(REPEALED
BY PRESIDENTIAL DECREE NO. 442)
WHEREAS, it would be desirable to make of the Philippines the business
and financial capital of Southeast Asia, thereby hastening the economic
and social development of the Philippines, which objective can be
accomplished by attracting the regional or area headquarters of
multinational companies to base their offices in the Philippines;chanroblesvirtualawlibrary
WHEREAS, the said headquarters do not earn or derive any income from
the host country and all their expenses are financed by their head
offices or parent companies;chanroblesvirtualawlibrary
WHEREAS, the attainment of the aforesaid goal will mean additional
foreign exchange receipts to the Philippines, a boost tor travel, new
construction and real estate development, new job opportunities,
increase in local tourism and potential investors; chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution as
Commander-in-Chief of all Armed Forces of the Philippines, and pursuant
to Proclamation No. 1081, dated September 21, 1972, and General Order
No. 1, dated September 22, 1962, as amended, do hereby order and decree
as follows:cralaw:red
Section 1. Foreign personnel of regional or area
headquarters of multinational companies, their respective spouses, and
unmarried children under twenty-one years of age, if accompanying them
or if following to join them after their admission into the Philippines
as non-immigrant shall be issued a multiple entry visa, valid for a
period of one year, to enter Philippines: Provided, That a responsible
officer of the applicant company submits a certificate to the effect
that the person who seeks entry into the Philippines is an executive of
the applicant company and will work exclusively for applicant's
regional or area headquarters which is duly licensed to operate in the
Philippines; and that he will receive a salary and will be paid by the
headquarters in the Philippines an amount equivalent to at least twelve
thousand United States dollars, or its equivalent in other foreign
currencies, per annum.
The admission and stay shall be co-terminus with the validity of the
multiple entry special visa. The stay, however, is extendible yearly
upon submission to the Commission on Immigration and Deportation of a
sworn certification by a responsible officer of the regional or area
headquarters: that its license to operate remains valid and subsisting;
that he has been paid in the Philippines from the date of original
admission, the equivalent of at least one thousand United States
dollars per month, or its equivalent in other foreign currencies; and
that the regional or area headquarters has withheld the tax due on said
compensation and the same has been paid to the Bureau of Internal
Revenue.
Non-immigrants who have been admitted under the multiple entry special
visa, as well as their respective spouses and dependents, shall be
exempt from: the payment of all fees due under the immigration and
alien registration laws; securing alien certificates of registration;
and obtaining emigration clearance certificates, and all types of
clearances required by any government department or agency, except that
upon final departure from the Philippines the employer of the said
non-immigrants shall so advise in writing the Commission on Immigration
and Deportation at least five (5) days prior to the non-immigrant's
departure, and the finally departing non-immigrant employee shall be
required to submit to the said office a tax clearance from the Bureau
of Internal Revenue.
Section 2. Section 22 of Commonwealth Act Numbered
466, as amended, is hereby amended to include an additional subsection
(c) to read as follows: chanroblesvirtualawlibrary
"(c) Aliens employed by regional or area headquarters
of multinational corporations. — There shall be levied, collected and
paid for each taxable year upon the gross income received by every
alien individual employed by regional or area headquarters established
in the Philippines by multinational corporations as salaries, wages,
annuities, compensations, remunerations and emoluments from such
regional or area headquarters a tax equal to fifteen per centum of such
gross income."
Section 3. Section 24(b) (1) of Commonwealth Act
Numbered 466, as amended, is hereby amended to include an additional
proviso to read as follows:cralaw:red
"(b) Tax on foreign corporations. — (1) Non-residents
corporation. —chanroblesvirtualawlibrary
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"Provided, finally, That regional or area headquarters established in
the Philippines by multinational corporations and which headquarters do
not earn or derive income from the Philippines and which act as
supervisory, communications and coordinating centers for their
affiliates, subsidiaries or branches in the Asia-Pacific Region shall
not be subject to tax."
Section 4. In the case of aliens employed by regional
or area headquarters established in the Philippines by multinational
corporations, there shall be deducted and withheld at the source in the
same manner and conditions as that provided under Supplement A —
Withholding on Wages of Commonwealth Act No. 466 as amended, on the
gross salaries, wages, annuities, compensations, remuneration and
emoluments from such regional headquarters a tax equal to fifteen per
centum of the gross thereof.
