Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. Ue

Introduced by Representative Junie E. Cua

This bill covers the second package of the Duterte Administration's
comprehensive tax reform program. It complements the recently-passed Tax
Reform for Acceleration and Inclusion (TRAIN) Act (RA 10963) by lowering the
corporate income tax rate, reforming the corporate income tax system, and
broadening the tax base by modernizing investment tax incentives to enhance
fairness, improve competitiveness, plug tax leakages, and achieve fiscal
sustainability.

Specifically, this bill endeavors to address the following major policy issues:

1. The Philippines’ corporate income tax system is characterized by a high
rate and a narrow base. Despite having the highest corporate income tax
rate in the ASEAN region at 30%, its collection efficiency is one of the
lowest. This is because of very generous tax incentives that are given in
perpetuity and in lieu of other taxes, and thus seriously erode the tax
base.

2. The country’s investment tax incentive system is very complex. It has 14
investment promotion agencies and more than 300 laws that grant
various types of investment and non-investment incentives with little
regard to cost-efficiency and effectiveness. All these result in a tax
incentive system that is less transparent, less targeted, not time-bound,
and not performance based.

3. The outdated tax code lacks adequate provisions to address transfer
pricing and other anti-avoidance practices.

4. Ironically, the DOF, which is the steward of the government's fiscal
health and mandated to formulate sound fiscal policy, has very little
involvement in the formulation and grant of tax incentives to the
registered business enterprises. This is contrary to international best


practice where the finance minister holds a significant role in the
decision making process regarding the design and grant of tax
incentives.

The cost to the country of this defective system is significant. In 2015, the
Department of Finance estimates that the investment tax incentive system
costs the government some P301 billion in forgone income tax, VAT (gross of
refund), and customs duty. This estimate does not yet include forgone local
taxes and leakages that arise from tax avoidance and tax evasion due to the
complicated system. While the country benefits from these incentives in terms
of investment, jobs, exports, and country-side development, the staggering
cost at more than 2% of GDP warrants the government to review its incentives
system by making them time-bound, performance-based, transparent, and
targeted to ensure that redundant incentives are removed, the benefits fully
outweigh the cost, and fiscal prudence is maintained at all times.

Specifically, despite being the most generous provider of incentives in the
region, the Philippines’ investment tax incentives have not translated into
much higher investment and export performance. The Philippines has one of
the lowest export share to GDP among the ASEANS, while the share of foreign
direct investment to GDP, while increasing in recent years, remains lackluster
relative to its neighbors. The answer to this conundrum lies in the fact that
investment and exports are mainly influenced by a country’s ability to provide
efficient infrastructure, modern logistics, effective governance, low cost of
doing business, and a productive work force. In general, while some tax
incentives can help the country improve its competitiveness, they are not the
real solution and they often serve as band-aid solution to the ills of the
country’s inability to provide infrastructure and basic services. In this regard,
the Duterte Administrations seeks to reform the tax system so that it can
generate more tax revenues fairly to fund the priority programs that will make
the country attractive to investors without giving away redundant and costly
tax incentives.

With tax incentives modernized and the tax base expanded, the corporate
income tax rate can be reduced to correct the current inequitable and unjust
system that benefits a few industries while negatively impacting the rest of the
business community, which pay the regular corporate income tax rate. The
reduction of the corporate income tax rate would be a very much welcome
relief that will benefit all corporate taxpayers, whether large or small, and
whether domestic or foreign, and will enhance the competitiveness of our


investment climate. In the end, this bill aims to benefit not just the
government, but more importantly, the Filipino taxpayers who have been
diligently complying with their tax obligations by making the tax system more
progressive, efficient, and simpler.

In view of the foregoing, urgent approval of this bill is earnestly sought.

presentative
Lone District, Quirino


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

2084
HOUSE BILL NO.

Introduced by Representative Junie E. Cua

AN ACT AMENDING SECTIONS 4, 5, 20, 22, 25, 27, 28, 34, 40, 50, 73,
112, 117, 119, 203, 204, 222, 237, 237-A, 255, 256, 257, 258, 260,
261, 262, 263, 264, 265, 266, 275, 282, 290 AND ADDING SECTIONS
6-A AND A NEW TITLE XII! UNDER THE NATIONAL INTERNAL
REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES.

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled.

SECTION 1. Title. This Act shall be known as the “Corporate Income Tax and
Reform Act.”

SEC. 2. Section 4 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:

“SEC. 4. Power of the Commissioner to Interpret Tax Laws and to
Decide Tax Cases. - The power to interpret the provisions of the
Code and other tax laws shall be under the exclusive and original
jurisdiction of the Commissioner, subject to review by the Secretary
of Finance: PROVIDED, THAT THE POWER TO INTERPRET THE
PROVISIONS OF TITLE XII! OF THIS CODE, SHALL BE UNDER THE


EXCLUSIVE AND ORIGINAL JURISDICTION OF THE SECRETARY OF
FINANCE.

‘The power to decide disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in relation
thereto, or other matters arising under this Code or other laws or
Portions thereof administered by the Bureau of Internal Revenue is
vested in the Commissioner, subject to the exclusive appellate
jurisdiction of the Court of Tax Appeals.

