The Fiscal Incentives Review Board (FIRB) has said that the Philippine Economic Zone Authority (PEZA) has failed to properly account for investments made by its locators and cannot provide complete data on the operations of certain companies.
In a statement on Wednesday, the Department of Finance (DoF) said PEZA had submitted incomplete information regarding some of the investment levels and markets served by its locators, after being asked to produce such data.
Finance Secretary Carlos G. Dominguez III chairs the FIRB.
In a statement, PEZA said its deadline for submitting its reports to the FIRB had not yet expired.
The FIRB was seeking information to monitor locators’ compliance with the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, to determine their eligibility for incentives such as tax exemptions and a special corporate income tax.
“PEZA did not provide us with the actual investment data. They said they weren’t monitoring it,” FIRB Deputy Secretary for Finance and Head of the Secretariat Juvy C. Danofrata was quoted in her report to a recent DoF meeting as saying.
Asked to comment, PEZA chief executive Charito B. Plaza said in a statement that the report issued by the FIRB was “erroneous and misleading” and designed to “embarrass PEZA as an investment promotion agency (IPA)”.
“PEZA is convinced that the benefits of investment incentives outweigh the lost taxes,” she added.
On the specific issue of incomplete data, PEZA said the “accepted practice” for APIs before Republic Act 11534 or the CREATE Act came into effect was to submit monthly investment reports. foreigners approved at the Ministry of Commerce and Industry. Similar reports have been filed quarterly with the Philippine Statistics Authority (PSA).
“It is accepted practice for all APIs, including PEZA, to monitor the committed investments of our businesses. The PSA publishes on its website quarterly reports on foreign investments approved on the basis of the consolidated API submission. When the CREATE Act came into force in April 2021, the FIRB (was) included in the monthly submission of our reports.
“The obligation to monitor the approved and actual amount of investments of (registered business enterprises) is a report imposed only under the CREATE Act under Section 205 with the filing of the annual benefit report. Most of our RBEs submitted these reports to the FIRB on June 15, while PEZA has until July 15 to submit our reports to the FIRB.
Of the 196 companies registered with PEZA, the reports of 12 contained no information on levels of invested capital, while 11 others contained no information on the markets they served, the DoF said.
The DoF said that as of April 30, only four investment promotion agencies were able to fully comply with the requirements – the Bases Conversion and Development Authority, John Hay Management Corp., Poro Point Management Corp. and the PHIVIDEC Industrial Authority.
“These reports are important to enable the FIRB to fulfill its oversight and oversight function of APIs and the administration and granting of tax incentives generally,” Ms. Danofrata said.
She added that these reports are also shared with other government agencies, particularly the Bureau of Internal Revenue, for tracking and auditing purposes. She also said that the FIRB Secretariat sent follow-up letters to APIs whose submissions were incomplete or missing.
The FIRB found that the 136 companies registered with the Board of Investments had invested capital of P43.12 billion, of which 127 served the domestic market and the remaining nine were export oriented.
Other IPAs are Bataan Free Zone Authority, Aurora Economic Zone and Freeport Authority, Cagayan Economic Zone Authority, Clark Development Corp., Regional Board of Investments of Bangsamoro Autonomous Region in Muslim Mindanao, Subic Bay Metropolitan Authority, Tourism Infrastructure and Enterprise Zone Authority and Zamboanga City Special Economic Zone Authority.
All APIs, including PEZA, had 348 companies at the end of April, of which 237 serve the domestic market while 100 are exporters.
“The real estate, services and manufacturing sectors are the industries with the highest number of registrants Ifrms. Of the 348 Ifrms, 25 have no information about their industry classIfcation,” Ms. Danofrata said. — Tobias Jared Tomas