A
collection of Philippine laws, statutes and codes
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Chan Robles Virtual Law Library
PRESIDENTIAL DECREE NO. 92
PRESIDENTIAL DECREE NO. 92 -
BUSINESS INCENTIVES AND REFORMS AN ACT INTENDED TO IMPROVE BUSINESS
CLIMATE BY AMENDING REPUBLIC ACTS NUMBERED FIFTY-ONE HUNDRED
EIGHTY-SIX, SIXTY-ONE HUNDRED THIRTY-FIVE, FIFTY-FOUR HUNDRED
FIFTY-FIVE AND FOR OTHER PURPOSES
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chanroblesvirtualawlibrary
WHEREAS, There is a need to improve the
overall climate for business and industry in the Philippines in order
to accelerate economic growth and promote the well-being especially of
the masses of our people.
WHEREAS, Although the various incentives already provided in existing
laws to encourage investment, both local and foreign, in desirable
industries and projects have actually induced their establishment in
preferred areas, there is still a need to re-examine their precise
impact and relevance not only to increase productivity but to the
improvement of the living standards of the people;chanroblesvirtualawlibrary
WHEREAS, In order to achieve the foregoing objectives, it is necessary
to update and rationalize existing incentives and provide new ones that
can help optimize the rate of economic development by giving priority
to export-oriented industries especially those utilizing indigenous raw
materials and which can generate more employment and income
opportunities in keeping with the escalating demands of our people for
the basic essentials that make for decent existence. 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 the Armed Forces of the Philippines and
pursuant to Proclamation No. 1081, dated September 21, 1972, and
General Order No. 1, dated September 22, 1972, as amended and in order
to effect the desired changes and reforms in the social, economic and
political structure of our society, do hereby order and decree
amendments to Republic Act Numbered Fifty-one hundred eighty-six,
otherwise known as the Investment Incentives Act, and complementary
laws such as Republic Act Numbered Sixty-one hundred thirty-five,
otherwise known as the Export Incentives Act and Republic Act Numbered
Fifty-five, as follows:cralaw:red
Section 1. Section seven of Republic Act Numbered
Fifty-one hundred eighty-six is hereby amended by adding a new
sub-section and amending paragraphs (d), (e) and (h) hereof, to read as
follows:cralaw:red
"Sec. 7. Incentives to a Registered Enterprise. — A
registered enterprise, to the extent engaged in a preferred area of
investment, shall be granted the following incentive
benefits: chanroblesvirtualawlibrary
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"(d) Tax Exemption on Imported Capital Equipment —
Within seven years from the date of registration of the enterprise,
importation of machinery and equipment, and spare parts shipped with
such machinery and equipment, shall not be subject to tariff duties and
compensating tax: Provided, That said machinery, equipment and spare
parts: (1) are not manufactured domestically in reasonable quantity and
quality at reasonable prices; (2) are directly and actually needed and
will be used exclusively by the registered enterprise in the
manufacture of its products, unless prior approval of the Board is
secured for the part-time utilization of said equipment in
non-registered operations to minimize usage thereof; (3) are covered by
shipping documents in the name of the registered enterprise to whom the
shipment will be delivered direct by customs authorities; (4) the prior
approval of the Board was obtained by the registered enterprise before
the importation of such machinery, equipment and spare parts; and (5)
the registered enterprise chooses not to avail of the privileges
granted by Republic Act Numbered Thirty-one hundred twenty-seven, as
amended. If the registered enterprise sells, transfers or disposes of
these machinery, equipment and spare parts without the prior approval
of the Board within five (5) years from the date of acquisition, the
registered enterprise shall pay twice the amount of the tax exemption
given it. However, the Board shall allow and approve the sale,
transfer, or disposition of the said items within the said period of
five (5) years if made: (1) to another registered enterprise; (2) for
reasons of proven technical obsolescence; (3) for purposes of
replacement to improve and/or expand the operations of the enterprise.
"(e) Tax Credit on Domestic Capital Equipment. — A
tax credit equivalent to one hundred per cent (100%) of the value of
the compensating tax and customs duties that would have been paid on
the machinery, equipment and spare parts had these items been imported
shall be given to the registered enterprise who purchases machinery,
equipment and spare parts from a domestic manufacturer, and another tax
credit equivalent to fifty per cent (50%) thereof shall be given to the
said manufacturer: Provided, (1) That the said machinery, equipment and
spare parts are directly and actually needed and will be used
exclusively by the registered enterprise in the manufacture of its
products, unless prior approval of the Board is secured for the
part-time utilization of said equipment in non-registered operations to
maximize usage thereof; (2) that the prior approval of the Board was
obtained by the local manufacturer concerned; and (3) that the sale is
made within seven years from the date of registration of the registered
enterprise. If the registered enterprise sells, transfers or disposes
of these machinery, equipment and spare parts without the prior
approval of the Board within five (5) years from the date of
acquisition, then it shall pay twice the amount of the tax credit given
it. However, the Board shall allow and approve the sale, transfer, or
disposition of the said items within the said period of five (5) years
if made (1) to another registered enterprise; (2) for reasons of proven
technical obsolescence; or (3) for purposes of replacement to improve
and/or expand the operations of the enterprise.
