Implementing Rules and Regulations of Republic Act 10708

July 20, 2016

CDC MEMORANDUM CIRCULAR NO. IPD11-16-07-44

 

Corollary to CDC Memo Circular dated 2016 February 09 (Annex A), the Implementing Rules and Regulations (IRR) of RA 10708 has been published to guide locators or entities granted Certificates of Registration & Tax Exemption (CRTEs). Copy of IRR is attached as Annex B.

Highlights of this legislation requiring direct participation/attention of CRTE holders are as follows:

1. Transitory Provisions or first submission of reports by locators to CDC shall be Taxable Year 2015 in accordance with the following reports and deadlines:

a. Income-based tax incentives: due on or before September 15, 2016

b. VAT and duty free exemptions: due on or before September 15, 2016

2. For succeeding years, CRTE holders shall file their reports within thirty days from the statutory deadline or filing the Final Adjustment Return for Income Tax and payment of tax due.

3. Non-compliance will be subject to penalty provisions which include the cancellation of registration/CRTE of the locator.

To ensure the smooth implementation of the law's mechanisms, CDC is closely coordinating with the Department of Finance (DOF) and concerned bureaus for possible consultations. We shall advise you of the schedule soon.

For information and guidance.

(SGD.) ELISEO B. SANTIAGOOfficer-in-ChargeClark Development Corporation

ANNEX A

CDC MEMORANDUM CIRCULAR

TO : ALL CONCERNED CFZ LOCATORS

SUBJECT : REPUBLIC ACT NO. 10708

DATE : 2016 February 09

In view of the enactment of Republic Act No. 10708 "An Act Enhancing Transparency in the Management and Accounting of Tax Incentives Administered by Investment Promotion Agencies (IPA)," copy of this law is disseminated to all affected Clark Freeport locators for reference and compliance.

As provided for in the RA, we wish to highlight the salient features:

1. It is hereby declared the policy of the State to promote fiscal accountability and transparency in the grant and management of tax incentives by developing means to promptly measure the government's fiscal exposure on these grants and to enable the government to monitor, review, and analyze the economic impact thereof and thereby optimize the social benefit of such incentives.

2. For registered business availing of incentives administered by the IPAs, they shall file with their respective IPAs a complete annual tax incentives report of their income-based tax incentives, value-added tax and duty exemptions, deductions, credits or exclusions from the tax base as provided in the charter of the IPA concerned, within thirty (30) days from the statutory deadline for filing of tax returns and payment of taxes.

3. The details of the tax incentives reports, as provided in the preceding paragraphs, shall be provided in the implementing rules and regulations (IRR) of this Act. (The IRR is still being finalized and details will be forwarded to all concerned locators once available)

4. We reiterate however that the same law likewise provides section 5 that ensures continuity of incentives to wit:

"Nothing in this Act shall be construed to diminish or limit, in whatever manner, the amount of incentives that IPAs may grant pursuant to their charters and existing laws; or to prevent, deter, or delay the promotion and regulation of investments, processing of applications for registrations, and evaluation of entitlement of incentives by IPAs."

5. Any registered business entity which fails to comply with filing and reportorial requirements with the appropriate IPAs and/or which fails to show proof of filing of tax returns using the electronic system for filing and payment of taxes of the BIR shall he imposed the following penalties:

(a) First (1st) violation — payment of a fine amounting to one hundred thousand pesos (P100,000.00);

(b) Second (2nd) violation — payment of a fine amounting to five hundred thousand pesos (P500,000.00); and

(c) Third (3rd) violation — cancellation of the registration of the registered business entity.

Provided, that if the failure show proof is not due to the fault of the registered business entity the same shall not be a ground for the suspension of the ITH and/or other income based tax incentives availment. cSEDTC

In this regard, the Clark Development Corporation shall cooperate with the Department of Finance and other partner agencies in the smooth implementation of this law to maximize the benefit and purposes it has been created.

For your information and guidance.

(SGD.) ARTHUR P. TUGADE

ANNEX B

Joint DOF-DTI A.O. No. 1