments, representing the share of the
National Government, shall be collected by the Commissioner or his duly
authorized representative. Two-fifth (2/5th) or forty percent (40%)
thereof shall be collected by the concerned city/municipality,
representing its share from the 5% special income tax on ECOZONE
enterprises.

(c) Related Party Information. — The Commissioner or his
duly authorized representative shall furnish the concerned
city/municipal treasurer with one (1) certified copy of the formal
deficiency 5% special income tax assessed against an ECOZONE enterprise
at the same time the same is issued to the said taxpayer. Hence, formal
deficiency tax assessment for issuance to such enterprises shall show
the following:

“CERTIFIED COPY:

The Treasurer
City/Municipality of _________________________
__________________________________________

Unless the taxpayer has duly protested against the deficiency tax
assessment, the same shall be paid by the taxpayer not later than the
date prescribed for its payment, as shown in the assessment notice,
otherwise, the corresponding delinquency increments shall be imposed.

Unless the taxpayer has duly protested against the deficiency tax
assessment, the same shall be paid by the taxpayer not later than the
date prescribed for its payment, as shown in the assessment notice,
otherwise, the corresponding delinquency increments shall be imposed.

The taxpayer shall inform the Treasurer of the city/municipality
concerned, in writing, whenever it protested against the aforesaid
deficiency tax assessment and shall submit therewith a copy of the
letter of protest duly filed with the BIR.

(d) Refund/Credit For Erroneously Paid 5% Special Income Tax. —

(1) In The Case Of The 3% Tax Share Of The National Government. —
In case of erroneous payment of the tax, the same may be refunded or
credited by the BIR, pursuant to the provisions of Section 204 of the
National Internal Revenue Code of 1997.

(2) In The Case Of The 2% Tax Share Of The City/Municipality.
— In case of erroneous payment of the tax, the amount erroneously paid
to the city/municipality shall be refunded by such city/municipality.

SECTION 7.       Repealing Clause . — The provisions of
Revenue Regulations No. 12-97 and all other revenue issuances which are
inconsistent herewith are hereby modified or amended accordingly.

SECTION 8.       Effectivity Clause . — These Regulations shall take effect fifteen (15) days after publication in a newspaper of general circulation.

Adopted: 12 Nov. 1999

(SGD.) EDGARDO B. ESPIRITU
Secretary of Finance

Recommending Approval:

(SGD.) BEETHOVEN L. RUALO
Commissioner of Internal Revenue