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"(h) Deduction for Expansion Reinvestment. — When a
registered enterprise reinvests its undistributed profit or surplus,
whether from registered operations or not, by actual transfer thereof
to the capital stock of the corporation for procurement of machinery,
equipment and spare parts previously approved by the Board under
sub-sections "d" and "e" hereof or for the expansion of machinery and
equipment used in production or for the construction of the buildings,
improvements or other facilities for the installation of the said
machinery and equipment, the amount so reinvested, to the extent of
25%, 37 ½ %, 50%, 75%, 100% in the case of pioneer projects, the
appropriate percentage to be determined by the Board for each industry
taking into account the relative risk, technology, transfer and
fall-out, export potential, incremental labor, use of locally
manufactured machinery and equipment and domestic raw materials, shall
be allowed as a deduction from its taxable income in the year in which
such reinvestment was made: Provided, (1) That prior approval of the
Board of such reinvestment was obtained by the registered enterprise
planning such reinvestment, and (2) that the registered enterprise does
not reduce it capital stock represented by the reinvestment within
seven (7) years from the date such reinvestment was made. In the event
the registered enterprise does not order the machinery and equipment
within two (2) years from the date the reinvestment was made or reduces
its capital stock represented by the reinvestment within a period of
seven (7) years from the date of reinvestment, a recomputation of the
income tax liability therefor shall be made for the period when the
deduction was made, and the proper taxes shall be assessed and paid
with interest.
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(k) Deduction for Labor Training Expenses. — An
additional deduction from taxable income of one half of the value of
labor training expenses incurred for upgrading the productivity and
efficiency or unskilled labor shall be granted to a registered
enterprise: Provided, That such training program is duly approved by
the appropriate government agency or in the absence thereof by the
Board: And provided, further, That such deduction shall not exceed ten
percent (10%) of direct labor wage."
Section 2. Subsection (a) of Section Eight of the
same Act is hereby amended to read as follows:cralaw:red
"Sec. 8. Incentives to a Pioneer Enterprise. — In
addition to the incentives provided in the preceding section, pioneer,
enterprises shall be granted the following incentive benefits:cralaw:red
(a) Tax Exemption. — Exemption from all taxes under
the National Internal Revenue Code, except income tax, from the date
the area of investment is included in the Investment Priorities Plan to
the following extent:cralaw:red
(1) One hundred per cent (100%) for the first five
years;chanroblesvirtualawlibrary
(2) Seventy-five per cent (75%) for the sixth through
the eighth year;chanroblesvirtualawlibrary
(3) Fifty per cent (50%) for the ninth and tenth
years;chanroblesvirtualawlibrary
(4) Twenty per cent (20%) for the eleventh and
twelfth years; and
(5) Ten per cent (10%) for the thirteenth through the
fifteenth year. chanroblesvirtualawlibrary
Provided, That the above schedule shall apply only to enterprises
registered in areas included for the first time in the sixth or
subsequent Investment Priorities Plan or therein carried over, from the
previous Investment Priorities Plan: Provided, however, That in areas
previously declared preferred and/or carried over the sixth or
subsequent Investment Priorities Plan and wherein enterprises have
already registered, the exemption herein provided shall be as follows:cralaw:red
(1) One hundred per cent up to December 31, 1972;chanroblesvirtualawlibrary
(2) Seventy-five per cent up to December 31, 1975;chanroblesvirtualawlibrary
(3) Fifty per cent up to December 31, 1977;chanroblesvirtualawlibrary
(4) Twenty per cent up to December 31, 1979;chanroblesvirtualawlibrary
(5) Ten per cent up to December 31, 1981.
Provided, further, That subject to the approval of the National
Economic Development Authority, the Board may extend the duration of
the tax exemption provided in any bracket for pioneer projects whose
total costs would exceed one hundred million pesos (P100,000,000)
subject to the condition that in no case shall the total period of
exemption herein exceed twenty (20) years." chanroblesvirtualawlibrary
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Section 3. Section Nine of the same Act is hereby
repealed en toto, any provision of law to the contrary notwithstanding
and in lieu thereof, the following special export incentives, may be
availed of by a registered enterprise.
"Sec. 9. Special Export Incentives for Registered
Enterprises. — Registered enterprises may be entitled to the following
special incentives for exports of their registered products and
commodities:cralaw:red
"(a) Special Tax Credit. — A tax credit equivalent to
the sales, compensating and specific taxes and duties on the supplies,
raw materials and semi-manufactured products used in the manufacture,
processing or production of its export products and forming part
thereof, whether exported directly by the registered enterprise or sold
to another export producer which uses such sold product as a direct
input in export products manufactured or processed by it and
subsequently exported, or to an export trader: Provided, That the tax
credit shall accrue to the registered enterprise only after the export
producer or export trader has in fact exported the products of the
export producer or those in the manufacture or processing of which such
inputs were used.
