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OTHER SPECIAL ECONOMIC ZONE ACTS

1. Republic Act No. 7903

 An Act Creating a Special Economic Zone and Free Port in the City of Zamboanga creating for this
purpose the Zamboanga City Special Economic Zone Authority, Appropriating Funds Therefore, and for
other Purposes.

This Act shall be known as the “ZAMBOANGA CITY SPECIAL ECONOMIC ZONE ACT of 1995.”

Approved: February 23, 1995

 Sec. 2 Declaration of Policy

- It is hereby declared the policy of the State to encourage and promote the attainment of a sound and
balanced industrial, economic and social development in the country through the promotion of private
enterprises.

- Towards this end, the State shall endeavor to establish special economic zones in suitable and selected
areas in the country where enterprise will be given incentives to create an environment conducive to
business.

- This shall be the means to attract the local and foreign investors, general employment opportunities, and
encourage the regional dispersal of industries.

 Sec. 3 Creation of the Zamboanga City Special Economic Zone

- In accordance with the foregoing policy and subject to the concurrence of the City Government of
Zamboanga affected by the Zone, there is hereby established a Special Economic Zone in the City of
Zamboanga to be known as the Zamboanga City Special Economic Zone, hereinafter referred to as
the ZAMBOECOZONE.

- The specific metes and bounds of the ZAMBOECOZONE shall be more particularly defined in a
Presidential Proclamation that shall be issued for this purpose.

 Proclamation No. 1099, s. 1997 (09/27/1997) - DESIGNATING AND DEFINING CERTAIN

PARCEL OF LAND OF THE PUBLIC DOMAIN SITUATED IN BARANGAYS UPPER LA
PAZ, UPPER LABUAN, UPPER LIMPAPA AND UPPER PATALON, ZAMBOANGA CITY,
AS PART OF THE ZAMBOANGA CITY SPECIAL ECONOMIC ZONE AND FREEPORT
(ZAMBOECOZONE)

A PARCEL OF LAND containing an area of FIFTEEN THOUSAND THREE HUNDRED

NINETY-ONE (15,391) hectares more or less.

 Proclamation No. 977, s. 1997, 02/28/1997 - DESIGNATING AND DEFINING A PORTION OF

THE PHILIPPINE COCONUT AUTHORITY RESEARCH CENTER SITUATED IN SAN
RAMON, ZAMBOANGA CITY, AS PART OF THE ZAMBOANGA CITY SPECIAL
ECONOMIC ZONE AND FREEPORT (ZAMBOECOZONE)

A PARCEL OF LAND Lot No. 5533-A containing an area of FIVE HUNDRED TWENTY-SEVEN
THOUSAND EIGHT HUNDRED NINETY-EIGHT (527,898) SQUARE METERS, more or less.

A PARCEL OF LAND, Lot No. 5533-B containing an area of SEVENTEEN THOUSAND SIX
HUNDRED FIFTY-TWO (17,652) SQUARE METERS.
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 Proclamation No. 113 (10/09/2001) – DESIGNATING AND DEFINING A PORTION OF THE

PHILIPPINE COCONUT AUTHORITY RESEARCH CENTER SITUATED IN SAN RAMON,
ZAMBOANGA CITY, AS PART OF THE ZAMBOANGA CITY SPECIAL ECONOMIC ZONE
AND FREEPORT

Pres. Gloria Macapagal-Arroyo designate an area consisting of ten and 14/100 (10.14) hectares of
the PCA Research Center, San Ramon, Zamboanga City, to constitute and form an integral part of
the ZAMBOECOZONE.

 Proclamation No. 111, s. 2001 (10/08/2001) - DESIGNATING A CERTAIN PARCEL OF LAND

OCCUPIED BY THE SAN RAMON PRISON AND PENAL FARM SITUATED IN SAN
RAMON, ZAMBOANGA CITY, AS PART OF THE ZAMBOANGA CITY SPECIAL
ECONOMIC ZONE AND FREEPORT PURSUANT TO REPUBLIC ACT NO. 7903

Pres. Gloria Macapagal-Arroyo designate the area occupied by the San Ramon Prison and Penal
Farm in San Ramon, Zamboanga City, consisting of Six Hundred Sixty-Four and 68/100 (664.68)
hectares, as part of the Zamboanga City Special Economic Zone and Freeport

 Sec. 4 Governing Principles

- (c) Foreign Citizens and companies owned by non-Filipinos in whatever proportion may set up
enterprises in the ZAMBOECONZONE, either by themselves or in joint venture with Filipinos in any
sector of industry, international trade and commerce within the ZAMBOECOZONE.

