The Philippine Economic Zone Authority is reminding all PEZA-registered enterprises (locators and developer/operators) that March 15, 2019 will be the deadline for submission of the 2018 Annual Tax Incentives Report (Annex A.2) – VAT, Excise Tax, and Duty-Based Incentives Under the TIMTA Law (R.A. 10708). PEZA is advising all those submitting the report that Annex A.2 is based on the calendar period and not the accounting period.
PEZA-registered enterprises can email a soft copy of the report (in Microsoft Excel format) to [email protected] The hard copy of the report should be signed by two of the highest responsible officials of the company and submitted to the PEZA Zone Office.
The deadline for Annex A.1 – Income Tax-Based Incentives is 30 days from the mandatory filing of the final/annual income tax return with the BIR.
Filing of Tax Returns and Submission of Tax Incentives Reports
Under Section 4 of R.A. No. 10708, otherwise known as the Tax Incentives Management and Transparency Act (TIMTA), “All registered business entities are required to file their tax returns and pay their tax liabilities, on or before the deadline as provided under the National Internal Revenue Code (NIRC), as amended, using the electronic system for filing and payment of taxes of the Bureau of Internal Revenue (BIR).
For registered business entities availing of incentives administered by the IPAs, they shall file with their respective IPAs a complete annual tax incentives report of their income-based tax incentives, value-added tax and duty exemptions, deductions, credits or exclusions from the tax base as provided in the charter of the IPA concerned, within thirty (30) days from the statutory deadline for filing of tax returns and payment of taxes.”
Analyzing the impact of tax incentives on the economy
Passed into law on December 9, 2015, the TIMTA law seeks to develop methods that measure the Philippine government’s fiscal exposure while also reviewing, monitoring, and analyzing the economic impact on its grant of tax incentives. These incentives come in the form of deductions, exclusions or credits from the tax base, exemptions, and income tax holidays or ITH. The law’s primary objective is to optimize the social benefits of the incentives.
Tax reform package “2 Plus”
In 2018, the Department of Finance (DOF) proposed tax reform package “2 Plus,” which aims to expand the coverage of the department’s fiscal incentive audit in order to include all government agencies and private entities that grant exemptions.
The DOF adopted Senate Bill No. 1702, which aims to include agencies administering tax-free perks such as the Bureau of Internal Revenue, Armed Forces of the Philippines, Department of Social Welfare and Development, and Cooperative Development Authority under TIMTA’s coverge.
Since the TIMTA law only reviews tax incentives granted by investment promotion agencies, corporations, cooperatives, and private individuals, and organizations benefitting from tax exemptions will be mandated to pay liabilities and file their tax returns to the BIR under the DOF’s proposal.
To learn more about the TIMTA law, get in touch with the attorneys at Duran & Duran-Schulze. Call (+632) 478 5826 or email [email protected] today.