"(b) Reduced Income Tax. — Registered enterprises
shall be entitled for the first five years from its registration, to
deduct from its taxable income an amount equivalent to the sum of the
direct labor cost and local raw materials utilized in the manufacture
of its export product: Provided, however, That such deduction shall in
no case exceed twenty-five per centum (25%) of its total export
revenue. chanroblesvirtualawlibrary
Before registered enterprises may avail themselves of the foregoing
export incentives benefits, they shall apply first with the Board,
which shall approve the application upon proof: (1) that the enterprise
proposes to engage in good faith in creating a market for its products
abroad; (2) that the product to be exported is one included in the
government priorities plan as suitable for export, or if not so
included that its export will not adversely affect the needs of the
domestic market for the finished product to be exported or for the
domestic raw materials used in its manufacture; (3) that the enterprise
has or will set up an adequate accounting system to segregate revenues,
purchases and expenses of its export market operations from those of
its domestic market operations; and (4) that the exported products and
commodities meet the standards of quality established by the Bureau of
Standards or, in default thereof, by the Board.
The Board may suspend or cancel wholly or partially the above deduction
under this section whenever any action is threatened or taken by an
international association or foreign nation which would nullify the
purpose of said incentive and would impair or threaten to impair the
export trade of the Philippines or its relations with other nations."
Section 4. Section Thirteen of the same Act is hereby
amended as follows:cralaw:red
"Sec. 13. Board of Investments. — The Board of
Investments shall be composed of five full-time members to be appointed
by the President of the Philippines with the consent of the Commission
on Appointments, from a list of nominees submitted by the Chamber of
Commerce of the Philippines, the Chamber of Industries, Base Metals
Producers Association, Gold Producers Association, Chamber of
Agriculture and Natural Resources of the Philippines, the Bankers
Association of the Philippines and other similar business organizations
as well as from duly organized and existing labor confederations,
federations and other organizations of national standing in the
Philippines from which the President may request nominees: Provided,
That each association shall submit a list of not less than three (3)
but not more than five (5) nominees and that no association shall have
more than one member in the Board at any particular time: And provided,
further, That the President may appoint as members of the Board
qualified persons who have not been so nominated. The Board shall elect
a Chairman and a Vice-Chairman from among themselves. The tenure of
office of each member shall be six (6) years: Provided, however, That
the members of the Board first appointed shall hold office for two (2)
years; three (3) years, four (4) years, five (5) years and six (6)
years as fixed in their respective appointments: Provided, further,
That upon the expiration of his term, a member shall serve as such
until his successor shall have been appointed and qualified: Provided,
furthermore, That no vacancy shall be filled except for the unexpired
portion of any term, and that no one may be designated to be a member
of the Board in an acting capacity, but all appointments shall be ad
interim or permanent: Provided, finally, That a member of the Board may
serve as director of government-owned or controlled
corporation." chanroblesvirtualawlibrary
Section 5. Section Fourteen of the same Act is hereby
amended by deleting the last sentence thereof and shall read as
follows:cralaw:red
"Sec. 14. Qualifications of Members of the Board. —
The members of the Board shall be citizens of the Philippines, at least
thirty (30) years old, of good moral character and of recognized
competence in the field of economics, finance, banking, commerce,
industry, agriculture, engineering, management, law or labor, such
competence to be certified by the association making the nomination or
by the association whose members belong to the same profession, calling
or occupation as the persons appointed."