- (d) Shall be managed and operated as a separate customs territory to ensure and facilitate the free flow,
entry and movement of machinery and other goods.

It shall be vested with the authority to issue Certificates of Origin for products manufactured or processed
in the ZAMBOECOZONE in accordance with prevailing rules of origin, and the pertinent regulations
of the duly recognized national bodies tasked to oversee all other ecozones in the country.

Customs Territory under RR No. 2-2005 – refers to the portion of the Republic of the Philippines outside
of SUBIC-ECOZONE, ECOZONE (selected areas with highly developed or which have the potential to
be developed into agro-industrial, industrial, tourist, recreational, commercial, banking, investment and
financial centers established in accordance with Sec. 5 and 6 of RA 7916), ZAMBOECOZONE or the
CAGAYAN-ECOZONE, as the case maybe.

Separate customs territory means that in such zone is created the legal fiction of foreign territory.
While an ecozone is geographically within the Philippines, it is deemed a separate customs territory and
is regarded in law as foreign soil.

- (e) Business establishments within the ZAMBOECOZONE shall be entitled to the existing fiscal
incentives as provided for:

 under Presidential Decree No. 66, the law creating the Export Processing Zone Authority, or those
provided under Book VI of Executive Order No. 226, known as the Omnibus Investment Code of
1987; and

 Such incentives, benefits or privileges presently enjoyed by business establishments operating

within the Subic Special Economic Zone pursuant to Republic Act No. 7227.

 Fiscal Incentives - are subsidies, tax reliefs and preferential tax treatment that are usually given to
registered enterprises and priority sectors to promote and encourage investments and development.
These activities are basically included in the Investment Priorities Plan (IPP) in terms of lower tax,
exemption from tax or duties and tax or duty refund, among others.
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 Non-Fiscal Incentives - refer to various non-tax inducements, whose purpose is mainly to facilitate
the creation and execution of a project’s operational and organizational structures rather than to
provide tax relief and other privileges that directly improve earnings.

 Under PD No. 66

Net Operating Loss Carry Over, as amended by PD 1786

A net operating loss incurred in any of the first ten years of operation as a registered zone
enterprise may be carried over as a deduction from taxable income for the six years
immediately following the year of such loss. The entire amount of the loss shall be carried
over to the first of six taxable years following the loss, and any portion of such loss which
exceeds the taxable income of such first year shall be deducted in like manner from the taxable
income of the next remaining five years.

Accelerated Depreciation

Fixed assets may be depreciated to the extent of not more than twice the normal rate of
depreciation or depreciated at the normal rate of depreciation if the expected life is ten years or
less; or depreciated over any number of years between five years and expected life if the latter
is more than ten years. The depreciation thereon allowed as a deduction from taxable
income. Provided, That the taxpayer notifies the Bureau of Internal Revenue at the beginning
of the depreciation period which depreciation rate allowed by this subsection will be used by it.

Exemption from Export Tax

The provisions of law to the contrary notwithstanding, foreign merchandise transshipped

through the zone or any article which has been processed, manufactured or manipulated in said
zone and exported therefrom, shall be exempt from any export tax, imposts or fee

Exemption from Local Taxes and Licenses, as amended by PD Nos. 1449 and 1786

Notwithstanding the provisions of law to the contrary, zone registered enterprises shall, to the
extent of their construction, operation or production inside the zone be exempt from the
payment of any and all local government imposts, fees, licenses or taxes except real estate taxes
which shall be collected by the Municipality responsible for the collection thereof under the
provisions of the Real Property Tax Code.

