NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session
)
)
SENATE
S. No. 2454
of li'-? !&■
23 SEP 27 A 8 *43
RECEiVLD BY;
Introduced by Senator Francis G. Escudero
AN ACT
TO PROMOTE AND SUSTAIN THE INDUSTRIAL, ECONOMIC AND SOCIAL 
DEVELOPMENT IN THE CAGAYAN VALLEY REGION, AMENDING FOR THE 
PURPOSE REPUBLIC ACT NO. 7922, OTHERWISE KNOWN AS THE "CAGAYAN 
SPECIAL ECONOMIC ZONE ACT OF 1995"
EXPLANATORY NOTE
Special economic zones (SEZs) are critical in promoting and sustaining the 
industrial, economic, and social development in the countryside and instrumental 
providing decent jobs to the people residing therein, in increasing local productivity 
and incomes, and in improving the level and quality of life of common Filipinos. To 
realize these noble objectives, the charter of Cagayan Special Economic Zone Authority 
(CEZA) provides for the grant of tax exemptions and other forms of incentives that 
may be used to entice prospective investors and to ensure that existing enterprises 
remain within its territorial jurisdiction.
Over the recent years, the advent of new measures seeking to generate 
additional government revenues and to realize other socioeconomic objectives of 
government has slowly but gradually eroded the tax-exempt status enjoyed by CEZA 
investors and the operational flexibility of CEZA to grant tax and non-tax incentives. 
These, in turn, impair the ability of CEZA to increase the number of investors within 
its territorial jurisdiction and casts doubt on CEZA's ability to deliver on its promised 
incentives moving forward.


To allay these concerns, this bill seeks to exempt the CEZA from the coverage 
of Republic Act No. 11534, otherwise known as the "Corporate Recovery and Tax 
Incentives for Enterprises (CREATE) Act", and allow the same entities to be governed 
by the provisions of their respective original charters. Through this intervention, the 
provisions of the CREATE Act will be further aligned with its declared policy of creating 
a more equitable tax incentive system that allows for the inclusive growth and 
generation of jobs and opportunities and that ensures access and ease in the grant of 
tax incentives especially for applicants in least developed areas of the Philippines.
Additionally, this bill seeks to clarify, restore, and reinforce the longstanding 
tax-exempt status granted to business establishments operating within the Cagayan 
Speciai Economic Zone. As unambiguousiy provided under the Republic Act No. 7922, 
otherwise known as the Cagayan Special Economic Zone Act of 1995, this bill 
reverberates one of the CEZA's governing principles that no local or national tax shall 
be imposed on business establishments operating within the Cagayan Special 
Economic Zone, and that in lieu thereof, covered business establishments would pay 
and remit to the national government a portion of their gross income. It is the intent 
of this proposed measure to extend this incentive uniformly to all Investors in the 
territorial jurisdiction of CEZA regardless of the nature of their business, so long as 
they are qualified to avail of the such incentive.
Given the above premises, among others, consideration and approval of this 
bill is respectfully requested.
FRANC
CUDERO


NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session
)
)
SENATE
s. No. 2454
i:’'k j ^5*1
of ti)C S' - •" st<" .T
23 SEP 27 A 8 *43
RECEIVED B\:
Introduced by Senator FRANCIS G. ESCUDERO
AN ACT
TO PROMOTE AND SUSTAIN THE INDUSTRIAL, ECONOMIC AND SOCIAL 
DEVELOPMENT IN THE CAGAYAN VALLEY REGION, AMENDING FOR THE 
PURPOSE REPUBLIC ACT NO. 7922, OTHERWISE KNOWN AS THE "CAGAYAN 
SPECIAL ECONOMIC ZONE ACT OF 1995"
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
1 
Section 1. A new Section 14 shail be inserted after Section 13 of Republic Act
2 
No. 7922 to read as follows:
3 
"SEC. 14. EXEMPTIONS. -THE ZONE SHALL BE EXCLUDED FROM
4 
THE COVERAGE AND APPLICATION OF REPUBLIC ACT NO. 11534,
5 
OTHERWISE KNOWN AS THE "CORPORATE RECOVERY AND TAX
6 
INCENTIVES FOR ENTERPRISES (CREATE) ACT" AND REPUBLIC ACT
7 
NO. 11590, AND SHALL CONTINUE TO BE GOVERNED SOLELY AND
8 
OPERATED PRIMARILY IN ACCORDANCE WITH THE PROVISIONS OF
9 
THIS ACT: PROVIDED, HOWEVER, THAT THE TAX AND NON-TAX
10 
INVENTIVES EXTENDED TO INVESTORS OF COVERED INVESTMENT
11 
PROMOTION AGENCIES AS PROVIDED UNDER REPUBLIC ACT NO.
12 
11534 SHALL LIKEWISE BE EXTENDED TO COMPLIANT AND DULY-
13 
REGISTERED INVESTORS OF THE CEZA: PROVIDED, FURTHER, THAT
14 
THE REGISTERED INVESTORS OPERATING WITHIN THE
15 
TERRITORIAL JURISDICTION OF THE CEZA WHO ARE ENGAGED IN
16 
THE BUSINESS OF GAMING OR GAMBLING IN ANY KIND OR FORM
17 
SHALL BE TAXED BASED ON THEIR GROSS EARNINGS OR INCOME


1 
REGARDLESS OF THE SOURCE OR ORIGIN OF THE BETS THEY
2 
RECEIVE AND SOLELY IN ACCORDANCE WITH THE PROVISIONS OF
3 
THIS ACT: PROVIDED, FURTHERMORE, THAT SUBJECT TO RELEVANT
4 
HEALTH OR NATIONAL SECURITY LAWS, RULES OR REGULATIONS,
5 
FOREIGN GOODS AND RAW MATERIALS DESTINED FOR THE
6 
DOMESTIC MARKET BROUGHT WITHIN THE TERRITORIAL
7 
JURISDICTION OF CEZA SHALL NOT BE SUBJECT TO CUSTOMS
8 
DUTIES AND INTERNAL REVENUE TAXES SO LONG AS SUCH FOREIGN
9 
GOODS OR RAW MATERIALS REMAIN WITHIN THE TERRITORIAL
10 
JURISDICTION OF THE CEZA: PROVIDED, FINALLY, THAT RAW
11 
MATERIALS DESTINED FOR THE MANUFACTURE OF PRODUCTS FOR
12 
EXPORT ABROAD, INCLUDING MACHINERY, EQUIPMENT, SPARE
13 
PARTS, TRANSPORTS SYSTEMS NEEDED TO PRODUCE SUCH
14 
PRODUCTS FOR EXPORT ABROAD, AS WELL THOSE NEEDED OR
15 
NECESSARY TO BUILD RETIREMENT HOMES, MASS HOUSING UNITS,
16 
MEDICAL FACILITIES OR EDUCATION FACILITIES WITHIN THE
17 
TERRITORIAL JURISDICTION OF THE CEZA SHALL NOT BE SUBJECT
18 
TO CUSTOMS DUTIES AND INTERNAL REVENUE TAXES."
19 
Sec. 2. The succeeding sections are hereby renumbered accordingiy.
20 
Sec. 3. Implementing Rules and Regulations (IRR). - Within thirty (30) days
21 
from the effectivity of this Act, the Department of Finance shaii, in coordination with
22 
the Bureau of Internai Revenue and the CEZA, promulgate the rules and regulations
23 
to effectiveiy impiement the provisions of this Act.
24 
Sec. 4. Repealing Clause. - Repubiic Act Nos. 11534 and 11590 insofar as they
25 
appiy to CEZA pursuant to its mandate under this Act are hereby repeaied or modified
26 
accordingiy.
27 
AN other iaws, acts, decrees, executive orders, issuances, and rules and
28 
regulations or parts thereof which are contrary to and inconsistent with this Act are
29 
hereby repeaied, amended or modified accordingly.


1
2
3
Sec. 5. Effectivity. - This Act shall take effect fifteen (15) days after its complete 
publication in the Official Gazette or in at least two (2) newspapers of general 
circulation.
Approved,