More companies keen on locating at ecozones

DOF objects to new perks

Manufacturing firms, including automotive companies, have expressed strong interest to locate in the planned domestic economic zones. However, establishment of new industrial parks still hangs at the Cabinet Economic Cluster following strong objection from the Department of Finance (DOF) due to revenue loss impact.

Elmer San Pascual, spokesperson of the Philippine Economic Zone Authority (PEZA), told reporters that the incentives and the investment environment in an ecozone proved to be attractive for investors.

“There have been strong interest from manufacturers including automotive firms and even food processing because the incentive is attractive since there is no local government intervention,” San Pascual said.

San Pascual, however, explained that the tax exemptions will certainly outweigh the economic benefits of creating domestic ecozones.

First, he said, the only tax incentives PEZA can give to these domestic economic zone locators is the perpetual 5 percent tax on gross income earned (GIE).

Section 24 of the PEZA Law allows its registered firms 5 percent GIE on all national and local taxes except real estate tax.

PEZA also grants certain allowable tax deduction on cost of sales like compensation to direct workers/ operators of machines, depreciation of machinery, direct salaries on production, raw