SEC. 3. Section 5 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:

“SEC. 5. Power of the Commissioner to Obtain Information and to
Summon, Examine, and Take Testimony of Persons. — In ascertaining
the correctness of any return, or in making a return when none has
been made, or in determining the liability of any person for any
internal revenue tax, or in collecting any such liability, or in
evaluation tax compliance, the Commissioner is authorized:

(A) xxx
(B) xxx

(C) xxx

(D) xxx; [ and ]
(E) xxx; AND

(F) IN CASE THE INFORMATION OR RECORDS REQUESTED ARE
NOT FURNISHED WITHIN THE PERIOD PRESCRIBED IN THE WRITTEN
NOTICE, OR WHEN THE INFORMATION OR RECORDS SUBMITTED
ARE INCOMPLETE, THE COMMISSIONER OR HIS DULY AUTHORIZED
REPRESENTATIVE, SHALL ISSUE A SUBPOENA DUCES TECUM
STATING THEREIN THE RELEVANT FACTS, SPECIFYING THE
PARTICULAR DOCUMENTS OR RECORDS NOT MADE AVAILABLE
AND THE TAXPAYER LIABLE OR THE THIRD PARTY/OFFICE
CONCERNED: PROVIDED, THAT INFORMATION OR RECORDS DULY
RECEIVED OR ALREADY WITHIN THE CUSTODY OF THE BUREAU, AS

2


1 THEREAFTER DECLARED BY THE PERSON SUBJECT OF THE
2 SUBPOENA DUCES TECUM, SHALL BE REMOVED THEREFROM.

3

4

5 THE SERVICE OF A SUBPOENA DUCES TECUM SHALL BE
6 EFFECTED BY THE REVENUE OFFICERS ASSIGNED TO INVESTIGATE
7 THE CASE. HOWEVER, SUCH SERVICE MAY BE MADE BY ANY OTHER
8 INTERNAL REVENUE OFFICER AUTHORIZED FOR THE PURPOSE.

9

10 THE SUBPOENA DUCES TECUM SHALL BE SERVED
an PERSONALLY OR BY MAIL, OR IF NOT PRACTICABLE, IT SHALL BE
12 SERVED BY SUBSTITUTED SERVICE IN ACCORDANCE WITH THE
13 RULES OF THE COURT.

14

15 A CRIMINAL ACTION SHALL BE INSTITUTED FOR FAILURE TO
16 OBEY THE SUBPOENA DUCES TECUM.

17

18 BOOKS, RECORDS, AND DOCUMENTS SUBMITTED AS A
19 RESULT OF A SUBPOENA DUCES TECUM SHALL BE UNDER THE
20 CUSTODIANSHIP OF THE RECEIVING OFFICER WHO SHALL BE
21 RESPONSIBLE FOR ITS SAFEKEEPING AND PRESERVATION, SUBJECT
22 TO APPLICABLE RULES.

23

24 SEC. 4. A new section shall be inserted as Section 6-A of the National

25 _ Internal Revenue Code of 1997, as amended, to read as follows:

27 “SEC. 6-A. — SERVICE OF LETTER OF AUTHORITY, AUDIT AND
28 ASSESSMENT NOTICES ISSUED BY THE BUREAU. - THE NOTICE TO
29 THE TAXPAYER HEREIN REQUIRED MAY BE SERVED BY THE
30 COMMISSIONER OR HIS DULY AUTHORIZED REPRESENTATIVE
31 THROUGH PERSONAL SERVICE AT HIS REGISTERED ADRESS. IN CASE
32 PERSONAL SERVICE IS NOT PRACTICABLE, THE NOTICE SHALL BE
33 SERVED BY SUBSTITUTED SERVICE IN ACCORDANCE WITH THE
34 RULES OF THE COURT.

35

36

37 SEC. 5. Section 20 of the National Internal Revenue Code of 1997, as

38 amended, is hereby further amended to read as follows:


1 “SEC. 20. Submission of Report and Pertinent Information by the
2 Commissioner. —

3

4 (A) xxx

5

6 (8) SUBMISSION OF TAX-RELATED INFORMATION TO THE
7 DEPARTMENT OF FINANCE. — THE COMMISSIONER SHALL, UPON
8 THE REQUEST OF THE SECRETARY OF FINANCE SPECIFICALLY
9 IDENTIFYING THE NEEDED INFORMATION AND JUSTIFICATION FOR
10 SUCH REQUEST, FURNISH THE SECRETARY PERTINENT TAXPAYER
a INFORMATION: PROVIDED, HOWEVER, THAT THE SECRETARY AND
12 THE RELEVANT OFFICERS HANDLING SUCH SPECIFIC INFORMATION
13 SHALL BE COVERED BY THE PROVISIONS OF SECTION 270, UNLESS
14 TAXPAYER CONSENTS IN WRITING TO SUCH DISCLOSURE.

15

16 [ (B) ] (C) Report to Oversight Committee. - The Commissioner
17 shall, with reference to Section 204 of this Code, submit to the
18 Oversight Committee referred to in Section 290 hereof, through the
19 Chairmen of the Committee on Ways and Means of the Senate and
20 House of Representatives, a report on the exercise of his powers
21 pursuant to the said Section, every six (6) months of each calendar
22 year.”
23
24 SEC. 6. Section 22 of the National Internal Revenue Code of 1997, as
25 amended, is hereby further amended to read as follows:
26
27 SEC. 22. Definitions. - xxx

28
29 (A) 00x
30

a (B) 100%

32

33 (C) xxx

34

35 (D) xxx

36

37 (E) The term ‘nonresident citizen’ means;

38


(1) A citizen of the Philippines who establishes to the
satisfaction of the Commissioner the fact of his physical presence
abroad with a definite intention to reside therein.

(2) A citizen of the Philippines who leaves the Philippines
during the taxable year to reside abroad, either as an immigrant or
for employment on a permanent basis.

(3) A citizen of the Philippines who works and derives income
from abroad and whose employment thereat requires him to be
physically present abroad [ most of the time ] FOR 183 DAYS OR
MORE during the taxable year.

(4) A citizen who has been previously considered as
nonresident citizen and who arrives in the Philippines at any time
during the taxable year to reside permanently in the Philippines shall
likewise be treated as a nonresident citizen for the taxable year in
which he arrives in the Philippines with respect to his income derived
from sources abroad until the date of his arrival in the Philippines.