Provided, that machineries owned by zone registered enterprises which are actually installed
and operated in the Zone for manufacturing, processing or for industrial purposes ü shall not
be subject to the payment of real estate taxes for the first three (3) years of operation of such
machineries

Exemption from Local Taxes and Licenses, as amended by PD Nos. 1449 and 1786 (similar
with Art. 78[a] & [b], Book VI, EO 226)

Provided, further, that fifty percent of the proceeds of the real estate taxes collected from all
real properties located in the Zone and such other areas owned or administered by the Authority
shall be remitted to the Authority by the municipality responsible for the collection of such
taxes under the provisions of the Real Property Tax Code.
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Under Sec. 4 of PD 1786, Production equipment or machineries, not attached to real estate,
used directly or indirectly in production, assembly or manufacture of the registered export
products of registered zone enterprises shall be exempt from real property tax.

Deduction for Labor Training Expenses, added by PD 1449

A deduction from taxable income of one-half the value of labor training expenses incurred for
upgrading the productivity and efficiency of unskilled labor shall be granted to a zone registered
enterprise:

Provided, that such training program is duly approved by the appropriate government agency
or in the absence thereof by the Board:

Provided, further, that such deduction shall not exceed ten (10%) percent of the direct labor
wage.

Deduction for Organizational and Pre-Operating Expenses

All capitalized organizational and pre-operating expenses attributable to the establishment of a

zone registered enterprise may be deducted from its taxable income over a period of not more
than ten (10) years beginning with the month the enterprise indicated the desired amortization
period at the time of the filing of income tax returns for the first taxable year.

For the purpose of this provision, organizational and pre-operating expenses shall include
expenses for pre-investment studies, start-up costs, cost of initial recruitment and training and
similar expenses.

Tax Credit, added by PD 1449

Every registered zone enterprise shall enjoy a tax credit equivalent to the sales, compensating
and specific taxes and duties on supplies, raw materials and semi-manufacture products used in
the manufacture, processing or production of its export products and forming part thereof:
Provided, That the tax credit shall accrue to the registered zone enterprise only after the final
product has in fact been exported.

The tax credit shall be used by the Secretary of Finance, upon presentation of the export
documents, and shall be in lieu of refunds.

It may be used to pay taxes, duties, charges and fees due to the national government in
connection with its operations.

A tax credit shall be non-transferable, except when such transfer is by hereditary succession or
occurs by operation of law; it may be used by the person or entity to whom it is issued only for
as long as its enjoys the benefits and incentives provided for in this Decree; and may not be
used so as to result in a refund.”

 Under Book VI of EO 226

Article 76 Tax Treatment of Merchandise in the Zone (similar to Sec. 17 of PD 66)

i. Except as otherwise provided in this Code, foreign and domestic merchandise, raw
materials, supplies, articles, equipment, machineries, spare parts and wares of every
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description, except those prohibited by law, brought into the zone to be sold, stored,
broken up, repacked, assembled, installed, sorted, cleaned, graded, or otherwise
processed, manipulated, manufactured, mixed with foreign or domestic merchandise
whether directly or indirectly related in such activity, shall not be subject to customs
and internal revenue laws and regulations nor to local tax ordinances, the provisions
of law to the contrary notwithstanding.

ii. Merchandise purchased by a registered zone enterprise from the customs territory
and subsequently brought into the zone, shall be considered as export sales and the
exporter thereof shall be entitled to the benefits allowed by law for such transaction.

iii. Domestic merchandise sent from the zone to the customs territory shall, whether or not
combined with or made part of other articles likewise of local origin or manufactured in
the Philippines while in the export processing zone, be subject to internal revenue laws
of the Philippines as domestic goods sold, transferred or disposed of for local
consumption.

iv. Merchandise sent from the export processing zone to the customs territory shall, whether
or not combined with or made part of other articles while in the zone, be subject to rules
and regulations governing imported merchandise. The duties and taxes shall be assessed
on the value of imported materials (except when the final product is exempt) and the
internal revenue taxes on the values added.

v. Domestic merchandise on which all internal revenue taxes have been paid, if subject
thereto, and foreign merchandise previously imported on which duty or tax has been paid,
or which have been admitted free of duty and tax, may be taken into the zone from the
customs territory of the Philippines and be brought back thereto free of quotas, duty or tax.

vi. Subject to such regulations respecting identity and safeguarding of the revenue as the
Authority may deem necessary when the identity of an article entered into the export
processing zone under the immediately preceding paragraph has been lost, such article
when removed from the zone and taken to the customs territory shall be treated as foreign
merchandise entering the country for the first time, under the provisions of the Tariff and
Customs Code.

vii. Articles produced or manufactured in the zone and exported therefrom shall, on subsequent
importation into the customs territory, be subject to the import laws applicable to like
articles manufactured in a foreign country

viii. Unless the contrary is shown, merchandise taken out of the zone shall be considered for
tax purposes to have been sent to customs territory.

