PEZA FIRM ON MOVE VS. ERRANT LOCATORS; DTI BACKS 3-WAY MOA

THE Philippine Economic Zone Authority (Peza) will not lift its punitive actions against two locators caught redhanded manufacturing tobacco products without proper permits until the Bureau of Internal Revenue (BIR) clears them of any violations.

is, as the investment promotion agency agrees with the call of the Department of Finance (DOF) to implement stricter tax regulations on cigarette manufacturers intending to establish shops in the country’s special economic zones.

e regulator of economic zone locators has ordered the suspension of the incentives and operations of GB-BEM and GB Global since February, Peza Director General Charito Plaza told the B M . Earlier this month, Peza said the companies were subjects of investigation by the agency after a BIR raid revealed that they were operating without the requisite registration.

Plaza said previously that Peza will follow its rules and regulations regarding applicable punishment—separate from whatever action BIR enforces against the alleged erring companies—for said locators. “We suspend their incentives and operations until cleared by BIR,” Plaza said.

Among the incentives of a Peza-registered enterprise are income tax holiday, tax and dutyfree raw materials importation, capital equipment, machineries and exemption in other related fees.

e Peza chief said GB-BEM and GB Global also got a temporary restraining order “from Court of Tax Appeals and those con scated by BIR were returned to the companies.” Earlier, the investment promotion agency said it was withholding the import shipments of the companies until a writ of preliminary injunction was issued by the courts.

e products of the two enterprises are all for export, which means they have no sales from the domestic market, Plaza said, explaining this is the reason the

rms were not registered with the BIR. However, she clari ed these

rms are subject to 5-percent tax on gross income earnings.

‘Loophole’ alarms DOF

BUT this “loophole,” the Finance department said on Tuesday, has allowed the ecozone locators to allegedly produce unregistered cigarettes and supply them illicitly in the country.

DOF noted that Peza registration requirements do not include compliance and submission of secondary licenses or authorization from agencies, like the BIR, for locator-applicants that produce regulated products such as cigarettes, medicines, oil and alcohol.

With this concern, Finance Secretary Carlos G. Dominguez III said that all cigarette manufacturers planning to establish operations in a special economic zone in the country will soon be required to register with the BIR rst.

“is is the misunderstanding here, so we agreed to have a MOA [memorandum of agreement] with BIR to put in Peza application and registration form the need to register every brand whether for export or domestic sales,” Plaza said.

e Department of Trade and Industry (DTI) threw its support behind the measure.

“We support that. Peza reported to me they are already jointly working on this with BIR some weeks ago,” Trade Secretary Ramon Lopez told this newspaper.

e director general said the mandatory registration with BIR will also allow proper monitoring of manufacturing and trading of cigarettes—and other products likely to be smuggled—among economic zone locators.