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BASIC PEZA- ENTERPRISE REPORTORIAL COMPLIANCE PHILIPPINES

By: Azaleah Faeyugenia Chimmin

From year to year, newly registered companies have been registering with the Philippine Economic Zone Authority (PEZA) for tax incentives it could enjoy, such as the following:
Income tax holiday for 4 to 6 years;
5% gross income taxation instead of 30% on taxable net income;
Value-added Tax (VAT) Zero-rating of local purchases;
VAT exemptions on importations; and,
Other non-fiscal incentives

Suffice it to say that the incentives of being a PEZA-registered entity in the Philippines is not automatic and is based on qualifications with applicable requires and continuing compliance with registration terms and conditions of such PEZA registration. Compliance of such requirements and reports to PEZA is being monitored by PEZA and is used as basis for issuing certifications such as annual Certificate of Zero-rating, and Certification of Incentives. Under this article, let us share you the basic continuing compliance of periodic reports by a Philippines PEZA- registered entity:

PEZA Monthly Report Philippines
All Enterprise are required to submit an EcoZone Monthly Performance Report (EZMPR), last updated in 2014. This report contains information such as the following:
• on details of responsible officers
• number and salaries of employees
• amount of sales, importations and local purchases
• labor concerns and/ or cases
• power consumption
This report is filed on or before the twenty (20) days after the month being reported by manually accomplishing the report within the Enterprise’s account or by uploading an already accomplished excel form.

PEZA Quarterly Reports Philippines
Currently, there are two (2) reports being submitted to the PEZA – Quarterly Performance Report and Quarterly Income Tax Return.
The Quarterly Performance Report (Form ERD.3.F.002) contains the following information:
• The same information as in the EZMPR but with more details
• Item of Farm-in and Farm-out
• Amount paid to telecommunications companies
This report is manually submitted to the PEZA office under the Enterprise Service Division (ESD) within fifteen (15) days after the quarter of report.
A copy of the Quarterly Income Tax Return (BIR Form 1702Q) together with a copy of the Official Receipt from the Local Government Unit (LGU) Office as proof of payment of LGU’s share of income tax, if any, is submitted to PEZA-ESD within fifteen days after filing with the Bureau of Internal Revenue (BIR).
PEZA Annual Reports Philippines
The following are yearly reports submitted to the PEZA-ESD:
 Annual Report on Actual Operations (ERF.3.F.001)

This report contains information much like the Quarterly Performance Report but with the following added details:
1. Balance Sheet and Income Statement
2. Percentage of Ownership based on nationality of stockholders
3. Details of Cost of Sales and Administrative Expenses
4. Amount of Incentives enjoyed
5. Details of Value-Added
6. Dollar Earnings and Cash Flow
7. Details of Taxes and Fees paid to the state
8. Details of Loans, Increase of Equity, Stockholders and Officers
9. Trainings attended by employees
10. Details of Equipment and/or Machinery directly used in the operation
Submission of this annual report should be made within ninety (90) days after the end of the year, fiscal or calendar by manually filing with the PEZA-ESD office.

 Details of Other Income (ERD.3.F.003)
Just as implied by the name of the report, information disclosed in this report are details income, realize and unrealized, from sources other than the registered activity/ ies.
 Data on Revenue and Taxes Paid (ERD.3.F.004)
Information contained in this report are amount of revenues earned by the Enterprise and the related taxes paid for, if any.
 Breakdown/ Schedule of Sales Per Registered Activity (ERD.3.F.005)
This report summarizes the amount of revenue earned and the number of units sold from each of the Enterprises’ registered activities.
 Financial Statements and Annual Income Tax Return (BIR Forms 1702-RT, 1702-MX, 1702-EX)

Complete copies of the audited financial statements (AFS) received by the BIR and the Annual ITR filed with the BIR are to be submitted to PEZA together with reports on Details of Other Income, Data on Revenue and Taxes Paid, and Breakdown/ Schedule of Sales Per Registered Activity. Submission with the PEZA should be made thirty (30) days after filing of the ITR and AFS with the BIR.
Penalty for non-compliance of PEZA reportorial requirements.
Non-compliance of the above reportorial requirements would result to Administrative Fines, suspension or worse cancellation of registration. Hence it is indispensable that all PEZA-registered entities observe requirements to continuously enjoy incentives that it may rightfully claim.
As such, we strongly suggest that you determine applicable PEZA reportorial requirements to your registered activity with PEZA, educate and or train on how to comply PEZA reportorial requirements, and strictly monitor such compliance for timely and proper compliance.

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About the writer:

Lea is currently leading the Tax Consultancy and Tax Compliance services of G. Pagaspas Partners & Co., CPAs. She has been in the public practice for almost four (4) years and gained experiences on pharma business, BPO, construction, retail, shipping, amusement and manufacturing. She has been handling services such as tax compliance, review, BIR audit/assessment, manual preparations, PEZA comp4r 13liance review and preparation.