Clarification on the allowable deductions for a PEZA-registered enterprise

FOR THE PAST decades it has been the policy of the government to encourage direct foreign investments in the Philippines to boost the economy and to provide jobs for the people. To implement this policy, Republic Act No. (RA) 7916 or the Philippine Economic Zone Authority (PEZA) law was enacted with provisions for incentives to foreign investors, to entice them to pour investments into the Philippines. Under RA 7916, PEZA-registered enterprises shall enjoy income tax holiday or 5% tax on their gross income in lieu of all national and local taxes except for real property tax.