Section 6. Section Sixteen of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 16. Powers and Duties of the Board. — The Board
shall meet as often as may be necessary but not less than once each
week on such day as it may fix. Notice of special meeting shall be
given all members of the Board and proof of such notice shall be spread
upon the minutes. The presence of three (3) members shall constitute a
quorum; and the affirmative vote of three (3) members in a meeting
validly held shall be necessary to exercise its powers and perform its
duties, which shall be as follows: chanroblesvirtualawlibrary
(a) Draw up annually an investment priorities plan in
the manner prescribed in Section eighteen which shall be the basis for
the implementation of this Act;
(b) Promulgate such rules and regulations as may be
necessary to implement the intent and provisions of this Act, which
rules and regulations shall take effect thirty (30) days after their
publication in two (2) newspapers of general circulation in the
Philippines;chanroblesvirtualawlibrary
(c) Process and approve, imposing such terms and
conditions as it may deem necessary to promote the objections of this
Act, including refund of incentives availed or to be availed by an
enterprise in amounts to be determined by the Board, applications for
registration under this Act, and issue the proper certificate of
registration upon payment of the necessary fees, which shall not exceed
two hundred pesos;chanroblesvirtualawlibrary
(d) After due hearing, decide controversies
concerning the implementation of this Act that may arise between
registered enterprises or investors therein and government agencies,
within thirty (30) days after the controversy has been submitted for
decision: Provided, That the investor or the registered enterprise may
appeal the decision of the Board within fifteen (15) days from receipt
thereof to the Court of First Instance of the City of Manila or of the
city or province where the principal office of the registered
enterprise is located, in the manner provided for by the Rules of Court
in cases of this nature;chanroblesvirtualawlibrary
(e) Recommend to the Commissioner of Immigration the
entry into the Philippines for employment of foreign nationals as
permitted in Sections seven and eight of this Act; chanroblesvirtualawlibrary
(f) Periodically check and verify, either by
inspection of the books or by requiring regular reports, the proportion
of the participation of Philippine Nationals in a registered enterprise
to ascertain compliance with its qualification to retain registration
under this Act;chanroblesvirtualawlibrary
(g) Periodically check and verify the compliance by
registered enterprise with the provisions of this Act, with the rules
and regulations promulgated under this Act and with the terms and
conditions of registration;chanroblesvirtualawlibrary
(h) After notice and hearing, cancel the registration
or suspend the enjoyment of incentive benefits of any registered
enterprise or require refund of incentives enjoyed by such enterprise
including interests and monetary penalties, for (1) failure to maintain
the qualifications required by this Act for registration, or (2) for
willful or grossly negligent violation of any provision of this Act, of
the rules and regulations issued under this Act, or the terms and
conditions of registration, or of laws for the protection of labor or
of the consuming public: Provided, That the registered enterprise
affected by the order of cancellation or suspension may appeal within
fifteen (15) days from the receipt of the order to the Court of First
Instance of the City of Manila or of the city or province where the
principal office of the registered enterprise is located;chanroblesvirtualawlibrary
(i) Appoint, discipline and remove, and determine the
compensation of its technical staff and other personnel: Provided, That
except as to the technical staff and such other positions as the Board
may declare to be highly technical or primarily confidential, all
positions in the Board are subject to the provisions of the Civil
Service Law and Rules, but are exempt from the regulations of the Wage
and Position Classification Office; chanroblesvirtualawlibrary
(j) Prepare or contract for the preparation of
feasibility and other pre-investment studies for pioneer areas either
upon its own initiative or upon the request of Philippine Nationals who
commit themselves to invest therein and show the capability of doing
so, and upon condition that in no case shall the expenditure of the
Board exceed one hundred twenty-five thousand pesos (P125,000) per
study: Provided, That if venture is implemented, then the amount
advanced by the Board should be repaid within five (5) years from the
date the commercial operation of said enterprise starts;chanroblesvirtualawlibrary
(k) Require registered enterprises to list their
shares of stock in any accredited stock exchange or directly offer a
portion of their capital stock to the public and/or their employees;chanroblesvirtualawlibrary
(l) Recommend to the National Economic Development
Authority guidelines for the rationalization of certain industries
whose continued operation will result in the dislocation of and/or
overcrowding in said industries, thus retarding economic growth, and
upon approval thereof, the Board shall have the power to implement the
same and in appropriate cases, recommend to the President, after due
hearing and notice, to restrict, either totally or partially, the
importation of any equipment or raw materials for firms in the industry
not conforming with the prescribed guidelines;chanroblesvirtualawlibrary
(m) In appropriate case and upon approval of the
National Economic Development Authority, suspend the nationality
requirement provided for in this Act of any other nationalization
statute in case of international complementation arrangements for the
manufacture of a particular product on a regional basis to take
advantage of economies of scale; chanroblesvirtualawlibrary
(n) Within four (4) months after the close of the
fiscal year, submit annual reports to the President and Congress, with
copies to each member thereof, which shall cover its activities in the
administration of this Act, including recommendations on investment
policies; and
(o) Generally, exercise all the powers necessary or
incidental to attain the purposes of this Act."
Section 7. The first two paragraphs of Section
Eighteen of the same Act are hereby amended to read as follows:cralaw:red
"Sec. 18. Preferred and Pioneer Areas of Investment.
— The Board of Investments shall submit to the President not later than
the end of January of every year, through the National Economic
Development Authority, an Investment Priorities Plan, as defined in
Section three, paragraph (k) of this Act.