(5) The taxpayer shall submit proof to the Commissioner to
show his intention of leaving the Philippines to reside permanently
abroad or to return to and reside in the Philippines as the case may
be for purpose of this Section.

1x.”

SEC. 7. Section 25 (A) (1) of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:

“SEC. 25. Tax on Nonresident Alien Individual. -

(A) Non-resident Alien Engaged in trade or Business Within the Philippines. —

(1) In General. — A nonresident alien individual engaged in trade or
business in the Philippines shall be subject to an income tax in
the same manner as an individual citizen and a resident alien
individual, on taxable income received from all sources within
the Philippines. A nonresident alien individual who shall come
to the Philippines and stay therein for an aggregate period of

5


more than one hundred eighty THREE [(180)] (183) days OR
MORE during any calendar year shall be deemed a
‘nonresident alien doing business in the Philippines.’ Section
22 (G) of this Code notwithstanding.

SEC. 8. Section 27 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:

“SEC. 27. Rates of Income tax on Domestic Corporations. ~

(A) In General. - Except as otherwise provided in this Code, AN
INCOME TAX RATE OF PERCENT (30%), is hereby imposed 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 this Code and taxable under this Title as a
corporation, organized in, or existing under the laws of the
Philippines: [ Provided, that effective January 1, 2009, the rate of
income tax shall be thirty percent (30%). ] PROVIDED, THAT THE
RATE OF CORPORATE INCOME TAX SHALL BE TWENTY EIGHT
PERCENT (28%) BEGINNING JANUARY 1, 2021; TWENTY SIX
PERCENT (26%) BEGINNING JANUARY 1, 2023; TWENTY FOUR
PERCENT (24%) BEGINNING JANUARY 1, 2025; TWENTY TWO
PERCENT (22%) BEGINNING JANUARY 1, 2027; AND TWENTY
PERCENT (20%) BEGINNING JANUARY 1, 2029. PROVIDED FURTHER,
THAT THE SCHEDULED DECREASE IN THE RATE MAY BE SUSPENDED.
BY THE PRESIDENT UPON RECOMMENDATION OF THE SECRETARY
OF FINANCE IF THE PROJECTED DEFICIT TARGET AS A PERCENT OF
GDP EXCEEDS THE PROGRAMMED DEFICIT, AS DETERMINED BY THE
DEVELOPMENT BUDGET COORDINATION COMMITTEE (DBCC), IN
THE PRECEEDING YEAR PRIOR TO THE SCHEDULED REDUCTION IN
THE CIT RATE, BASED ON THE ANNUAL REVIEW OF THE MEDIUM
TERM FISCAL PROGRAM.

In the case of corporations adopting the fiscal-year accounting
period, the taxable income shall be computed without regard to the
specific date when specific sales, purchases and other transactions
occur. Their income and expenses for the fiscal year shall be deemed
to have been earned and spent equally for each month of the period.


The corporate income tax rate shall be applied on the amount
computed by multiplying the number of months covered by the new
rate within the fiscal year by the taxable income of the corporation
for the period, divided by twelve.

[ Provided, further, That the President, upon the
recommendation of the Secretary of Finance, may effective January
1, 2000, allow corporations the option to be taxed at fifteen percent

(15%) of gross income as defined hereinafter the following conditions
10 have been satisfied:

13 (1) A tax effort ratio of twenty percent (20%) of Gross
14 National Product (GNP);

16 (2) A ratio of forty percent (40%) of income tax
17 collection to total tax revenues;

19 (3) A VAT tax effort of four percent (4%) of GNP; and

a (4) A0.9 percent (0.9%) ratio of the Consolidated Public
22 Sector Financial Position (CPSFP) to GNP.]

24 XXX

27 (B) xxx
29 (C) xxx
3t (D) xxx
33 (E) xxx

35 SEC. 9. Section 28 of the National Internal Revenue Code of 1997, as
36 amended, is hereby further amended to read as follows:

38 “SEC. 28. Rates of Income Tax on Foreign Corporations. —
39
40 (A) Tax on Resident Foreign Corporations. -

7


(1) In General. - Except as otherwise provided in this Code, a
corporation organized, authorized, or existing under the laws of any
foreign country, engaged in trade or business within the Philippines,
shall be subject to an income tax equivalent to THIRTY PERCENT
(30%) [ thirty-five percent (35%) ] of the taxable income derived in
the preceding taxable year from all sources within the Philippines: [
Provided, That effective January 1, 2009, the rate of income tax shall
be thirty percent (30%). ] PROVIDED, THAT THE RATE OF
CORPORATE INCOME TAX SHALL BE TWENTY EIGHT PERCENT (28%)
BEGINNING JANUARY 1, 2021; TWENTY SIX PERCENT (26%)
BEGINNING JANUARY 1, 2023; TWENTY FOUR PERCENT (24%)
BEGINNING JANUARY 1, 2025; TWENTY TWO PERCENT (22%)
BEGINNING JANUARY 1, 2027; AND TWENTY PERCENT (20%)
BEGINNING JANUARY 1, 2029. PROVIDED FURTHER, THAT THE
SCHEDULED DECREASE IN THE RATE MAY BE SUSPENDED BY THE
PRESIDENT UPON RECOMMENDATION OF THE SECRETARY OF
FINANCE IF THE PROJECTED DEFICIT TARGET AS A PERCENT OF GDP
EXCEEDS THE PROGRAMMED DEFICIT, AS DETERMINED BY THE
DBCC, IN THE PRECEEDING YEAR PRIOR TO THE SCHEDULED
REDUCTION IN THE CIT RATE, BASED ON THE ANNUAL REVIEW OF
THE MEDIUM TERM FISCAL PROGRAM.

