An Ordinance Declaring PEZA-Registered Enterprises Operating in the Ecozones within the Territorial Jurisdiction of the City of Cebu as Exempt from All Local Taxes, Except Real Property Taxes

September 22, 2004 Excerpt from the Minutes of the Regular Session Held by the Sangguniang Panlungsod of the City of Cebu in its Session Hall on September 22, 2004. RESOLUTION NO. 04-0908 The Sangguniang Panlungsod of the City of Cebu, on motion of Members Archival and Pacaa, seconded by Member Pasquera. RESOLVED, to approve the following ordinance: CEBU CITY ORDINANCE NO. 2016-04 AN ORDINANCE DECLARING PEZA-REGISTERED ENTERPRISES OPERATING IN THE ECOZONES WITHIN THE TERRITORIAL JURISDICTION OF THE CITY OF CEBU AS EXEMPT FROM ALL LOCAL TAXES, EXCEPT REAL PROPERTY TAXES WHEREAS, to encourage more investments in the ECOZONE within the territorial jurisdiction of the City of Cebu, and pursuant to the tax exemptions granted to PEZA-registered enterprises under R.A. 7916, there is, therefore, a need for the enactment of an enabling City Ordinance reinforcing R.A. 7916, as amended by R.A. 8748, which declares PEZA-registered enterprises as exempt from all local taxes; WHEREAS, R.A. 7916, otherwise known as the "SPECIAL ECONOMIC ZONE ACT of 1995," grants tax exemptions to all PEZA-registered enterprises operating within the ECOZONE; WHEREAS, Sec. 23 of R.A. 7916 provides that business establishments operating within the ECOZONES shall be entitled to the fiscal incentives as provided for under Presidential Decree No. 66, the law creating the Export Processing Zone Authority, or those provided under Book VI of Executive Order (E.O.) No. 226, otherwise known as the "Omnibus Investment Code of 1987"; WHEREAS, the City of Cebu, in the year 2003, experienced an influx of investments on the Information Communication Technology as Cebu province was officially declared as the second largest information technology (IT) hub in the Philippines; HTcADC WHEREAS, on February 27, 2001, Presidential Proclamation No. 12 established the Cebu Asiatown IT Park, located at Lahug, Cebu City; WHEREAS, the Cebu Asiatown IT Park, as a PEZA-accredited ECOZONE, serves as business address to at least five (5) PEZA-registered enterprises, and expected to house more PEZA-registered enterprises especially with Business Process Outsourcing (BPPO)-related businesses establishing as the main economic driver for the Philippines since the past year; WHEREAS, such flowing-in of investments would necessarily translate into more employment opportunities for the people of Cebu City; WHEREAS, Sec. 192 of the Local Government Code of 1991 provides that "local government units may, through ordinances duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may deem necessary"; NOW, THEREFORE, in view of the foregoing premises, the Sangguniang Panlungsod of the City of Cebu, in a regular session assembled, hereby ordains that: SECTION 1. Exemption. All PEZA-registered enterprises operating in the ECOZONEs within the territorial jurisdiction of the City of Cebu shall be exempt from all local taxes, except real property taxes; PROVIDED, that the exemptions shall apply upon the effectivity of the enterprise's PEZA Registration; PROVIDED, FURTHER, that after the income tax holiday (ITH) period, PEZA-registered enterprises shall directly remit to the City of Cebu the two percent (2%) of the five percent (5%) of the gross income earned by these enterprises, as final tax in lieu of all national and local taxes, as provided in Republic Act 7916; PROVIDED, FURTHERMORE, that the payment of the two (2%) percent final tax to the City Treasurer's Office shall be made within three (3) working days from the deadline set by the Bureau of Internal Revenue (BIR) for payment of corporate income taxes; PROVIDED, FINALLY, that those enterprises operating outside of the ECOZONE but authorized by the PEZA Board, through a resolution duly passed, shall be entitled to the same tax exemptions; SECTION 2. Documentary Requirements . All PEZA-registered enterprises qualified to avail of the tax exemptions granted under Sec. 1 hereof shall submit their proof of entitlement to exemption to the City Treasurer's Office on or before the deadline for the renewal of Mayor's Permit, or on or before January 20 of each year. CAIHTE PEZA-registered enterprises shall submit their Letter-applications for exemptions to the City Treasurer's Office together with their PEZA Certificates of Registration and a Certification from PEZA that they are enterprises of good standing and have not committed any violation whatsoever to the PEZA Act, and a PEZA Resolution authorizing a PEZA-registered enterprise to operate outside of the ECOZONE, as the case may be; PROVIDED, that upon the effectivity of this Ordinance, a newly registered PEZA enterprise shall submit, instead of a letter of application for exemption, its SWORN STATEMENT that it has been granted a PEZA Certificate of Registration, together with a Certified true copy of the PEZA Certificate of Registration, within thirty (30) days from receipt of such Certificate. Compliance thereto shall entitle the said enterprise exemption of the city's local taxes, except real property taxes. PROVIDED, FURTHERMORE, that PEZA-registered enterprises shall indicate whether they are using the calendar year or the fiscal year. And if and when they are using the fiscal year, they should indicate therein the end of their fiscal year so that it would be the basis of the City Treasurer's Office of the City of Cebu to collect. SECTION 3. PEZA-registered Enterprises operating in the ECOZONEs within the territorial jurisdiction of Cebu City shall renew their Mayor's Permit annually as a pre-requisite to availment of tax exemptions as provided for under Section 1 hereof. However, they shall be exempted from payment of fees relative to the release of the Mayor's Permit. SECTION 4. Penalties and Surcharges on Unpaid Taxes . A surcharge of twenty-five per cent (25%) of the amount of taxes not paid on time and an interest rate of two per cent per month of the unpaid taxes including surcharges, shall be imposed on PEZA-registered enterprises, but in no case shall the total interest on the unpaid amount or portion thereof shall exceed thirty-six (36) months. SECTION 5. Separability Clause . Should any portion of this ordinance be declared unconstitutional or invalid by any court of competent jurisdiction, those that are not so declared shall remain in full force and effect. SECTION 6. Repealing Clause . Any ordinance or provision thereof which are inconsistent with this ordinance shall be deemed repealed or modified accordingly. SECTION 7. Effectivity Clause . This ordinance shall take effect after fifteen (15) days following its publication. CARRIED UNANIMOUSLY. I hereby certify to the correctness of the aforequoted resolution/ordinance. (SGD.) ESTRELLA F. DE LOS REYES City Secretary ATTESTED: (SGD.) HILARIO P. DAVIDE III Acting Presiding Officer APPROVED: (SGD.) TOMAS R. OSMEA Mayor October 2004