In determining the preferred and pioneer areas of investment and their
corresponding measured capacities, the Board shall determine which
areas of investment best accomplish the policy declared in this Act,
including those which will economically produce goods for domestic use
in substitution for goods being imported in large quantities, and
especially those which will process further and thereby increase the
value of agricultural, mining and timber products already being
produced for export or which will make products at costs low enough to
be sold competitively in export markets." chanroblesvirtualawlibrary
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Section 8. Paragraph (a) Section Nineteen of the same
Act is hereby amended to read as follows:cralaw:red
"Sec. 19. Qualification of Applicants. — To be
entitled to registration, an applicant must satisfy the Board that:cralaw:red
(a) It possesses the qualifications prescribed for
registered enterprises in Section three, paragraph (b) of this Act; or
if it does not possess the required degree of ownership by Philippine
Nationals, the following circumstances must be satisfactorily
established:cralaw:red
(1) That it is otherwise qualified under Section
three, paragraph (b) of this Act;chanroblesvirtualawlibrary
(2) That it proposes to engage in a pioneer project,
as defined in Section three, paragraph (h) of this Act which,
considering the nature and extent of capital requirements, processes,
technical skills and relative business risks involved, is in the
opinion of the Board of such a nature that the available measured
capacity thereof cannot be readily and adequately filled by Philippine
Nationals; chanroblesvirtualawlibrary
(3) That it obligates itself to attain the status of
a Philippine National, as defined in Section three, paragraph (f) of
this Act within thirty (30) years from the date of registration by
having its shares of stock listed with a Philippine stock exchange
within fifteen (15) years from the date of registration and actually
offering for sale the said shares to Philippine Nationals immediately
after the said period: Provided, however, That in case of a registered
enterprise exporting at least seventy per cent (70%) of its total
production, it shall attain the status of a Philippine National within
forty (40) years from date of registration by listing its shares of
stock within twenty-five (25) years from date of registration and
actually selling its shares after the said period: Provided, further,
That the Board may extend this period for another ten (10) years,
subject to such conditions as it may impose in the national interest,
and upon proof by the registered enterprise that it has exerted its
best efforts to sell the required number of shares to Philippine
Nationals, as required by this Section but Philippine Nationals have
not bought the same and for such other cause as the Board may deem
sufficient to justify the extension of the period;chanroblesvirtualawlibrary
(4) That the pioneer area it will engage is one that
is not within the activities reserved by the Constitution or other laws
of the Philippines to Filipinos or corporations owned or controlled by
Filipino citizens."
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Section 9. The last two paragraphs of Section Twenty
of the same Act are hereby amended to read as follows:cralaw:red
"Sec. 20. Application. —chanroblesvirtualawlibrary
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A non-Philippine National may engage in non-pioneer areas of investment
where Philippine Nationals are already engaged only after three (3)
years from the date of declaration of the area as preferred if the
measured capacity has not been filled within the said period, except
where such non-Philippine National shall engage, without incentives,
unless otherwise registered under Republic Act Numbered Sixty-one
hundred thirty-five in the manufacture of finished products primarily
for export. The Board shall fix the percentage of production that must
be exported by a non-Philippine National in order to be deemed to be
engaged in manufacture primarily for export, which percentage shall not
be less than seventy per cent (70%) of its total production.
Any order or decision of the Board under this Section may be appealed
within thirty (30) days from receipt of said order or decision to the
National Economic Development Authority. Upon failure on the part of
the National Economic Development Authority to act within the said
period of ninety (90) days, the decision of the Board shall be deemed
upheld. The Board or the enterprise applying for registration under
this Act may appeal the decision of the National Economic Development
Authority to the President within thirty (30) days from its
promulgation." chanroblesvirtualawlibrary
Section 10. Paragraph (a) of Section Twenty-five of
the same Act is hereby amended to read as follows:cralaw:red
"Sec. 25. Applicability and Interpretation. — In
interpreting and applying the provisions of this Act, the following
rules shall be observed:cralaw:red
(a) Applicability to Existing Enterprises. — An
enterprise which satisfies the definition of a "Philippine National"
engaged in a preferred area of investment at the time of its
declaration as such, shall be entitled to registration as to its
existing capacity, as well as to such an expansion or enlargement
thereof requiring new or additional machinery and equipment as shall be
within the unfilled measured capacity of the area; so also, an investor
in such an existing enterprise shall be entitled to benefits and
incentives to the extent of his present as well as new or additional
investment therein: Provided, That the application is filed while the
area is still in the Investment Priorities Plan: Provided, however,
That the benefits of this Act, so far as may be applicable to such
existing enterprises and investors in such existing enterprises, shall
be given prospective effect only from the date of registration."
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Section 11. The last paragraph of Section 4 of R.A.
5455 is hereby amended as follows and a new section to be designated as
Section 9-A is hereby added: chanroblesvirtualawlibrary
"Sec. 4. Licenses to do Business. —chanroblesvirtualawlibrary
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The above requirements shall be in addition to those set forth in the
Corporation Law, as amended, for licensing foreign corporations and a
violation of any of these requirements or of the terms and conditions
which the Board may impose shall be sufficient cause to cancel a
license or permit issued to this Act: Provided, however, That aliens or
foreign firms, associations, partnerships, corporations or other forms
of business organization not organized or existing under the laws of
the Philippines who may lawfully have been licensed to do business in
the Philippines prior to the effectivity of this Act shall, with
respect to the activities for which they were licensed and actually
engaged in prior to the effectivity of this Act, not be subject to the
reporting requirements prescribed by the Board. Provided, further, That
where the issuance of said license has been irregular or contrary to
law, any person affected thereby may file an action with the Court of
First Instance where said alien or foreign business organization
resides or has its principal office to cancel the said license. In such
cases, no injunction shall issue without notice and hearing; and
appeals and other proceedings for review shall be filed directly with
the Supreme Court."
