MANILA – The Philippine Economic Zone Authority (PEZA) and the Board of Investments (BOI) have finally resolved the classification of ecozone logistics service enterprises (ELSEs) as “export enterprises” that could benefit from the perks under the Strategic Investment Priority Plan (SIPP).

The PEZA shared with the media on Tuesday Memorandum Circular (MC) 2023-010 dated Feb. 3, 2023 that recognizes ELSEs as exporters under the 2022 SIPP’s activities in support of exporters.

“This is in view of the active lobbying and relentless efforts of PEZA through our letter to the BOI dated 24 February 2022, Position Paper dated 8 September 2022 to the Fiscal Incentives Review Board - Technical Committee (FIRTB-TC), and comments/inputs on the BOI MC, for the inclusion and recognition of ELSEs as activities in support of exporters and thus, entitled to the VAT (value-added tax) zero-rating incentive,” the MC read.

Before the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, ELSEs were granted fiscal incentives through PEZA Board Resolution 97-366 dated Nov. 11, 1997, or the “Guidelines for Registration and Operations of Ecozone Facilities Enterprise Engaging in Warehouse Operation.”

As the government rationalizes tax perks through the CREATE Act, the BOI and PEZA have to clarify the classification of ELSEs.

In the new PEZA MC, ELSE projects can be considered export enterprises when it renders at least 70 percent of output and/or services to another registered export enterprise and shall be engaged in integrated logistics, such as the establishment of a warehouse storage facility and procurement from local sources and/or PEZA-registered enterprises for direct export or consignment to PEZA-registered export enterprises.

“Accordingly, all ELSEs which have already filed their application/request for VAT zero-rating certification for the year 2023 and are compliant with PEZA reportorial requirements, including reports required under TIMTA, shall be issued the VAT zero-rating certificate,” the PEZA said.

It added ELSEs that have not yet filed their request for a VAT zero-rating certificate may still apply with PEZA. (PNA)