In the case of corporations adopting the fiscal-year accounting
period, the taxable income shall be computed without regard to the
specific date when sales, purchases and other transactions occur.
Their income and expenses for the fiscal year shall be deemed to
have been earned and spent equally for each month of the period.

The corporate income tax rate shall be applied on the amount
computed by multiplying the number of months covered by the new
rate within the fiscal year by the taxable income of the corporation
for the period, divided by twelve.

[ Provided, however, That a resident foreign corporation shall
be granted the option to be taxed at fifteen percent (15%) on gross

income under the same conditions, as provided in Section 27 (A). ]

(2) xxx


(3) xxx

[ (4) Offshore Banking Units. - The provisions of any law to the
contrary notwithstanding, income derived by offshore banking units
authorized by the Bangko Sentral ng Pilipinas (BSP), from foreign
currency transactions with nonresidents, other offshore banking
units, local commercial banks, including branches of foreign banks
that may be authorized by the Bangko Sentral ng Pilipinas (BSP) to
transact business with offshore banking units shall be exempt from
all taxes except net income from such transactions as may be
specified by the Secretary of Finance, upon recommendation of the
Monetary Board which shall be subject to the regular income tax
payable by banks: Provided, however, That any interest income
derived from foreign currency loans granted to residents other than
offshore banking units or local commercial banks, including local,
branches of foreign banks that may be authorized by the BSP to
transact business with offshore banking units, shall be subject only to
a final tax at the rate of ten percent (10%).

Any income of nonresidents, whether individuals or
corporations, from transactions with said offshore banking units shall
be exempt from income tax. ]

[ (5) ] (4) Tax on Branch Profits Remittances. - Any profit
remitted by a branch to its head office shall be subject to a tax of
fifteen percent (15%) which shall be based on the total profits
applied or earmarked for remittance without any deduction for the
tax component thereof [ (except those activities which are registered
with the Philippine Economic Zone Authority) }. Xxx

[ (6) Regional or Area Headquarters and Regional Operating
Headquarters of Multinational Companies. —

(a) Regional or area headquarters as defined in Section 22(DD)
shall not be subject to income tax.

(b) Regional operating headquarters as defined in Section
22(EE) shall pay a tax of ten percent (10%) of their taxable income.]


[ (7) ] (5) Tax on Certain Incomes Received by a Resident
Foreign Corporation. -

(a) Interest from Deposits and Yield or any other Monetary
Benefit from Deposit Substitutes, Trust Funds and Similar
Arrangements and Royalties. — Interest from any currency bank
deposit and yield or any other monetary benefit from deposit
substitutes and from trust funds and similar arrangements and
royalties derived from sources within the Philippines shall be subject
to a final income tax at the rate of twenty percent (20%) of such
interest: Provided, however, That interest income derived by a
resident foreign corporation from a depository bank under the
expanded foreign currency deposit system shall be subject to a final
income tax at the rate of FIFTEEN PERCENT (15%) [ seven and one-
half percent (7 1/2%) ] of such interest income.

(b) Income Derived under the Expanded Foreign Currency Deposit

System.
XXX

(c) Capital Gains from Sale of Shares of Stock Not Traded in the
Stock Exchange. — A final tax at the rate [ s prescribed below ] OF
FIFTEEN PERCENT (15%) is hereby imposed upon the net capital gains
realized during the taxable year from the sale, barter, exchange or
other disposition of shares of stock in a domestic corporation except
shares sold or disposed of through the stock exchange:.

[ Not over P100,000 5%
On any amount in excess of P100,000 10% }

(d) Intercorporate Dividends.- xxx

(B) Tax on Nonresident Foreign Corporation. -

(1) In General. - Except as otherwise provided in this Code, a
foreign corporation not engaged in trade or business in the
Philippines shall pay a tax equal to THIRTY PERCENT (30%) [ thirty-
five percent (35%) ] of the gross income received during each

10


taxable year from all sources within the Philippines, such as interests,
dividends, rents, royalties, salaries, premiums (except reinsurance
premiums), annuities, emoluments or other fixed or determinable
annual, periodic or casual gains, profits and income, and capital
gains, except capital gains subject to tax under subparagraph 5 (c):
[Provided, That effective January 1, 2009, the rate of income tax shall
be thirty percent (30%). ] PROVIDED, THAT THE RATE OF
CORPORATE INCOME TAX SHALL BE TWENTY EIGHT PERCENT (28%)
BEGINNING JANUARY 1, 2021; TWENTY SIX PERCENT (26%)
BEGINNING JANUARY 1, 2023; TWENTY FOUR PERCENT (24%)
BEGINNING JANUARY 1, 2025; TWENTY TWO PERCENT (22%)
BEGINNING JANUARY 1, 2027; AND TWENTY PERCENT (20%)
BEGINNING JANUARY 1, 2029. PROVIDED FURTHER, THAT THE
SCHEDULED DECREASE IN THE RATE MAY BE SUSPENDED BY THE
PRESIDENT UPON RECOMMENDATION OF THE SECRETARY OF
FINANCE IF THE PROJECTED DEFICIT TARGET AS A PERCENT OF GDP
EXCEEDS THE PROGRAMMED DEFICIT, AS DETERMINED BY THE
DBCC, IN THE PRECEEDING YEAR PRIOR TO THE SCHEDULED
REDUCTION IN THE CIT RATE, BASED ON THE ANNUAL REVIEW OF
THE MEDIUM TERM FISCAL PROGRAM.

(2) Nonresident Cinematographic Film Owner, Lessor or
Distributor. - A cinematographic film owner, lessor, or distributor
shall pay a tax of twenty-five percent (25%) of its gross income from
all sources within the Philippines.