Section 5. Section 191 of Commonwealth Act Numbered
466, as amended, is hereby amended as follows: chanroblesvirtualawlibrary
"Sec. 191. Contractors, proprietors or operators of
dockyards and others. — A contractor's tax of three per centum of the
gross receipts is hereby imposed on the following:cralaw:red
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xxx
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"The term "independent contractor" shall not include regional or area
headquarters established in the Philippines by multinational
corporations, including their alien executives, and which headquarters
do not earn or derive income from the Philippines and which act as
supervisory, communications and coordinating centers for their
affiliates, subsidiaries or branches in the Asia-Pacific Region." chanroblesvirtualawlibrary
Section 6. The alien executives of the regional or
area headquarters of multinational companies shall enjoy the privileges
extended to foreigners coming to settle in the Philippines for the
first time as provided for under Section 105(h) of the Tariff and
Customs Code, as amended.
Section 7. The regional or area headquarters of
multinational companies shall be exempt from all forms of local
licenses, fees, dues, imposts, or any other local taxes or burdens.
Section 8. Any foreign business entity formed,
organized or existing under any laws other than those of the
Philippines whose purpose, as expressed in its organizational documents
or by resolution of its Board of Directors or its equivalent, is to
supervise, superintend, inspect or coordinate its own affiliates,
subsidiaries or branches in the Asia-Pacific Region may establish a
regional or area headquarters in the Philippines, after securing a
license therefor from the Securities and Exchange Commission, upon the
favorable recommendation of the Secretary of Trade. chanroblesvirtualawlibrary
The Securities and Exchange Commission shall, within thirty (30) days
from the effectivity of this Decree, issue the implementing rules and
regulations. The following minimum requirements shall, however, be
complied with by the said foreign entity:cralaw:red
(a) A certification from the Philippines Commercial
Attaché or in the absence of such an official, a Philippine
Consul in the foreign firm's home country that said foreign firm is an
entity engaged in international trade with affiliates, subsidiaries, or
branch offices in the Asia-Pacific Region.
(b) A certification from a principal officer of the
foreign entity to the effect that the said foreign entity has been
authorized by its board of directors of governing body to establish its
regional headquarters in the Philippines, specifying that: chanroblesvirtualawlibrary
(1) The activities of the regional headquarters shall
be limited to acting as supervisory, communications and coordinating
center for its affiliates, subsidiaries and branches of the region;chanroblesvirtualawlibrary
(2) The headquarters will not derive any income from
sources within the Philippines and will not participate in any manner
in the management of any subsidiary or branch office it might have in
the Philippines;chanroblesvirtualawlibrary
(c) An undertaking that the multinational company
will remit into the country such amount as may be necessary to cover
its operations in the Philippines but which amount will not be less
than fifty thousand United States dollars or its equivalent in other
foreign currencies annually. Within thirty (30) days from receipt of
certificate of registration from the Securities and Exchange
Commission, the multinational company will submit to the Securities and
Exchange Commission a certificate of inward remittance from a local
bank showing that it has remitted to the Philippines the amount of at
least thirty thousand Unites States dollars or its equivalent in other
foreign currencies and converted the same to Philippine currency.
Annually, within thirty days from the anniversary date of the
multinational company's registration as a regional or area headquarters
with the Securities and Exchange Commission, it will submit proof to
the Securities and Exchange Commission of inward remittance amounting
to at least fifty thousand United States dollars or its equivalent in
other foreign currencies during the past year. chanroblesvirtualawlibrary
(d) Any willful violation by the regional or area
headquarters of a multinational company of any of the provisions of
this Decree, or its implementing rules and regulations, or other terms
and conditions of its registration, or any provision of existing laws
shall constitute a sufficient cause for the cancellation of its license
or registration.
Section 9. The regional or area headquarters of
multinational companies shall be exempt from the provisions of Republic
Act No. 5455.
Section 10. Any provision of existing general or
special laws inconsistent with the provisions of this Decree shall be
considered modified, amended, or repealed accordingly.
Section 11. This Decree shall take effect immediately.
Done in the City of Manila,
this 16th day of June, in the year of Our Lord, nineteen hundred and
seventy-three.
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