Tax-free!

By Ducky Paredes

SEE trouble ahead. The news that the Department of Finance (DOF) wants to downgrade both the Aurora-Pacific Economic Zone Authority (APECO) and the Bataan Export Processing Zone Authority (BEPZA) into just special economic zones without “free port” status and tax privileges that make importations into these ports tax-free.

These two were created by legislation – Republic Acts 10083 and 9728.

The Department of Finance (DOF) say that the tax-free status enjoyed by the two economic free ports costs at least P3 billion in foregone revenues. So, the DOF wants APECO and BEPZA reverted back to their previous status of special economic zones subject to certain taxes provided under the Philippine Economic Zone Authority law. As for APECO, which is, in addition, listed as a non-profit GOCC, the DOF says: “This is tantamount to exempting the said GOCC from tax and dividend declaration. This is inconsistent with the policy of level playing field in the government corporate sector, and the expressed policies of government on the tax and dividend treatment of GOCCs.”

Don’t people in the DOF know that when there are havens such as these, there must be someone powerful behind them?

Says the DOF: “Free ports pose huge challenge to customs authorities. Because of the ‘free flow’ of all goods into the free ports and non-imposition of taxes and duties, the free ports become very vulnerable to smuggling activities that cause a heavy drain on our revenue stream and pose unfair competition to our domestic industries.

“The country does not need another free port to develop growth areas, but more infrastructure to be built by the national government.”

APECO, now practically run by one political family, and BEPZA used to be “merely” special economic zones.

The old Bataan special economic zone was under the administrative supervision of PEZA. But recent laws gave both the status of a free ports, thus, making all importations into the zone, including consumer goods, tax and duty free.

What the DOF wants is fine; just another step that needs to be taken in leveling the playing field. But, isn’t there still another one of these north of Aurora? Why isn’t that one — where all the second-hand cars from Japan ender the country –being noticed by the DOF. If the DOF has noticed it, why is it not being mentioned?

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Read more: http://www.malaya.com.ph/12012010/edducky.htm

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