Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City

Seventeenth Congress
Second Regular Session

HOUSE BILL NO. 6037

Introduced by
REPRESENTATIVE ALFREDO B. BENITEZ

EXPLANATORY NOTE

Mindanao, despite its rich environment and culture, lags behind Luzon and
Visayas in terms of economic development. Mindanao's potential is blurred by its
reputation as host to lawless elements who seeks and promote violence by terrorizing
its law-abiding citizens. Said reputation, continuously haunts and prevents Mindanao
from achieving its full potential for development as investors and businessmen grew
hesitant, if not totally opposed to making sound and lasting investments in the Island.

Lest we forget, that Section 20, Article Il of the 1987 Constitution provides that
“the State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments.”

This Bill seeks to encourage investors to look past beyond Mindanao's
reputation by giving incentives through lowering the corporate income tax for
corporations located in Mindanao which are engaged in agro-industrial, industrial,
commercial, tourist, banking, investment, and financial enterprises.

Accordingly, it is imperative that this Congress, in the exercise of its mandate
and in the performance of its duty to affect inclusive and sustainable growth in the
entire Philippine archipelago, to take all necessary actions to make sure that growth
includes all, affects all, and reaches all. No one gets left behind.

FREDO ee

37d District, Negros Occidental



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Seventeenth Congress
Second Regular Session

HOUSE BILL No. 6037

Introduced by

REPRESENTATIVE ALFREDO B. BENITEZ

AN ACT PROVIDING FOR FISCAL INCENTIVES FOR CORPORATIONS WITH
BUSINESS ENTERPRISES DULY ESTABLISHED AND LOCATED IN THE
ISLAND OF MINDANAO,

Section 1. Title. — This Act shall be known as the “Mindanao Economic Zone
Act.”

Section 2. Declaration of Policy. — It is the declared policy of the government
to translate into practical realities the following policies and mandates in the 1987
Constitution, namely:

a. “The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed
investments.” (Section 20, Article II)

b. “The State shall promote the preferential use of Filipino labor, domestic
materials and locally produced goods and adopt measures that help make
them competitive.” (Section 12 Article XIl)

In pursuance of these policies, the government shall actively encourage,
promote, induce and accelerate a sound and balanced industrial, economic and social
development of the country in order to provide jobs to the people especially those in
the rural areas, increase their productivity and their individual and family income, and
thereby improve the level and quality of their living condition through the establishment
of strategic measures that shall effectively attract legitimate and productive local and
foreign investments.


Section 3. Purposes, Intents and Objectives. — \t is the purpose, intent and
objective of this Act:

a. To transform the entire Island of Mindanao into highly developed agro-
industrial, industrial, commercial, tourist, banking, investment, and financial
centers;

b. To promote the flow of investors, both foreign and local, into Mindanao
which would generate employment opportunities; and

c. To create a climate conducive to creating business in Mindanao by
providing incentives for business activity in the said Island.

Section 4. Fiscal Incentives. Corporations located in Mindanao duly qualified
under this Act as may be determined by the Mindanao Development Authority (MinDA)
shall be entitled to the following fiscal incentives:

a. The income tax rate of thirty percent (30%) imposed on Domestic
Corporations under Section 27 (A), Chapter IV of the National Internal
Revenue Code is reduced to ten percent (10%) upon the taxable income
derived during each taxable year from all sources within and without the
Philippines by every corporation, as defined in Section 22 (B) of the of the
National Internal Revenue Code, organized in, or existing under the laws of
the Philippines.

Said fiscal incentive shall apply for a period of five (5) years upon approval
of the MinDA.

b. Corporation and business establishments which met the qualifications shall
be entitled to the fiscal incentives as provided for under Presidential Decree
No. 66, the law creating the Export Processing Zone Authority, or those
provided under Book VI of Executive Order No. 226, otherwise known as
the Omnibus Investment Code of 1987.

Section 5. Exemption from National and Local Taxes. — Except for real
property taxes on land owned by developers, no taxes, local and national, shall be
imposed on corporations and business establishments which qualified under this Act.
In lieu thereof, five percent (5%) of the gross income eared by all business
enterprises quallfied under this Act shall be paid and remitted as follows:

a. Three percent (3%) to the National Government; and
b. Two percent (2%) which shall be directly remitted by the business

establishment to the Treasurer's office of the municipality or city where the
enterprise is located.


Section 6. Duties of the Mindanao Development Authority. The MinDA shall
be responsible for the exercise of the following powers and duties:

a. Prepare a list containing specific activities of industries that can qualify for
the above-mentioned incentives duly supported by the studies and existing
and prospective demands for such products and services.

b. Promulgate rules and regulations as may be necessary to determine the
qualified corporations and business establishments on the incentives
provided under this Act.

c. Process and approve applications for qualification under this Act, imposing
such terms and conditions as it may deem necessary to promote the
objectives of the same.

Section 7. Separability Clause. — If any provision of this act or the application
of the same is declared invalid, the remainder of this Act or the application of any other
provision shall not be affected by such declaration.

Section 8. Repealing Clause. — All laws, decrees, ordinances, rules and
regulations, executive or administrative orders and other presidential issuances
inconsistent with this Act, are hereby repealed, amended or modified accordingly.

Section 9. Effectivity. — This Act shall take effect after fifteen (15) days from
publication in two (2) national papers of general circulation.