CEBU CITY (April 26, 2024) – Some calls centers and business processing companies dodge the payment of income and other taxes by changing collars.

CTO’s Monina Paires. | 📷 RMN / jkv

Monina Paires, local treasury officer of the City Treasurer’s Office (CTO), said her office noticed that some of these companies suddenly change names in order to continue getting perks from the Philippine Economic Zone Authority (PEZA).

Paires said that these export-oriented enterprises allegedly dodge payment of income taxes in order to enjoy the 4-7 year income tax holiday (ITH) PEZA grants.  

“Ang ubang companies mag-change og name pero same building ra sila. Sometimes, i-change ra ang ilang company name pero same persons ra ang composition sa corporation,” she told Cebu City News.

This news portal interviewed Paires after she and city treasurer Mare Vae F. Reyes presented the maiden cast of Money Talks, the teleradyo program of the City Treasurer’s Office over Sugboanon Channel.

Ang ubang companies mag-change og name pero same building ra sila. Sometimes, i-change ra ang ilang company name pero same persons ra ang composition sa corporation.

Monina Paires, local treasury officer

Paires also found out that some of these companies would change names in order to avoid complying with Republic Act 7916, or the Special Economic Zone Act of 1995, which requires them to pay a two percent share to the local government unit on a quarterly basis.

According to PEZA, fiscal and non-fiscal incentives are given to registered business enterprises depending on the location and industry priority.

A call center and its employees. | 📷 Courtesy of SunStar Cebu

Fiscal incentives for export-oriented enterprises include ITH of 4-7 years and availment of special corporate income tax (SCIT) rate of five percent or enhanced deductions for 10 years for export-oriented enterprises.

Non-fiscal incentives include:

  • Tax and duty-free importation of capital equipment, raw materials, spare parts or accessories;
  • Domestic sales allowance of up to 30 percent of total sales;
  • Value Added Tax (VAT) on importation and VAT zero-rating on local purchases for goods directly related to its registered activity to include telecommunications, power and water bills.
  • Exemption from payment of national and local government taxes and fees for the period of availment of the 5 percent SCIT incentive
  • Employment of foreign nationals
  • Long-term land lease of up to 75 years
  • Issuance of a 2-year PEZA visa for foreign nationals employed by PEZA-registered companies and their dependents.

“Kung ma-register man gud sila sa PEZA, magsugod nana ilang income tax holiday and they will only be required to pay the regulatory fees to the city,” Paires said.

Paires said the CTO will ask PEZA to provide a list of export-oriented industries currently based in Cebu City for their assessment.  

Once CTO gets the list, it will verify if these companies have changed collars and send notices to the ones with questionable statuses, she said.

“If naa sa list nga wala sila ni-apply sa atoa, we will send them a notice and we will penalize them accordingly,” she added. | RMN / jkv

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