Locators in this Freeport who are classified as Domestic Market Enterprises (DMEs) may continue to avail of their duty exemption on imports granted to them prior to the passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
In a letter from the Fiscal Incentives and Review Board (FIRB), Assistant Secretary of Finance and Head of the FIRB Secretariat Juvy C. Danofrata said that “all Registered Business Enterprises (RBEs) availing of the transitory provisions under CREATE Act may continue to avail of non-income related tax incentives subject to the provisions under Rule 18, Section 5 of the CREATE Act and its Implementing Rules and Regulations.”
This confirmation came after the Clark Development Corporation (CDC), headed by its President and CEO Atty. Agnes VST Devanadera, sent an inquiry to the FIRB on whether the RBEs classified as DMEs availing of transitory provisions under CREATE Act may continuously avail non-income related tax incentives such as the duty –free importations.
On FIRB’s reply to CDC, Danofrata further stated that the duty exemption on importation of capital equipment raw materials, spare parts, and accessories incentive may still be enjoyed by the transitory DMEs provided that they were availing such incentive at the time that the CREATE Act became effective.
Meanwhile, FIRB also mentioned in its letter that Value Added Tax (VAT) exemption on importation and VAT zero-rating on local purchases incentives may no longer be availed by DMEs, as this can only be availed as a set of incentives for transitory Export Enterprises.
“Duty exemption, VAT exemption on the importation, and VAT zero-rating on local purchases must be read as the set of incentives available to transitory RBEs classified as Export Enterprises (EEs). Such incentive, as a set, thus, cannot be availed by DMEs. Nonetheless, DMEs can be allowed to continue availing of the duty-free incentive on importation,” the FIRB said.
Following the response of the FIRB, Devanadera ordered for the immediate reactivation of CDC’s E- Transit Admission Permit System (ETAPS) and Intercommerce Network Services (INS) accounts of all affected DMEs that are under the transitory period. This will allow the DMEs who were previously holders of Certificates of Registration and Tax Exemption (CRTE) with Full Incentives to resume and continue to process their importation of covered goods. Similarly, this will enable them to facilitate their duty exempt importations until the expiration of the transitory period of ten years on April 10, 2031.
DME refers to “any enterprise registered with the Investment Promotion Agency other than export enterprise,” as stated in Section 293 (D) of the Republic Act No. 11534 also known as CREATE Act.