"Sec. 9-A. Periodic reports. — The Board shall
periodically check and verify compliance with the provisions of this
Act, either by inspection of the books or by requiring regular reports
from aliens or foreign firms, domestic enterprises with foreign
investments in excess of thirty per cent (30%) and new entities
licensed to do business under Section four of this Act. Nothing herein
shall be deemed to preclude the Board from requiring similar reports
from domestic firms with foreign investments of less than thirty per
cent (30%). chanroblesvirtualawlibrary
A summary of said reports shall be annually submitted by the Board to
Congress not later than January fifteen. For this purpose, the Board
may require other government agencies licensing and/or regulating
foreign enterprises of domestic firms with foreign equity, to furnish
the Board with reports on such foreign investments."
Section 12. Paragraphs (b), (c), (d), (f) and (g) of
Section Three of Republic Act Numbered Sixty-one hundred and
thirty-five are hereby amended to read as follows:cralaw:red
"Sec. 3. Definition of Terms. — For purposes of this
Act
(a) .
(b) "Registered Export Producer" shall mean any
person, corporation, partnership or other entity organized and existing
under Philippine laws, (1) registered with the Board in accordance with
this Act, (2) engaged or proposing to engage in the manufacture or
processing of export products as hereinbelow defined, and (3) directly
exporting its export products, or selling them (a) to a registered
export trader that subsequently exports the said products, or (b) to
other export producers who utilize said products as direct inputs in
products subsequently manufactured or processed by them and thereafter
exported, or (c) to foreign tourists and foreign travelers in areas
covered by Tourism Priorities Plan and subject to the guidelines
prepared by the Philippine Tourist Commission and the Board.
(c) "Registered Export Trader" shall mean any person,
corporation, partnership or other entity organized and existing under
Philippine laws. chanroblesvirtualawlibrary
(1) registered with the Board in accordance with this
Act and (2) which derived at least twenty per cent (20%) of its gross
income for the year in which the incentives are claimed, from the sale
abroad of export products bought by it from one or more export
producers or from domestic sale to foreign tourists and foreign
travellers in areas covered by the Tourism Priorities Plan and subject
to the guidelines prepared by the Philippine Tourist Commission and the
Board.
(d) "Registered Service Exporter" shall mean a
person, corporation, partnership or other entity organized and existing
under Philippine laws, (1) registered with the Board in accordance with
this Act and (2) engaged or proposing to engage (a) rendering
technical, professional or other services which are paid for in foreign
currency including, but not limited to, the fields of law, medicine,
accounting, management, valuation and appraisals, engineering,
construction, geodetics, surveying, teaching, pharmacy, nursing,
cultural presentations or promotions, works of art, and entertainments;
(b) in exporting television and motion pictures and musical recordings
made or produced in the Philippines, either directly or through a
registered export trader; or (c) in rendering services for foreign
tourists and foreign travellers covered by the Tourism Priorities Plan
and subject to the guidelines prepared by the Philippine Tourist
Commission and the Board. chanroblesvirtualawlibrary
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(f) "Export Sales" shall mean the Philippine port
F.O.B. value, determined from invoices, bills of lading, inward letters
of credit, landing certificates, and other commercial documents, of
export products exported directly by a registered export producer or
registered export trader, or the net selling price of export products
sold by a registered export producer to another export producer, or
registered export trader who subsequently exports the same, or the net
selling price of export products in acceptable foreign currencies sold
by a registered export producer or registered export trader to foreign
tourists and foreign travellers under certain conditions to be
prescribed by the Board, but sales of export products to another
registered export producer or to a registered export trader shall only
be deemed export sales when actually exported by the latter, as
evidenced by landing certificates or similar commercial documents.
Exportation of goods or consignment shall not be deemed export sales
until the export products consigned are in fact sold by the consignee.
(g) "Export Fees" shall mean the total foreign
exchange which is charged or received by a registered service exporter
for furnishing or performing services, or permitting the showing or
playing, outside of the Philippines, of television or motion pictures
or musical recordings. It shall also include fees in acceptable foreign
currencies received by service exporters catering to foreign tourists
and foreign travellers under certain conditions to be prescribed by the
Board."
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xxx
xxx
Section 13. Section Four of Republic Act Numbered
Sixty-one hundred and thirty-five is hereby amended to read as follows:cralaw:red
"Sec. 4. Export Priorities Plan. — Not later than the
end of January of every year the Board shall submit to the President,
through the National Economic Development Authority, an export
priorities plan setting forth the export products that should be
encouraged with priority, considering: chanroblesvirtualawlibrary
(a) the comparative advantage they enjoy or could be
made to enjoy;chanroblesvirtualawlibrary
(b) their potential for earning foreign exchange; and
(c) their profitability to the national economy.