(3) xxx
(4) x00

(5) Tax on Certain Incomes Received by a Nonresident Foreign
Corporation. —

(a) Interest on Foreign Loans. — xxx

(b) Intercorporate Dividends. — A final withholding tax at
the rate of fifteen percent (15%) is hereby imposed on the
amount of cash and/or property dividends received from a
domestic corporation, which shall be collected and paid as
provided in Section 57 (A) of this Code, subject to the

1


27

29
30
31
32
33
34
35
36
37
38
39
40

condition that the country in which the nonresident foreign
corporation is domiciled, shall allow a credit against the tax
due from the nonresident foreign corporation taxes deemed to
have been paid in the Philippines equivalent to [ twenty
percent (20%) ] FIFTEEN PERCENT (15%) which represents the
difference between the regular income tax [ of thirty-five
percent (35%) ] and the fifteen percent (15%) tax on dividends
as provided in this subparagraph: Provided, that EFFECTIVE
JANUARY 1, 2021, [ effective January 1, 2009 J, the credit
against the tax due shall be equivalent to [ fifteen percent
(15%), which represents ] the difference between the regular
income tax RATE [ of thirty percent (30%) ] and the fifteen
percent (15%) tax on dividends.

(c) Capital Gains from Sale of Shares of Stock not
Traded in the Stock Exchange. — A final tax at the rate[s
prescribed below ] OF FIFTEEN PERCENT (15%) is hereby
imposed upon the net capital gains realized during the taxable
year from the sale, barter, exchange or other disposition of
shares of stock in a domestic corporation, except shares sold,
or disposed of through the stock exchange.[ :

Not over P100,000 5%
On any amount in excess of P100,000 10% ]”

SEC. 10. Section 34 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:

“SEC. 34, Deductions from Gross Income. - Except for taxpayers
earning compensation income arising from personal services
rendered under an employer-employee relationship where no
deductions shall be allowed under this Section, in computing taxable
income subject to income tax under Sections 24 (A); 25 (A); 26; 27
(A), (B) and (C); and 28 (A) (1), there shall be allowed the following
deductions from gross income;

(A) Expenses. -

(1) Ordinary and Necessary Trade, Business or Professional
Expenses.-

12


XK
(2) xxx
(B) interest.-

(1) In General. - The amount of interest paid or incurred
within a taxable year on indebtedness in connection with the
taxpayer's profession, trade or business shall be allowed as
deduction from gross income: Provided, however, That the
taxpayer's otherwise allowable deduction for interest expense
shall be reduced by [ forty-two percent (42%) ]THIRTY THREE
PERCENT (33%) of the interest income subjected to final tax [ :
Provided, That effective January 1, 2009, the percentage shall
be thirty-three percent (33%). ]: PROVIDED, FURTHER, THAT
THE FOLLOWING PERCENTAGES SHALL APPLY IF THE
CORPORATE INCOME TAX RATE AS PROVIDED IN SECTIONS 27
(A) AND 28(A)(1) IS ADJUSTED AS FOLLOWS:

IF RATE IS 28%, INTEREST EXPENSE REDUCTION RATE IS 29%

IF RATE IS 26%, THE INTEREST EXPENSE REDUCTION RATE IS
IF RATE IS 24%, THE INTEREST EXPENSE REDUCTION RATE IS
IF RATE IS 22%, THE INTEREST EXPENSE REDUCTION RATE 1S
IFRATE IS 20%, THE INTEREST EXPENSE REDUCTION RATE IS
0%

PROVIDED, FINALLY, THAT IF THE TAX ON INTEREST INCOME
IS ADJUSTED IN THE FUTURE, THE INTEREST EXPENSE
REDUCTION RATE SHALL BE ADJUSTED ACCORDINGLY BASED
ON THE PRESCRIBED STANDARD FORMULA AS DEFINED IN
THE RULES AND REGULATIONS TO BE PROMULGATED BY THE
SECRETARY OF FINANCE, UPON THE RECOMMENDATION OF
THE COMMISSIONER.

(2) x0


20K

(C) Taxes. - xxx
(D) Losses. - xxx
(E) Bad Debts. — xxx
(F) Depreciation. - xxx
(G) Depletion of Oil and Gas Wells and Mines. - xxx
(H) Charitable and Other Contributions. - xxx
(1) Research and Development. - xxx

(J) Pension Trusts. - xxx

(K) Additional Requirements for Deductibility of Certain Payments. -

(t) Optional Standard Deduction (OSD). - In lieu of the
deductions allowed under the preceding Subsections, an
individual subject to tax under Section 24, other than a
nonresident alien, [ may elect a standard deduction in an
amount not exceeding forty percent (40%) of his gross sales or
gross receipts, as the case maybe. In the case of a] AND A
corporation CLASSIFIED AS MICRO, SMALL OR MEDIUM-SIZED
ENTERPRISE (MSME) AS DETERMINED BY THE DEPARTMENT
OF TRADE AND INDUSTRY AND subject to tax under Sections
27(A) and 28 (A)(1), [ it ] may elect a standard deduction in an
amount not exceeding forty percent (40%) of its gross income
as defined in Section 32 of this Code: Unless the taxpayer
signifies in his return his intention to elect the optional
standard deduction, he shall be considered as having availed
himself of the deductions allowed in the preceding
Subsections. Such election when made in the return shall be
irrevocable for the taxable year for which the return is made:
Provided, That an individual who is entitled to and claimed for
the optional standard deduction shall not be required to
submit with his tax return such financial statements otherwise

14


1 required under this Code: Provided, further, That except when
2 the Commissioner otherwise permits, the said individual shall
3 keep such records pertaining to his gross sales or gross
4 receipts, or the said corporation shall keep such records
5 pertaining to his gross income as defined in Section 32 of this
6 Code during the taxable year, as may be required by the rules
7 and regulations promulgated by the Secretary of Finance,
8 upon, recommendation of the Commissioner.

