article banner
Let's Talk Tax

Let’s keep pace

“The scene of this world is changing. I can’t live in the past.
Please help me to keep running because we’re moving fast…”

The quote is part of the lyrics of a music video, “Keep the Pace.” Undeniably, there is a need to keep pace as we witness various organizational, communication, and technological advancements.

The idea applies even to government regulators, especially now that commercial operations have become more complex and modern. Since the linkages among business organizations have become cybernetic and virtual, they are present in various jurisdictions. Such progress presents challenges.

In the 2016 Doing Business report by the World Bank Group, the Philippines ranked 103 out of 189 economies. In the next year, the economy made a significant jump to number 99, according to the World Bank. While this upward movement seems promising, there is no room for complacency. The government needs to keep up since the ability to manage the challenges of modernization encourages investors to participate in the Philippines’ economic pursuits.

One of the items on the current administration’s socioeconomic agenda is to increase competitiveness and ease of doing business. Many government agencies are doing their share in this regard.

In 2016, the Department of the Interior and Local Government (DILG), the Department of Trade and Industry (DTI), and the Department of Information and Communications Technology (DICT) issued Joint Memorandum Circular No. 01-2016. The circular states that there is a need to further impose stricter performance standards for business permit processing and on regulatory processes to further improve the competitiveness ranking of the Philippines in global surveys. A more compelling reason, says the circular, is to ensure the preparedness of cities and municipalities to more intense global competition arising from the 2015 Association of Southeast Asian Nations (ASEAN) Economic Integration.

Since the Philippines is the host of this year’s ASEAN Summit, it is timely to remember the features of this circular. It also serves as a reminder for the concerned government offices to assess the status of their compliance with Joint Memorandum Circular No. 01-2016.

Under the circular, all cities and municipalities are enjoined to follow revised standards for processing business permits and licenses. A single or unified business application shall be used in processing new applications, which consolidates all the information on a business registrant needed by various government departments. The unified form shall be made available using the channels for dissemination and be made available for download either in the city/municipality websites.

The standard steps and processing timeline for all cities and municipalities is likewise provided in the circular. Moreover, a maximum of two signatories is required for the processing of new business applications and business renewals. Cities and municipalities shall set up a business one-stop-shop for business registration.

The circular also espouses the computerization and automation of business permit processes. Cities and municipalities are further encouraged to develop online mechanisms for both new business registrations and permit renewal applications.

Another agency that is keeping pace with technological progress is the Philippine Economic Zone Authority (PEZA).

On Sept. 27, PEZA issued Memorandum Order No. 012-2017, simplifying the issuance of certifications on (a) available incentives and (b) entitlement to 5% gross income tax (5% GIT) to qualified registered enterprises and ecozones/IT parks and center developers/operators. Applications for the issuance of necessary certifications shall now be made online. It shall apply to PEZA Enterprises and PEZA Developers/Operators entitled to PEZA incentives. 

Since it is the most recent PEZA issuance, which took effect only on Oct. 15, let us review some of its salient features:

1. All requests for certifications on Available Incentives and Entitlement to the 5% GIT shall be made on the “Request for Certification Form,” which may be downloaded from the PEZA website.

2. The Request Form should be signed by an official responsible for the PEZA enterprise. The e-mail address of the official responsible for executing the Request Form shall be indicated on the request form.

3. The accomplished Request Form shall be scanned and e-mailed to the Office of the PEZA Director-General for entry in the PEZA Document Tracking System. The Request Form shall then be verified and evaluated by the concerned PEZA personnel.

4. Only PEZA Enterprises and Developers with complete PEZA reports shall be endorsed for processing and subsequent PEZA approval/signing of the Certifications on Available Incentives and Entitlement to 5% GIT.

5. The PEZA enterprise will then be informed that the certification is available for release upon paying the filing fee to the PEZA Zone Office. Upon receipt of the said payment, the certification will be sent to the e-mail address indicated on the Request Form.

6. Each PEZA certification shall bear a Quick Response (QR) code that may be used to access the certification from a smartphone or computer.

7. The PEZA entity may print multiple copies of the certification.

The memorandum also highlights the importance of further improving ease of doing business with PEZA.

Without a doubt, such issuances prove that government regulators are keeping pace with the developments brought about by modernization and commercialization. Although the government plays a vital role in driving the nation’s economy, the responsibility should not be placed on its shoulders alone. Constant coordination and cooperation among all stakeholders (both public and private) is the key to achieving economic prosperity.

Renato R. Balisacan, Jr. is a manager with the Tax Advisory and Compliance division of P&A Grant Thornton.


As published in BusinessWorld, dated 24 October 2017