Within the same period, the Philippine Tourist Commission shall submit
to the President through the National Economic Development Authority, a
Tourism Priorities Plan setting the required tourism facilities in
various regions which can qualify for incentives. The Export Priorities
Plan and the Tourism Priorities Plan shall be acted upon and take
effect, and may be amended, following the procedure for, and with like
effect as, the said investments priorities plan."
Section 14. Section Six, paragraph (b) of Republic
Act Numbered Sixty-one hundred thirty-five is hereby amended to read as
follows:cralaw:red
"Sec. 6. Conditions for Availment of Incentives. —chanroblesvirtualawlibrary
(a) .
(b) To be entitled to registration, an applicant must
satisfy the Board that (1) he is a citizen of the Philippines, in case
the applicant is a natural person, or that at least sixty per cent
(60%) of its capital is owned and controlled by citizens of the
Philippines, in case the applicant is a corporation, partnership or
other entity; (2) that it is engaged or proposes to engage in
manufacturing, processing or exporting export products listed in the
export priorities plan or tourism priorities plan, or if not so listed
in the export priorities plan, that at least fifty per cent (50%) of
its sales are export sales; or in case of a service exporter, that it
is engaged or proposes to engage in rendering services payable in
foreign currency, providing services to foreign tourists and foreign
travellers in areas with the tourism Priorities Plan and subject to the
guidelines prepared by the Philippine Tourism Commission and the Board,
or in exporting television or motion pictures or musical recordings
produced or made in the Philippines; (3) that it is not engaged and
will not engage in any of the activities reserved by the Constitution
or the laws of the Philippines to Filipino citizens or corporations
owned and controlled by Filipino citizens, unless and until the
applicant can fulfill the requirements of the Constitution of said
laws; and (4) that if the applicant is engaged or proposes to engage in
activities other than the manufacture, processing and exportation of
export products, or in rendering services other than export services,
it has installed or undertakes to install an adequate accounting system
to segregate the investments, revenues, sales, receipts, purchases,
payrolls, expenses, and profits and losses of its export operations
from those of its domestic operations: Provided, That in the case of:
(i) a pioneer enterprise herein registered, as defined under Section
3(h) of Republic Act Numbered Fifty-one hundred eighty-six, (ii) a
service exporter primarily engaged in the business of catering to
foreign travellers, and (iii) an export producer seventy per cent (70%)
of whose total production is to be exported, the nationality
requirement shall be in accordance with Section nineteen of said Act
instead of Section six, paragraph (b) of this Act: Provided, further,
That in the latter case, the Board may increase the seventy per cent
(70%) export requirement in the event of an adverse effect on the
domestic producers of the export product: Provided, furthermore, That
upon receipt of the application for registration, the Board shall,
within thirty (30) days, notify the applicant of all pertinent
requirements not complied with. And provided, finally, That the Board
of Investments shall act on said application within ninety (90) days
after submission thereof." chanroblesvirtualawlibrary
Section 15. Section Seven, excluding paragraphs (c)
and (d), Republic Act Numbered Sixty-one Hundred Thirty-Five is hereby
amended to read as follows:cralaw:red
"Sec. 7. Incentives to Registered Export Producers.
— Registered export producers, unless they already enjoy the same
privileges under other laws, shall be entitled to the incentives set
forth in paragraphs (g), (h), (i), (j) and (k) of Section seven of
Republic Act Numbered Fifty-one hundred eighty-six, known as the
Investment Incentives Act; and registered export producers that are
pioneer enterprises shall be entitled also to the incentives set forth
in paragraphs (a), (b), and (c) of Section eight of the said Act. In
addition to the said incentives, and in lieu of other incentives
provided in Sections seven and nine of that Act, registered export
producers shall be entitled to benefits and incentives as enumerated
hereunder:cralaw:red
(a) Tax Credit. — Every registered export producer
shall enjoy a tax credit equivalent to the sales, compensating and
specific taxes semi-manufactured products used in the manufacture,
processing or production of its export products and forming part
thereof, whether exported directly by the registered export producer or
sold to another export producer, which uses such sold product as a
direct input in export products manufactured or processed by it and
subsequently exported to a registered export trader: Provided, That the
tax credit shall accrue to the registered export producer only after
the other export producer or registered export trader has in fact
exported the products of the export producer or those in the
manufacture or processing of which such inputs were used. The tax
credit shall be issued by the Secretary of Finance, upon presentation
of the export documents, and shall be in lieu of refunds. It may be
used to pay taxes, duties, charges, and fees due to the national
government in connection with its operations. A tax credit shall be
non-transferrable, except when such transfer is hereditary succession
or occurs by operation of law; it may be used by the person or entity
to whom it is issued only for as long as it enjoys the benefits and
incentives provided for in this Act; and may not be used so as to
result in a refund.
