VAT reforms on PEZA registered locators | KPMG | PH

VAT reforms on PEZA-registered locators

VAT reforms on PEZA-registered locators

by Eugene M. Pulga

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VAT reforms on PEZA locators

With the passage of House Bill (HB) No. 5636 in the House of Representative on May 31 and pending deliberation of Senate Bill (SB) No. 1408 in the Senate, much has been discussed about the reforms being proposed on the current National Internal Revenue Code (NIRC). One of the sectors that would be affected by the proposed changes, specifically on the value-added tax (VAT), are the Philippine Economic Zone Authority (PEZA)-registered locators. Let us take a closer look at the proposed changes on the VAT and how they would affect them.

I. Income Tax Holiday (ITH)

When the PEZA-registered locators are still the ITH stage, they are generally subject to the 12 percent (VAT) on theirs sales unless qualified to zero percent VAT on their sale of goods or services subject to certain conditions. This scenario would still remain the same 

II. 5 percent preferential income tax rate

When the ITH period expires, pursuant to RA No. 7916, the PEZA-registered locators would be subject to the five percent preferential income tax rate on their gross inocme, in lieu of local and national taxes.

 

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