Ecozone logistics services enterprises are now eligible for government incentives under Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises or CREATE Act.
It comes as ELSE activity has been included in the new Strategic Investment Priorities Plan, which lists the priority industries, sectors, and businesses projects that may qualify for investment incentives.
The Board of Investment, in its Memorandum Circular 2023-001 dated 31 January 2023, clarified the coverage of logistics services as one of the activities in support of exporters under the 2022 SIPP pursuant to Section 300 of the CREATE Act and Sections 2 and 3 of its Implementing Rules and Regulations.
The same has been circularized by the Philippine Economic Zone Authority through MC 2023-010 and by the Bureau of Internal Revenue under Revenue Memorandum Circular 15-2023, both dated 3 February 2023.
“We thank the Department of Finance, the Department of Trade and Industry, the Board of Investments, and the Bureau of Internal Revenue for finally resolving our pending concern on the recognition and eligibility of ELSEs for registration with the investment promotion agencies with incentives,”€ PEZA Officer-in-Charge Tereso Panga said.
Earlier, PEZA made a case to BoI for the inclusion in the SIPP of other ecozone locators that provide support to export activities such as ecozone developers/operators, utilities, facilities and logistics service enterprises.
The BoI adopted PEZA’s recommendation but encountered a problem with the BIR RMCs that limited the grant of incentives only to what the bureau defines as export enterprise. The “limitation” effectively barred both existing (prior to CREATE) and new locator investors (under CREATE) providing support to export activities from getting incentives.
With the clarification issued by the BoI and BIR, ELSEs can now enjoy zero value-added tax on qualified local purchases, Panga said.
The MC affirms the entitlement to VAT zero rating incentives on local purchases of ELSEs registered under type 3 of Board Resolution 97-366, as amended, or the Guidelines for Registration and Operations of Ecozone Facilities Enterprise Engaging in Warehouse Operations.”
ELSEs are traders supplying production-related raw materials and equipment that cater exclusively to requirements of ecozone locators.
To date, PEZA has registered 340 ELSEs with total investments of P11.154 billion. Of these, Japanese foreign direct investment share in ELSE accounts for P3.499 billion.
Among the leading Japanese ELSEs are Nagase Philippines International Services Corporation, Inabata Philippines, Lima Logistics Corporation, Tokai Electronics Philippines and NX Logistics Philippines.