9

10 Notwithstanding the provision of the preceding Subsections,
1 the Secretary of Finance, upon recommendation of the
12 Commissioner, after a public hearing shall have been held for this
13 purpose, may prescribe by rules and regulations, limitations or
14 ceilings for any of the itemized deductions under Subsections (A) to
15 (J) of this Section: Provided, That for purposes of determining such
16 ceilings or limitations, the Secretary of Finance shall consider the
17 following factors: (1) adequacy of the prescribed limits on the actual
18 expenditure requirements of each particular industry; and (2)effects
19 of inflation on expenditure levels: Provided, further, That no ceilings
20 shall further be imposed on items of expense already subject to
21 ceilings under present law.”

22

23 SEC. 11. Section 40(C)(2) of the National Internal Revenue Code of 1997, as
24 amended, is hereby further amended to read as follows:

25

26 “SEC. 40. Determination of Amount and Recognition of Gain or Loss.
27

28 (A)x xx

29

30 (B)x xx

31

32 (C) Exchange of Property. -—

33 (1) xxx

34

35 (2) Exception. - No gain or loss shall be recognized TO A
36 CORPORATION OR ON ITS STOCK OR SECURITIES IF SUCH
37 CORPORATION IS A PARTY TO A REORGANIZATION AND
38 EXCHANGES PROPERTY, [ if ] in pursuance of a plan of [
39 merger or consolidation ] REORGANIZATION SOLELY FOR
40 STOCK OR SECURITIES IN ANOTHER CORPORATION THAT IS A

15


PARTY TO THE REORGANIZATION. A REORGANIZATION IS
DEFINED AS:

(a) A corporation, which is a party to a
merger or consolidation, exchanges property
solely for stock in a corporation, which is a party
to the merger or consolidation; or

(b) [ A shareholder exchanges stock in a
corporation, which is a party to the merger or
consolidation, solely for the stock of another
corporation also a party to the merger or
consolidation; or ] THE ACQUISITION BY ONE
CORPORATION, IN EXCHANGE SOLELY FOR ALL
OR A PART OF ITS VOTING STOCK, OR IN
EXCHANGE SOLELY FOR ALL OR A PART OF THE
VOTING STOCK OF A CORPORATION WHICH IS IN
CONTROL OF THE ACQUIRING CORPORATION, OF
STOCK OF ANOTHER CORPORATION IF,
IMMEDIATELY AFTER THE ACQUISITION, THE
ACQUIRING CORPORATION HAS CONTROL OF
SUCH OTHER CORPORATION WHETHER OR NOT
SUCH ACQUIRING CORPORATION HAD CONTROL
IMMEDIATELY BEFORE THE ACQUISITION;

(c) [ A security holder of a corporation,
which is a party to the merger or consolidation,
exchanges his securities in such corporation,
solely for stock or securities in such corporation, a
party to the merger or consolidation. ] THE
ACQUISITION BY ONE CORPORATION, IN
EXCHANGE SOLELY FOR ALL OR A PART OF ITS
VOTING STOCK OR IN EXCHANGE SOLELY FOR
ALL OR A PART OF THE VOTING STOCK OF A
CORPORATION WHICH IS IN CONTROL OF THE
ACQUIRING CORPORATION, OR SUBSTANTIALLY
ALL OF THE PROPERTIES OF ANOTHER
CORPORATION, BUT IN DETERMINING WHETHER
THE EXCHANGE IS SOLELY FOR STOCK THE
ASSUMPTION BY THE ACQUIRING CORPORATION

16


1 OF A LIABILITY OF THE OTHER SHALL BE

2 DISREGARDED;

3

4 (D) A RECAPITALIZATION; OR

5

6 (E) A REINCORPORATION

7

8 No gain or loss shall also be recognized if property is

9 transferred to a corporation by a person in exchange for stock or unit
10 of participation in such a corporation of which as a result of such
11 exchange said person, alone or together with others, not exceeding
12 four (4) persons, [ gains control of said corporation ] AND,
13 IMMEDIATELY AFTER, SUCH PERSON OR PERSONS ARE IN CONTROL
14 OF SAID CORPORATION: Provided, that stocks issued for services
15 shall not be considered as issued in return for property.

16

17 IN ALL OF THE ABOVE INSTANCES, THE TRANSACTION OR
18 ARRANGEMENT MUST BE UNDERTAKEN FOR A LEGITIMATE OR
19 BONA FIDE BUSINESS PURPOSE AND NOT SOLELY FOR THE
20 PURPOSE OF AVOIDING OR ESCAPING THE BURDEN OF TAXATION.
2

22 THE PROVISION OF SECTION 50 OF THIS CODE SHALL BE
23 APPLIED AND ENFORCED IN CASES WHERE THE TRANSACTION OR
24 ARRANGEMENT ENTERED INTO IS FOUND TO BE NOT FOR
25 LEGITIMATE OR BONA FIDE BUSINESS PURPOSE.

26

27 SALE OR EXCHANGES OF PROPERTY USED FOR BUSINESS FOR
28 SHARES OF STOCK COVERED UNDER THIS SUBSECTION SHALL NOT
29 BE SUBJECT TO VALUE ADDED TAX (VAT).

