[ Malaya.com.ph ] November 30, 2010
The Department of Finance (DOF) is pushing for the downgrading of the Aurora-Pacific Economic Zone Authority (Apeco) and the Bataan Export Processing Zone Authority (BEPZA) into special economic zones by stripping them of their "free port" status and of their tax privileges.
The DOF said amending the two laws, RAs 10083 and 9728, which created the two freeport zones, respectively, would redound to either savings or fresh revenues of at least P3 billion a year.
The finance department estimates that blanket tax-free status enjoyed by the two economic free ports costs at least P3 billion in foregone revenues annually.
The DOF stressed Apeco and BEPZA should be reverted back to their previous status of special economic zones and be subject to certain taxes provided under the Philippine Economic Zone Authority law.
The finance department singled out Apeco, which it said should be stripped of its "non-profit" character and start remitting some taxes and dividends.
"This is tantamount to exempting the said GOCC from tax and dividend declaration. This is inconsistent with the policy of level playing field in the government corporate sector, and the expressed policies of government on the tax and dividend treatment of GOCCs," DOF said in a position paper.
The DOF said the two freeports would only serve as smuggling havens with unscrupulous groups taking advantage of its "tax-free" status.
"Free ports pose huge challenge to customs authorities. Because of the ‘free flow’ of all goods into the free ports and non-imposition of taxes and duties, the free ports become very vulnerable to smuggling activities that cause a heavy drain on our revenue stream and pose unfair competition to our domestic industries," the agency said.
It added: "The country does not need another free port to develop growth areas, but more infrastructure to be built by the national government."
Both Apeco, which is now at the center of a controversy for being practically run by one political family, and BEPZA used to be "merely" special economic zones.
The old Bataan special economic zone was under the administrative supervision of PEZA. But recent laws gave both the status of a free ports, thus, making all importations into the zone, including consumer goods, tax and duty free.