by Marino P. Lizaso V
The Philippines, through certain laws administered by incentive-giving agencies, grants specific incentives to prospective investors in order to create a business environment that is investor-friendly. An example of these laws is Republic Act (RA) 7227, as amended by RA 9400 (or the law governing Clark Special Economic Zone and Clark Freeport Zone, among others), which granted freeport and economic earned in lieu of national and local taxes as well as tax and duty-free importation of goods and capital equipment.
Back in 2012, the Department of Finance issued Revenue Regulations (RR) 02-2012 in response to the reported rampant smuggling of petroleum and petroleum products resulting in substantial revenue losses to the government. The regulations required an upfront payment by the importer to the Bureau of Customs (BOC) of value-added tax (VAT) and excise tax on the imported and/or brought directly from abroad to the Philippines, including FEZs. The subsequent export or sale of these petroleum or petroleum products to registered enterprises enjoying tax privileges within the FEZs shall be subject to zero percent VAT.