Company brings tax issue vs PEZA to court

CEBU, Philippines - The Primary Properties Corporation (PPC) filed a civil case for declaratory relief against the Philippine Economic Zone Authority (PEZA) for scrapping the five percent preferential tax on gross income tax incentive.

Earlier, PEZA passed Board Resolution No. 12-083 dated February 28, 2012 citing that the PPC will no longer be entitled of their incentives in accordance with Board Resolution No. 11-066 dated February 17, 2011.

However, PPC questioned the resolution, claiming this violated Republic Act 7916 otherwise known as The Special Economic Zone Act.

The PPC, in its petition for declaratory relief, stated that “refusing to grant said incentive to petitioner was issued in clear violation of the wordings of RA 7916 and its implementing rules and regulations that Ecozone Developers or Operators are entitled to the incentive of availing of the 5% preferential tax rate on gross income.”

PPC is a corporation operating PEZA-accredited Information Technology (IT) buildings both at the Mactan Export Processing Zone and Asiatown IT Park, Cebu. PPC is registered with the PEZA as an Ecozone Facilities Enterprise pursuant to amended PEZA certification of registration.

On February 28, 2012, the PPC said the PEZA granted their application for registration to construct and operate IT Building with a gross floor area of 26,000 square meters, more or less, identified as Lots 1 and 2.

The PPC said that on that same date, PEZA passed a board resolution invoking the 2011 resolution saying they are not entitled to PEZA incentives.

The PEZA resolution reads: “Resolved, That the PEZA Board hereby approves the removal of the 5% Gross Income Tax incentive to developers/operators of new IT Parks and Centers in Cebu City.”

The PPC said they asked for reconsideration but this was denied. Because of that, the PPC is seeking the assistance of the court.

In its petition, the PPC asked the court to declare null and void the PEZA board resolution. The company also asked the court to declare that they will be entitled to a five percent gross income tax incentive of the said project.

The PPC said the board resolution was not published in a newspaper of general circulation. They asked the court to determine the “validity and constitutionality” of the said resolution.  (FREEMAN)