Article 78. Additional Incentives - A zone registered enterprise shall also enjoy all the
incentive benefits provided in Article 39 hereof

i. Income Tax Holiday

For six (6) years from commercial operation for pioneer firms and four (4) years for non-
pioneer firms, new registered firms shall be fully exempt from income taxes levied by the
National Government.
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ii. Additional Deduction for Labor Expense

For the first five (5) years from registration a registered enterprise shall be allowed an
additional deduction from the taxable income of fifty percent (50%) of the wages
corresponding to the increment in the number of direct labor for skilled and unskilled
workers if the project meets the prescribed ratio of capital equipment to number of
workers set by the Board

iii. Tax and Duty Exemption on Imported Capital Equipment

Under Sec. 2 of EO 22, the zero percent duty shall be applied to importations by BOI-
registered new and expanding enterprises of capital equipment, spare parts and
accessories, classified under Chapters 40, 59, 68, 69, 70, 73, 76, 82, 83, 84, 85, 86, 87,
89, 90, 91 and 96 of the CMTA, upon issuance by the BOI of a Certificate of Authority,
provided that such imported capital equipment, spare parts and accessories comply with
the following conditions:

A. They are not manufactured domestically in sufficient quantity, of comparable quality

and at reasonable prices; and
B. They are reasonably needed and will be used exclusively by the enterprise in its
registered activity.

iv. Exemption on Breeding Stocks and Genetic Materials

v. Tax Credit on Domestic Breeding Stocks and Genetic Materials
vi. Tax Credit for Taxes and Duties on Raw Materials
vii. Exemption from Taxes and Duties on Imported Spare Parts
viii. Exemption from Whafage Dues and any Export Duty, Duty, Impost and Fee

 Incentives, benefits or privileges presently enjoyed by business establishments operating within the
Subic Special Economic Zone pursuant to Republic Act No. 7227.

Tax and duty-free importations of raw materials, capital and equipment

5% tax on Gross Income earned in lieu of national and local taxes

- (f) Any provisions of existing laws, rules or regulations to the contrary notwithstanding, no taxes, local
and national, shall be imposed on business establishments operating within the ZAMBOECOZONE. In
lieu of paying taxes, said business establishments shall pay and remit to the NATIONAL
GOVERNMENT two percent (2%) of their gross income. In addition, they shall remit to the CITY
GOVERNMENT OF ZAMBOANGA three percent (3%) of the gross income, to be allocated as follows:
Two percent (2%) to the CITY OF ZAMBOANGA; and One percent (1%) to the BARANGAY
SPECIAL DEVELOPMENT FUND, which is hereby created, for the development and improvement of
the barangays within the City of Zamboanga.

- (h) Any FOREIGN investor who establishes a business enterprise within the ZAMBOECOZONE and
who maintains CAPITAL INVESTMENT of NOT LESS THAN One hundred fifty thousand United
States dollars (US$150,000) shall:

 Be granted, ALONG with his/her SPOUSE, DEPENDENTS, and UNMARRIED CHILDREN

below twenty-one (21) years of age, a PERMANENT RESIDENT STATUS within the
ZAMBOECOZONE.
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 Such FOREIGN investor and his or her SPOUSE, DEPENDENTS and UNMARRIED CHILDREN
below the age of twenty-one (21) years, shall have freedom of ingress and egress to and from the
ZAMBOECOZONE without any need of any special authorization from the Bureau of Immigration
and Deportation.

 Likewise, the Zamboanga City Special Economic Zone Authority shall issue WORKING VISAS
renewable every two (2) years to FOREIGN EXECUTIVES AND FOREIGN TECHNICIANS with
highly specialized skills which no Filipino possesses, as certified by the Department of Labor and
Employment.

 The names of foreigners granted permanent resident status and working visas by the Zamboanga
City Special Economic Zone Authority shall be reported to the Bureau of Immigration and
Deportation within thirty (30) days from such grant.

