REVENUE MEMORANDUM CIRCULAR NO. 53-2023 issued on May 11, 2023 clarifies 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.
              The Board of Investments (BOI) Memorandum Circular (MC) No. 2022-003 which amended the Specific Guidelines of Activities in Support of Exporters under the 2020 Investment Priorities Plan (IPP), also known as the transitional Strategic Investment Priority Plan (SIPP), included the development and operation of economic zones; and industrial parks and buildings for exporters, as “Activities in Support of Exporters”.
                    This covers the development and operation of economic zones, and industrial parks within export or Freeport zones with integrated facilities for export-oriented enterprises. Economic zones and industrial parks shall have infrastructure such as paved roads, power system, water supply, drainage system, sewerage treatment facilities, pollution control systems, communication facilities, and other infrastructure/facilities needed for the operation of exporters located therein.
                   This also covers the development and management of new buildings located outside NCR, declared as an economic zone or within export or Freeport zones, with a minimum contiguous land area of 10,000 square meters with the following features:
             High-speed fiber-optic telecommunication backbone and high-speed international
               gateway facility or wide-area network (WAN); or any high-speed data
               telecommunication system that may become available in the future;
             Clean, uninterruptible power supply;
             Computer security and building monitoring and maintenance systems (e.g.,
               computer firewalls, encryption technology, fluctuation controls, etc.); and
             Any other requirements as may be determined by the Board of the concerned
               Investment Promotion Agencies (IPAs).
            At least seventy percent (70%) of the leasable/saleable areas shall be dedicated to exporters.
             Revenues arising from clients/tenants engaged in activities that are not allowed pursuant to the definition of a registered business enterprise under Section 293(M) of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act will not be entitled to the Income Tax Holiday incentive.
                Phased development of an economic zone or industrial park may be allowed, provided
the whole project is completed within five (5) years unless otherwise approved by the Board of the concerned IPA. These amendments shall apply to all projects qualified under the CREATE Act.
            Based on the foregoing, the ecozone developer and operator may be classified as export enterprise if it meets the qualifications stated above, in which case, it shall also be entitled to the VAT incentives under the CREATE Act.
                 In case an enterprise is not qualified based on the amended guidelines, the ecozone developer or operator will be classified as a domestic market enterprise under Item D(I)(8)(j) of the General Policies and Specific Guidelines to Implement the 2020 IPP which covers the development of domestic industrial zones, as circularized by the BOI thru MC No. 2021-001. Consequently, it shall not be entitled to the VAT incentives under the CREATE Act.