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RMC No. 53-2023: Provides clarifications on the entitlement of economic zone developers and operators to the Value-Added Tax (VAT) zero-rating on local purchases of goods and services directly and exclusively used in the registered project or activity

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Summary

RMC No. 53-2023 clarifies when economic zone developers and operators are entitled to VAT zero-rating on local purchases of goods and services used directly and exclusively in their registered project or activity.

Key points

  1. Activities in support of exporters. BOI MC No. 2022-003 added the development and operation of economic zones, and industrial parks and buildings for exporters, to Activities in Support of Exporters under the 2020 Investment Priorities Plan (transitional SIPP). Zones and parks must have infrastructure such as paved roads, power, water, drainage, sewerage treatment, pollution control and communication facilities.
  2. New buildings outside NCR. Covered are new buildings outside NCR, declared as an economic zone or within export or Freeport zones, with at least 10,000 square meters of contiguous land. They need a high-speed fiber-optic backbone and gateway or WAN, clean uninterruptible power, computer security and building monitoring systems, and other IPA requirements. At least seventy percent (70%) of leasable or saleable areas must go to exporters.
  3. Income tax holiday and phasing. Revenues from tenants engaged in activities not allowed for a registered business enterprise under Section 293(M) of the CREATE Act get no Income Tax Holiday. Phased development is allowed if the whole project is completed within five (5) years, unless the IPA Board approves otherwise.
  4. Classification and VAT incentives. A qualifying developer or operator may be classified as an export enterprise and gets the VAT incentives under the CREATE Act. A non-qualifying one is a domestic market enterprise under Item D(I)(8)(j) of the 2020 IPP guidelines (BOI MC No. 2021-001) and gets no VAT incentives.

Who is affected

  • Economic zone developers and operators
  • Industrial park and building developers for exporters

Deadlines and effectivity

  • Phased development completed within five (5) years unless otherwise approved by the IPA Board

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.

Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.