The BOI Clarifies the Coverage of Logistic Services as “Activities in Support to Exporters”

On 03 February 2023, the Bureau of Internal Revenue (“BIR”) published the full text of Memorandum Circular (“MC”) No. 2023-001 issued by the Board of Investments (“BOI”). In the said MC, the BOI sought to clarify the coverage of logistic services as “activities in support to exporter” under the 2022 Strategic Investment Priority Plan (“SIPP”).

The BOI explained therein that based on the definition of export enterprises under Section 293 (E) of the Corporate Recovery and Tax Incentives for Enterprises (“CREATE”) Act, the listing in the SIPP for logistic services as one of the activities in support of exporters shall cover the Ecozone Logistics Service Enterprises (“ELSEs”) or ELSEs type 3 or “combination of both,” as follows:

1. Establishment of a warehouse storage facility; and
2. Importation of procurement from local sources and/or from other PEZA registered enterprises of goods for resale, or for packing/covering (including marking, labelling), cutting or altering to customers’ specification, mounting and/or packaging into kits or marketable lots thereof for subsequent sale, transfer or disposition for export.

Further, it was stated in the said MC that such integrated ELSEs shall be considered as export enterprises, provided that they render at least 70% of their output/services to another registered export enterprise.
Thus, the ELSEs as described above are now eligible for Value Added Tax (“VAT”) exemption on its importation and VAT zero-rating on its local purchases.