30

31 Xxx”

32

33 SEC. 12. Section 50 of the National Internal Revenue Code of 1997, as
34 amended, is hereby further amended to read as follows:

35

36 “SEC. 50.[ Allocation of Income and Deductions. In the case of
37 two or more organizations, trades or businesses (whether or not
38 incorporated and whether or not organized in the Philippines) owned
39 or controlled directly or indirectly by the same interests, the
40 Commissioner is authorized to distribute, apportion or allocate gross

7


ervyeounona

income or deductions between or among such organization, trade or
business, if he determined that such distribution, apportionment or
allocation is necessary in order to prevent evasion of taxes or clearly
to reflect the income of any such organization, trade or business. ]
AUTHORITY OF THE COMMISSIONER TO DISTRIBUTE, APPORTION,
ALLOCATE, AND IMPUTE INCOME AND DEDUCTIONS TO DISREGARD
AND COUNTERACT TAX AVOIDANCE ARRANGEMENTS. — IN CASE OF
TWO OR MORE ORGANIZATIONS, TRADES OR BUSINESSES,
WHETHER OR NOT ORGANIZED IN THE PHILIPPINES, OWNED OR
CONTROLLED DIRECTLY OR INDIRECTLY BY THE SAME INTERESTS,
THE COMMISSIONER IS AUTHORIZED TO DISTRIBUTE, APPORTION,
ALLOCATE, OR IMPUTE INCOME OR DEDUCTIONS BETWEEN OR
AMONG SUCH ORGANIZATIONS, TRADES OR BUSINESSES, IF THE
COMMISSIONER DETERMINES THAT SUCH DISTRIBUTION,
APPORTIONMENT, ALLOCATION, OR IMPUTATION IS NECESSARY IN
ORDER TO PREVENT EVASION OF TAXES OR TO CLEARLY REFLECT
THE INCOME OF ANY SUCH ORGANIZATION, TRADE, OR BUSINESS.

IN CASES WHERE THE TRANSACTION OR ARRANGEMENT IS
MOTIVATED BY OBTAINING TAX BENEFIT OR ADVANTAGE WITH NO
COMMERCIAL REALITY OR ECONOMIC EFFECT, SUCH AS (A)
DIRECTLY OR INDIRECTLY ALTERING THE INCIDENCE OF ANY
INCOME TAX; (B) DIRECTLY OR INDIRECTLY RELIEVING A PERSON
FROM LIABILITY TO PAY INCOME TAX OR FROM A POTENTIAL OR
PROSPECTIVE LIABILITY TO FUTURE INCOME TAX; OR (C) DIRECTLY
OR INDIRECTLY AVOIDING, POSTPONING, OR REDUCING ANY
LIABILITY TO INCOME TAX, OR ANY POTENTIAL OR PROSPECTIVE
LIABILITY TO FUTURE INCOME TAX, THEN THE COMMISSIONER IS
AUTHORIZED TO DISREGARD AND CONSIDER SUCH TRANSACTION
OR ARRANGEMENT AS VOID FOR INCOME TAX PURPOSES, AND
MAY ADJUST THE TAXABLE INCOME OF A PERSON AFFECTED BY THE
ARRANGEMENT IN A WAY THE COMMISSIONER DEEMS
APPROPRIATE, IN ORDER TO COUNTERACT A TAX ADVANTAGE
OBTAINED BY THE PERSON FROM OR UNDER THE ARRANGEMENT.

SEC. 13. Sec. 73 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

“SEC. 73. Distribution of Dividends or Assets by Corporations. -
18


(A) Definition of Dividends. - The term ‘dividends' when used in
this Title means any distribution made by a corporation to its
shareholders out of its earnings or profits and payable to its
shareholders, whether in money or in other property.

[ Where a corporation distributes all of its assets in complete
liquidation or dissolution, the gain realized or loss sustained by the
stockholder, whether individual or corporate, is a taxable income or a
deductible loss, as the case may be. ]

(B) Stock Dividend. - A stock dividend representing the transfer
of surplus to capital account shall not be subject to tax. However, if a
corporation cancels or redeems stock issued as a dividend at such
time and in such manner as to make the distribution and cancellation
or redemption, in whole or in part, essentially equivalent to the
distribution of a taxable dividend, the amount so distributed in
redemption or cancellation of the stock shall be considered as
taxable income to the extent that it represents a distribution of
earnings or profits.

(C) LIQUIDATING DIVIDENDS. — LIQUIDATING DIVIDENDS ARE
DIVIDENDS REPRESENTING THE REMAINING GAINS REALIZED OR
LOSS SUSTAINED BY THE STOCKHOLDER IN A COMPLETE
LIQUIDATION OR DISSOLUTION BY A CORPORATION AND SHALL BE
CONSIDERED AS TAXABLE INCOME OR A DEDUCTIBLE LOSS, AS THE
CASE MAY BE.

[ (C) ] (D) Dividends Distributed are Deemed Made from Most
Recently Accumulated Profits. - Any distribution made to the
shareholders or members of a corporation shall be deemed to have
been made from the most recently accumulated profits or surplus,
and shall constitute a part of the annual income of the distributee for
the year in which received.

[ (D) ] (E) Net income of a Partnership Deemed Constructively
Received by Partners. - The taxable income declared by a partnership
for a taxable year which is subject to tax under Section 27 (A) of this
Code, after deducting the corporate income tax imposed therein,
shall be deemed to have been actually or constructively received by

19


ON RHARONH

the partners in the same taxable year and shall be taxed to them in
their individual capacity, whether actually distributed or not.”

