SPECIAL ECONOMIC ZONE
INCOME TAX HOLIDAY (12 month period availment )
ABC Corporation., a PEZA-registered export enterprise, has the following sales for its first
three years in operation:
• Year 1 – P 1,000,000 (10,000 units @ P100)
• Year 2 – P 900,000 (9,000 units @ P100)
• Year 3 – P 1,100,000 (11,000 units @P100)
In the beginning of Year 4, ABC Corporation. Introduced a process which significantly
reduced its cost and increased efficiency in delivering services. As a result, ABC
Corporation applied with the PEZA for expansion of its project and was granted 3 years
ITH on the incremental sales. By the end of the year 4, ABC recorded sales amounting to
2,500,000 (25,000 units @ P100) and net income of 500,000. Tax rate is 30%.
QUESTIONS:
• How much is the incremental sales?
• What is the rate of exemption?
• How much net income is exempt from income tax?
• How much is the income tax holiday?
• How much is the income tax to be paid?
SOLUTIONS
Volume (units) Value (PhP)
A. Total Sales (whole taxable year) 25,000 2,500,000
A. Less: Base figure 11,000 1,100,000
A. Incremental Sales (A-B) 1,400,000
A. Rate of Exemption (C/A x 100) 56%
A. Taxable Income from Registered 500,000
Activity
A. Tax Due from Registered Activity 150,000
(E x tax rate)
A. Estimated Income Tax Holiday 84,000
Incentive (F x D)
A. Tax Due to be paid (F-H) 66,000
INCOME TAX HOLIDAY (Less than a year availment)
ABC Corporation., a PEZA-registered export enterprise, has the following sales for its
first three years in operation:
• Year 1 – P 1,000,000 (10,000 units @ P100)
• Year 2 – P 900,000 (9,000 units @ P100)
• Year 3 – P 1,100,000 (11,000 units @P100)
In the beginning of Year 4, ABC Corporation. Introduced a process which significantly
reduced its cost and increased efficiency in delivering services. As a result, ABC
Corporation applied with the PEZA for expansion of its project and was granted 3
years ITH on the incremental sales. By the end of the year 4, ABC recorded sales
amounting to 2,500,000 (25,000 units @ P100) and net income of 500,000. Assume
that the income tax holiday incentive has already expired at the end of June of the
current year.
QUESTION:
How much is the income tax holiday incentive?
SOLUTIONS
Volume (units) Value (PhP)
A. Total Sales (for period still entitled to 12,500 1,250,000
ITH)
A. Less: Base figure (pro-rated) 5,500 550,000
A. Incremental Sales (A-B) 700,000
A. Rate of Exemption (C/A x 100) 56%
A. Taxable Income from Registered 250,000
Activity
A. Tax Due from Registered Activity 75,000
(E x tax rate)
A. Estimated Income Tax Holiday 42,000
Incentive (F x D)
INCOME TAX HOLIDAY EXTENSION
(CAPITAL EQUIPMENT TO LABOR RATIO)
ABC Company, a PEZA registered enterprise has the following information for the year:
Production machinery and equipment P 60,000,000
1 US Dollar = PHP 53.00
Direct labor for the year (No. of workers) :
Month January 100 July 120
February 105 August 125
March 105 September 130
April 110 October 135
May 112 November 140
June 115 December 143
• QUESTIONS:
• What is the Capital equipment to labor ratio?
• Is the company allowed to extend income tax holiday pay?
Solutions
DIRECT LABOR
CAPITAL EQUIPMENT VALUE
Month No. of Workers
Production machinery and PhP 60,000,000
January 100
equipment
February 105 Total US$ 1,132,075
March 105 (Php 60,000,000/53)
April 110
May 112 CAPITAL EQUIPMENT TO Total Capital Equipment in US$
LABOR RATIO
=
June 115 Average No. of Direct Labor for
the Year
July 120
August 125 = $ 1,132,075
120
September 130 $ 9,434 / worker
=
October 135
November 140
December 143
Total 1440 Yes, because the capital equipment to labor
Average for the 120 ratio of the company is less than $10,000
Year
Hi
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F
a
J
Month-to-date Year to date
New site: Robinsons Cybergate Cebu
M
B
• Break-even ADS of 44T on a 7-day week or 51T on a 6-day week
• Offer is P818/sqm basic + 5% percentage rent with an increase to P900/sqm the
following year
• Mall is beside Chong Hua Hospital
• Clinics on Level 3-4 of malls and BPO on Level 5
• At foot traffic of 12.4T daily average, catch rate should be 57% to achieve BE
Marketing Updates
- End -
Thank you!