(04 April 2002
MEMORANDUM CIRCULAR NO. 2002-007
To:
EZA-REGISTERED ECOZONE EXPORT ENTERPRISE
Subject: Procedures and Guidelines on the Implementation of PEZA Board
Resolution No. 01-161 re the Determination of the Start of
‘Commercial Operations (SCO) as the Starting Date for the
Availment of the Income Tax Holiday (ITH) Incentive
Pursuant to PEZA Board Resolution No. 01-161 dated 10 May 2001, the following guidelines
and procedures shall govern the determination of the Start of Commercial Operations
(SCO) of PEZA-registered "New" and / or “Expansion” projects of economic zone export
enterprises to serve as starting date for the availment of the Income Tax Holiday (ITH)
Incentive:
1. For the purpose of the establishing the starting date of a PEZA-registered economic zone
export enterprise's availment of its Income Tax Holiday (ITH) incentive, the date of the
“Start of Commercial Operations” (SCO) shall be the date specified in its Registration
‘Agreement with PEZA, or the verified actual date when it begins commercial production of
its registered product, whichever comes first.
2. Prior to the actual start of its commercial operations, a PEZA-registered export enterprise
shall submit to the PEZA-Enterprise Regulations Department (ERD), through the PEZA
‘Administrator / Manager in the economic zone where it is located, monthly progress reports.
fn its project implementation, which shall include the utilization of import permits issued by
PEZA, construction of its bullding(s), installation ef machinery and equipment, contractual
agreements relevant to the implementation of its project, activities of foreign nationals and
non-resident alien employees granted visas through PEZA and other pertinent information
as may be required by PEZA.
Where an export locator enterprise fails to submit the required monthly reports, PEZA shall
conduct inspection of the export enterprise's established facilities, and’ undertake
evaluation, audit and inventory of the implementation of the project, particularly
Importations covered by PEZA's tax and duty free incentives, for the purpose of determining
the status / progress of the project's implementation, without prejudice to the imposition of
applicable fines or penalties on the export enterprise for its failure to submit the required
monthly reports.
3. A PEZA-registered export enterprise, which anticipates that it will not be able to start
commercial operations on the SCO date indicated in its Registration Agreement (or in its
application for registration in case its Registration Agreement does not indicate its SCO
date), shall inform in writing the PEZA Administrator/Manager in the economic zone where
itis located of the adjusted or new SCO date,
Subsequently, the export enterprise shall submit to the PEZA-Enterprise Regulations
Department (ERD) a notarized certification of its actual SCO date, duly attested by the
Zone Administrator / Manager, within seven (7) days from the actual SCO date.
4, Where a PEZA-registered locator enterprise does not start commercial operations on the
SCO date indicated in its Registration Agreement and also falls to notify the PEZA
‘Administrator / Manager in the economic zone where it is located of its adjusted or new
SCO date, or where the actual SCO date cannot be clearly verified or determined, the date
of the first importation of raw materials by the export enterprise shall be adopted as its
SCO date, for the purpose of establishing the starting date of the export enterprise's
availment of its ITH incentive, without prejudice to PEZA imposition of applicable fines or
penalties on the export enterprise for its failure to formally inform PEZA of its adjusted/new
and actual SCO, as required.
5. PEZA shall automatically cancel the registration of an economic zone export enterprise
which has not started actual commercial operations after one (1) year from the SCO date
indicated in its Registration Agreement, or the adjusted / new SCO which it has formally
Informed PEZA of.However, the PEZA Board may re-instate said registration, provided the export enterprise
files a written request for re-instatement with PEZA and, provided further, that It is able to
establish that project Implementation has actually commenced, as may be evidenced by
any of the following:
‘+ importation of production equipment and machinery;
‘+ payment of lease rentals on the project site or acquisition of land for the project site;
and / or
‘+ such other undertakings that will indicate that the economic zone export enterprise is,
Intent on implementing its PEZA-registered project.
6. The following economic zone export enterprises, which were registered with EPZA/PEZA
prior to the issuance of these guidelines and which started actual commercial operations
later than the SCO dates indicated in their respective Registration / Supplemental
Agreements, may re-apply with the PEZA Enterprise Regulations Department (ERD) for
adjustment of their SCO dates, within ninety (80) days from the issuance of this Guidelines,
provided their ITH periods have not yet lapsed:
‘+ Export enterprises which have previously filed applications for adjustment of their
SCOs within the one (1) year period prescribed in PEZA Board Resolution No. 95-158
‘and PEZA Memorandum Circular No. 96-0008;
‘+ Export enterprises which have previously filed applications for adjustment of their
SCOs beyond the one (1) year period prescribed in PEZA Board Resolution No. 95-
185 and Memorandum Circular No, 96-0008; and
‘+ Export enterprises whose applications for adjustment of their SCOs have been denied
in the past
PEZA-registered locator enterprises, which are already availing of the 5% Gross Income Tax
incentive or which are already paying the regular corporate income tax, shall not be
qualified to re-apply for adjustment of their SCOs.
7. Export enterprises shall submit the following documentary requirements, in connection
with their re-applications for adjustment of their SCOs as described in Item No. 6 above
‘+ Letter-request for SCO adjustment or for reconsideration of the PEZA denial of a
previous application, signed by the CEO of the locator enterprise;
‘+ Anotarized certification of the date of the actual start of commercial operations of the
locator enterprise, duly attested by the PEZA Administrator / Manager in the
‘economic zone where the enterprise is located;
‘+ Copy of documents evidencing first importation of raw materials, duly validated by
the Zone Administrator / Manager.
‘+ Audited Financial Statements for the first year of operations and pre-operations, if
applicable; and
‘ Official Receipt on payment of the P1,200 Filing Fee.
‘This Memorandum Circular shall take effect immediately and shall supersede Memorandum
Circular No. 96-0008 dated 18 December 1996,