  
  
G/SCM/Q2/PHL/20  
 
29 March 2022  
(22-2580) Page: 1/2 
Committee on Subsidies and Countervailing Measures  Original: English  
 
 
SUBSIDIES  
REPLY TO FOLLOW -UP QUESTION POSED BY THE UNITED STATES1 REGARDING  
RESPONSES2 TO QUESTIONS3 FROM THE UNITED STATES REGARDING  
THE NEW AND FULL NOTIFICATION OF THE PHILIPPINES4 
The following communication, dated and received on 28 March 2022 , is being circulated at the 
request of the delegation of the Philippines . 
_______________  
Question 1  
In response to Question 4, Philippines explained that the GIT scheme and other tax and 
duty incentives available to PEZA -registered companies are contingent on export sales, 
but indicated that these incentives accord with Footnote 1 (or Annexes I – III) of the 
SCM Agreement.  
a. Would Philippines please specify, for the GIT scheme and each of th e other 
incentives, which provision(s) of the Annexes apply to each of the incentives 
under the notified program?  
Reply : 
In respect of PEZA -registered companies, the incentives granted and their concordance with the 
illustrative export subsidies in Annex I are provided below:  
(i) Direct taxes:  
1. Income tax holiday (4 -8 years, depending on pioneer or non -pioneer status) – [E] 
2. 5% Gross Income Tax (not to coincide with ITH above) – [E] 
3. Local government taxes – [E] 
(ii) Indirect taxes:  
1. Tax and duty -free importation  of raw materials, supplies, capital equipment and spare 
parts – [I] 
2. Zero-rated value added tax (VAT) and excise taxes on local purchases, including 
telecommunication, power, water, other utilities – [G, H]  
It must be clarified, however, that revenue foreg one under this category of incentives are not in 
excess of any amount that have accrued. Thus, while they are similar to or like the examples in G, 
H and I in the illustrative list, they are never in excess of any amount that is due.  
In this light, section  I of Annex II does not apply to the incentives granted because revenue foregone  
are not in excess of any amount that have accrued.  
 
1 G/SCM/Q2/PHL/19 . 
2 G/SCM/Q2/PHL/17 . 
3 G/SCM/Q2/PHL/1 6. 
4 G/SCM /N/343/ PHL/Suppl.1.  G/SCM/Q2/PHL/20  
 
- 2 - 
 
  Annex III does not apply as well to any of the incentives granted to PEZA -registered companies 
because the drawback system d escribed in section I of Annex III is not practiced.  
b. Would Philippines please provide the same information as to the incentives 
available in the other zones identified, i.e., Cagayan Economic Zone Authority 
(CEZA), Zamboanga City Special Economic Zone Auth ority (ZAMBOECOZONE) 
and PHIVIDEC Industrial Authority (PIA Zone)?  
Reply : 
In respect of the other zones, the answers above apply.  
__________  