HOUSE OF REPRESENTATIVES
RECEIVED
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BY:
SEVENTEENTH CONGRESS Ze

First Regular Session RECITATION UNIT
1636 | BALS anv anvex ser VCE

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

House Bill No.

INTRODUCED BY: HON. GWENDOLYN F. GARCIA

EXPLANATORY NOTE

Republic Act No. (RA) 7916, which was enacted into law on 21
February 1995, created the Philippine Economic Zone Authority. It provided
for the legal framework and mechanism for the creation, operation,
administration and coordination of special economic zones (ECOZONES) in
the Philippines. The intendment of this law was to transform selected areas of
the country into highly developed agro-industrial, commercial, tourist,
banking investment and financial centers with the end in view of allowing the
flow of investors, both foreign and local, generate employment opportunities
‘and establish backward and forward linkages among industries in and
around the economic zones.

To encourage investors to operate business establishments within the
ECOZONES, RA 7916 exempted them from the payment of local and national
taxes. In lieu of these taxes, three percent (3%) of the gross income earned
by these business establishments shall be paid and remitted to the National
Government and two percent (2%) to the city or municipality where the
business enterprise is located. It must be noted, however, that while the
above-stated law allows the city or municipality to derive certain percentage
from the income of the business establishments operating within the
ECOZONES, the province to which the city or municipality belongs does not
receive any share from the income of the business enterprises operating
therein.

A city or municipality where the ECOZONE is located is part of the
territorial boundaries of a province and whose needs including those of its
barangays are being attended to by the province. Moreover, most of the
employees who serve as the necessary workforce in an ECOZONE come from
the municipalities and/or cities within a province. Justice and equity,
therefore, dictate that the province should also be included among the
recipients of the benefits extended to the local government units stated in
Section 24 of RA 7916.


The granting to a province of certain percentages from the income of
business establishments operating within the ECOZONE Is in consonance with
Sec. 18, Chap. 2, Title 1, Book 1 of the Local Government Code which
provides that local government units shall have the power and authority to
"create their own sources of revenue and to levy taxes, fees, and charges
which shall accrue exclusively for their use and disposition and which shall be
retained by them ..." and "... to have an equitable share in the proceeds
from the utilization and development of the national wealth and resources
within their respective territorial jurisdictions including sharing the same with
the Inhabitants by way of direct benefits”.

This bill, therefore, seeks to amend Sec. 24 of RA 7916 for the purpose of
granting the province where the economic zone is situated a share of one
and half percent (1.5%) of the gross income derived by the business
enterprise of whatever nature operating within the economic zone.

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nh ‘YN F. GARCIA


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

‘SEVENTEENTH CONGRESS
First Regular Session

House Bill No, 1636.

INTRODUCED BY: HON. GWENDOLYN F. GARCIA

AN ACT
AMENDING SECTION 24 OF REPUBLIC ACT NO, 7916, OTHERWISE KNOWN AS
THE SPECIAL ECONOMIC ZONE ACT OF 1995

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Section 24 of Republic Act No. 7916, otherwise known as the
Special Economic Zone Act of 1995, is hereby amended to read as follows:

"SEC. 24. Exemption from National and Local Taxes.-
Except for real property taxes on land owned by developers, no
taxes, local and national, shall be imposed on business
establishments operating within the ECOZONE. In lieu thereof, five
percent (5%) of the gross income eamed by all business
enterprises within the ECOZONE shall be paid and remitted as
follows:

“a, ONE AND ONE HALF PERCENT (1.5%) [Three percent (3%)] to
the National Government;

“D.XXXXX

“C. ONE AND ONE HALF PERCENT (1.5%) WHICH SHALL BE
DIRECTLY REMITTED BY THE BUSINESS ESTABLISHMENTS TO THE
TREASURER'S OFFICE OF THE PROVINCE WHERE THE LOCATION OF
THE ECOZONE IS PART OF ITS TERRITORIAL BOUNDARIES.”

SECTION 2. Any law or parts thereof inconsistent with any of this
provision of this Act shall be deemed repealed or modified as the case may
be.

SECTION 3. This Act shall take effect fifteen days after its publication in
the Official Gazette or in two (2) newspapers of general circulation.

Approved,