Exemption of PEZA-Registered Economic Zone Enterprises Paying the Special 5% Tax on Gross Income from Paying the Power Distribution Franchise Tax

May 3, 2004 PEZA MEMORANDUM CIRCULAR NO. 015-04 TO : Economic Zone Developers and Locator Enterprises SUBJECT : Exemption of PEZA-Registered Economic Zone Enterprises Paying the Special 5% Tax on Gross Income from Paying the Power Distribution Franchise Tax Please be informed that PEZA-registered economic zone enterprises, which are paying the special 5% tax on gross income, are exempted from paying the Power Distribution Franchise Tax being collected by power distribution utilities, pursuant to the provisions of Republic Act No. 7916 ("The Special Economic Zone Act of 1995"), as amended by Republic Act No. 8748, and the National Internal Revenue Code, as follows: Republic Act No. 7916, as amended by Republic Act No. 8748 "Section 24. Exemption from National and Local Taxes. Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows: (a) Three percent (3%) to the National Government; (b) Two percent (2%) which shall be directly remitted by the business establishments to the treasurer's office of the municipality or city where the enterprise is located." National Internal Revenue Code of 1997 "Section 119. Tax on Franchises. Any provision of general or special law to the contrary notwithstanding, there shall be levied, assessed and collected in respect to all franchises on radio and/or television broadcasting companies whose annual gross receipts of the preceding year does not exceed Ten million pesos (P10,000,000.00), subject to Section 236 of this Code, a tax of three percent (3%) and on electric, gas and water utilities, a tax of two percent (2%) on the gross receipts derived from the business covered by the law granting the franchise: . . ." For the guidance of all concerned. ISCTcH (SGD.) LILIA B. DE LIMA Director General