 Sec. 5 Creation of the Zamboanga City Special Economic Zone Authority

- Subject to the concurrence of the local government units that will be affected by the creation of the
ZAMBOECOZONE, there is hereby created a body corporate to be known as the Zamboanga City
Special Economic Zone Authority, hereinafter referred to as the ZAMBOECOZONE Authority, which
shall manage and operate the ZAMBOECOZONE, in accordance with this Act.

2. Republic Act No. 7922

 An Act Establishing a Special Economic Zone and Free Port in the Municipality of Santa Ana and the
Neighboring Islands in the Municipality of Aparri, Province of Cagayan, Providing Funds Therefor, and
for Other Purposes.

This Act shall be known as the “CAGAYAN SPECIAL ECONOMIC ZONE ACT of 1995.”

Approved: February 24, 1995

 Sec. 2 Declaration of Policy

- It is hereby declared the policy of the government to actively encourage, promote, induce and accelerate
a sound and balanced industrial, economic and social development of the country in order to provide
jobs to the people especially those in the rural areas, increase their productivity and their individual and
family income, and thereby improve the level and quality of their condition through the establishment,
among others, of special economic zones and free ports in suitable and strategic locations in the country
and through measures that shall effectively attract legitimate and productive foreign investments.

 Sec. 3 The Cagayan Special Economic Zone and Free Port

- In accordance with the foregoing declared policy, there is hereby established a special economic zone
and free port to be known as the Cagayan Special Economic Zone Which shall cover the entire area
embraced by the Municipality of Santa Ana and the islands of Fuga, Barit, and Mabbag in the
Municipality of Aparri, Province of Cagayan.

 Sec. 4 Governing Principles

- Business establishments operating within the Zone shall be entitled to the existing FISCAL
INCENTIVES as provided for under:
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 Presidential Decree No. 66, the law creating the Export Processing Zone Authority (EPZA), or
 Those provided under Book VI of Executive Order No. 226, otherwise known as the Omnibus
Investment Code of 1987.

- Any provision of existing law, rules or regulations to the contrary notwithstanding, no taxes, local and
national, shall be imposed on business establishments operating within the Zone. In lieu of paying taxes,
said business establishments shall pay and remit to the national government five per centum (5%) of
their gross income, to be divided as follows:

 Two per centum (2%) shall accrue to the general fund of the national government;
 One per centum (1%) to the Province of Cagayan;
 One-half per centum (1/2%) to be shared by the municipalities affected by the declaration of the
Zone in proportion to their income from business activities within the Zone; and
 One and one-half per centum (1 ½%) to the Cagayan Economic Zone Authority which shall be
created under this Act.

- Any foreign investor who establishes a business enterprise within the Zone and who maintains capital
investment of not less than One hundred fifty thousand United States dollars (US$150,000) shall be:

 Granted, along with his or her spouse, dependents, and unmarried children below twenty-one (21)
years of age, a permanent resident status within the Zone.
 The responsibility and authority to grant such permanent resident status is hereby delegated to the
Cagayan Economic Zone Authority referred to in Section 5 of this Act.
 Such foreign investor and his or her spouse, dependents, and unmarried children below the age of
twenty-one (21) years, shall have the freedom of ingress and egress to and from the Zone without
need of any special authorization from the Bureau of Immigration.
 Likewise, the Cagayan Economic Zone Authority shall issue working visas renewable every two
(2) years to foreign executives and foreign technicians with highly specialized skills with no Filipino
possesses, as certified by the Department of Labor and Employment.
 The names of foreigners granted permanent resident status and working visas by the Cagayan
Economic Zone Authority shall be reported to the Bureau of Immigration within thirty (30) days
from such grant.

 Sec. 5 Creation of the Cagayan Economic Zone Authority

A body corporate to be known as the Cagayan Economic Zone Authority, hereinafter referred to as the CEZA,
is hereby created to manage and operate, in accordance with the provisions of this Act, the Cagayan Special
Economic Zone and Free Port.

This corporate franchise shall expire in fifty (50) years counted from the first day of the fifth (5th) calendar
year after the effectivity of this Act, unless otherwise extended by Congress.

It has the power and function to approve, accept, accredit and allow any local or foreign business, enterprise
or investment in the Zone subject only to such rules and regulations as CEZA may promulgate from time to
time in conformity with the provisions of this Act and the limitations provided in the Constitution. (Sec. 6[c])
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