(b) Reduced income tax. — Every registered export
producer, except those registered under Section six, paragraph (b),
subsection (iii) of this Act shall be entitled for the first five (5)
years from its registration, to deduct from its taxable income an
amount equivalent to the sum of the direct labor cost and local raw
materials utilized in the manufacture of its export products: Provided,
however, That such deduction shall in no case exceed twenty five per
centum (25%) of its total export revenue. chanroblesvirtualawlibrary
xxx
xxx
xxx
(e) Exemption from Export Tax. — The provisions of
law to the contrary notwithstanding, exports by a registered export
producer, of its registered export product shall be exempted from the
export tax, impost or fee, including the stabilization tax under
Republic Act Numbered Sixty-one hundred twenty-five.
Section 16. Section Eight of Republic Act Numbered
Sixty-One hundred thirty-five is hereby amended to read as follows:cralaw:red
"Sec. 8. Incentives to Registered Export Traders. — A
registered export trader shall be entitled to (a) exemption from export
tax provided in paragraph (e) of Section seven of this Act, for export
products bought by it from registered export producer/s qualified to
avail of such exemption for export tax; (b) to a tax credit equivalent
to the amount of specific and sales taxes on the registered export
products bought by it from export producers and subsequent exported;
and (c) for the first five (5) years from registration, to deduct from
its taxable income, in addition to the normal deduction allowed by the
National Internal Revenue Code, an amount equivalent to ten per cent
(10%) of its total export sales. For a period of five (5) years after
registration, an additional deduction of one per cent (1%) shall be
allowed a registered export trader who extends financial assistance to
a registered export producer or producers in an amount equivalent to
not less than twenty per cent (20%) of the registered export trader's
total export sales during the year in which the incentive is
claimed." chanroblesvirtualawlibrary
Section 17. Section Ten of Republic Act Numbered
Sixty-one hundred and thirty-five is hereby amended to read as follows:cralaw:red
"Sec. 10. Incentives to Registered Service Exporters.
— Every registered service exporter shall, for the first five (5) years
form registration, be entitled to deduct from its taxable income an
amount equivalent to fifty per cent (50%) of its total export fees
during the year in which the incentive is claimed: Provided, That, to
be entitled this deduction, the registered service exporter must have
remitted or repatriated to the Philippines in acceptable foreign
exchange its total export fees earned during the year in which the
incentive is claimed, less reasonable costs and expenses incurred or
payable in foreign currencies, under such rules and regulations as the
Monetary Board may prescribe. In addition, for a period of five (5)
years from registration, a registered service exporter who produces
television or motion pictures, or musical recordings, directly or
through a registered export trader shall also be entitled (a) to a tax
credit equivalent to the amount of specific, compensating and sales
taxes and duties paid by it on the raw materials and supplies used in
producing the picture or recording that is exported; and (b) to
exemption from payment of customs duties and compensating taxes on
importations of equipment, machinery or spare parts shipped with such
machinery and equipment that (1) are not manufactured domestically in
reasonable quantity and quality or sold at reasonable prices; (2) are
directly and actually needed and will be used by the registered service
exporter in producing or making the pictures of recordings that it
exports; (3) are covered by shipping documents in the name of the
registered service exporter to whom the shipment will be delivered
direct by customs authorities; (4) have the approval of the Board of
Investments obtained by the registered service exporter before placing
the order for the importation; and (5) are the subject of international
bidding, under the supervision of the Board, unless the Board dispenses
with this condition for any of the reason set forth in Section seven,
paragraph (c) of this Act. If the registered service exporter does not
bring into the Philippines export fees equivalent to at least the cost
of the imported machinery, equipment, and spare parts within (5) years
after delivery of the same to it, or if it sells, transfers, or
disposes of the same or any part thereof, without prior approval of the
Board, within said five (5) years, it shall pay twice the amount of the
exemption given it, together with the penalty and interest thereon,
computed from the date of delivery, fixed by the Tariff and Customs
Code and the National Internal Revenue Code for delinquency in the
payment of duties and taxes. However, the Board shall allow and approve
the sale, transfer or disposition within the said period of five (5)
years. If the registered service exporter has brought into the
Philippines export fees during the period it has held the equipment
which amount to twenty per cent (20%) of the cost of the equipment for
each year in which it has held the equipment; and if made (1) to
another registered service exporter of pictures and recordings; (2) for
reasons of proven technical obsolescence; or (3) for purposes of
replacement to improve or expand the operations of the registered
service exporter. A similar incentive of tax and duty-free importation
of equipment, machinery and spare parts shipped with such machinery and
equipment under the same conditions as above enumerated shall be
granted to service exporters engaged primarily in catering to foreign
tourists and foreign travellers in preferred areas covered by the
Tourism Priorities Plan and within the guidelines prescribed by the
Philippine Tourist Commission and the Board.
Section 18. All Acts, executive orders,
administrative orders, rules and regulations or parts thereof
inconsistent with the provisions of this Act are likewise repealed or
modified accordingly. chanroblesvirtualawlibrary
Section 19. Effectivity. — This Act shall take effect
from its approval.
Approved.
Done in the City of Manila,
this 6th day of January, in the year of Our Lord, nineteen hundred and
seventy-three.
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