SEC. 14. Sec. 112 (A) (B) of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:

“SEC. 112. Refunds [ or Tax Credits ] of Input Tax. —

"(A) Zero-rated or Effectively Zero-rated Sales. - Any VAT-
registered person, whose sales are zero-rated or effectively zero-
rated may, within two (2) years after the close of the taxable quarter
when the sales were made, apply for [ the issuance of a tax credit
certificate or ] refund of creditable input tax due or paid attributable
to such sales, except transitional input tax, to the extent that such
input tax has not been applied against output tax: Provided,
however, That in the case of zero-rated sales under Section
106(A)(2)(a)(1) (2) and [ (b) ] and Section 108 (B)(1) and (2), the
acceptable foreign currency exchange proceeds thereof had been
duly accounted for in accordance with the rules and regulations of
the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where
the taxpayer is engaged in zero-rated or effectively zero-rated sale
and also in taxable or exempt sale of goods or properties or services,
and the amount of creditable input tax due or paid cannot be directly
and entirely attributed to any one of the transactions, it shall be
allocated proportionately on the basis of the volume of sales.
Provided, finally, that for a person making sales that are zero-rated
under Section 108(B)(6), the input taxes shall be allocated ratably
between his zero-rated and non-zero-rated sales.

"(B) Cancellation of VAT Registration. - A person whose
registration has been cancelled due to retirement from or cessation
of business, or due to changes in or cessation of status under Section
106(C) of this Code may, within two (2) years from the date of
cancellation, apply for REFUND. [ the issuance of a tax credit
certificate for any unused input tax. which may be used in payment
of his other internal revenue taxes]

SEC. 15. SEC. 117 of the National Internal Revenue code of 1997, as
amended, is hereby amended to read as follows:

20


33
34
35
36
37
38
39
40

“SEC 117. Percentage Tax on Domestic Carriers and Keepers of
Garages. —Cars for rent or hire driven by the lessee; transportation
contractors, including persons who transport passengers for hire, and
other domestic carriers by land for the transport of passengers
(except OWNERS/OPERATORS OF TRICYCLES OPERATING NOT
MORE THAN TWO (2) UNITS, owners of bancas, and owners of
animal-drawn two-wheeled vehicle), and keepers of garages shall pay
a tax equivalent to three percent (3%) of their quarterly gross
receipts.

Xxx’

SEC. 16. Sec. 119 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

“SEC. 119. Tax on Franchises. - Any provision of general or special law
to the contrary notwithstanding, there shall be levied, assessed and
collected in respect to all EXISTING franchise agreement or law
pertaining TO franchises on radio and/or television broadcasting
companies [whose annual gross receipts of the preceding year do not
exceed Ten million pesos (P10,000,000.00) } , subject to Section 236
of this Code, a FRANCHISE tax of three percent (3%) and on gas and
water utilities, a FRANCHISE tax of two percent (2%) on the gross
receipts derived from the business covered by the law granting the
franchise: Provided, however, That radio and/OR television
broadcasting companies referred to in this Section shall [ have an
option to] be registered as a value-added taxpayer and pay the tax
due thereon [ : Provided, further, That once the option is exercised,
said option shall not be irrevocable ].
xXx”

SEC. 17. Sec. 203 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

“SEC. 203. Period of Limitation Upon Assessment and Collection. —
Except as provided in Section 222, internal revenue taxes “Except as
provided in Section 222, internal revenue taxes shall be assessed
within [three (3)] FIVE (5) years after the last day prescribed by law
of the filing of the return, and no proceeding in court without
assessment for the collection of such taxes shall be begun after the

24


1 expiration of such period: Provided, That in a case where a return is
2 filed beyond the period prescribed by law, the [three (3)] FIVE (5)
3 year period shall be counted from the day the return was filed. For
4 purposes of this Section, a return filed before the last day prescribed
5 by law for the filing thereof shall be considered filed on such last
6 day.”
7
8 SEC. 18. Sec. 204 of the National Internal Revenue Code of 1997, as
9 amended, is hereby amended to read as follows:
10
on “SEC. 204. Authority of the Commissioner to Compromise, Abate and
12 Refund or Credit Taxes. - The Commissioner may —
13
14 (A) Compromise the payment of any internal revenue tax, when:
15
16 (1)A reasonable doubt as to the validity of the claim against
17 the taxpayer exists; or
18
19 (2) The financial position of the taxpayer demonstrates a clear
20 inability to pay the assessed tax.
2
22 The compromise settlement of any tax liability shall be subject to the
23 following minimum amounts:
24
25 For cases of financial incapacity, a minimum compromise rate
26 equivalent to ten percent (10%) of the basic assessed tax; and
27
28 For other cases, a minimum compromise rate equivalent to forty
29 percent (40%)of the basic assessed tax.
30
31 Where the basic tax involved exceeds [ One ] TEN million pesos [
32 (P1,000.000) ] (P10,000,000) or where the settlement offered is less
33 than the prescribed minimum rates, the compromise shall be subject
34 to the approval of the Evaluation Board which shall be composed of
35 the Commissioner and the four (4) Deputy Commissioners.
36
37 Xxx”
38
39 SEC. 19. Sec. 222 of the National Internal Revenue Code of 1997, as

40 amended, is hereby amended to read as follows:

22


“SEC. 222. Exceptions as to Period of Limitation of Assessment and
Collection of Taxes.-

(b) If before the expiration of the time prescribed in Section
203 for the assessment of the tax, [ both the Commissioner

1
2
3
4
5 (a) xxx
6
7
8
9 and ] the taxpayer [ have agreed ] APPLIES WITH THE

10 COMMISSIONER in writing to its assessment after such time,
cn the tax may be assessed within the period

12 [agreed upon] SPECIFIED IN THE APPLICATION WHICH SHALL
13 NOT EXCEED SIX (6) MONTHS AT ANY ONE TIME. The
14 FOREGOING period [ so agreed upon ] may be extended by
15 subsequent written [ agreement JAPPLICATION made before
16 the expiration of the period previously [ agreed upon
17 JAPPLIED FOR.

18

19 Xxx"

20

24 SEC. 20. Sec. 237 of the National Internal Revenue Code of 1997, as
22 amended, is hereby amended to read as follows:

23

24 “SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. —

25

26 (A) Issuance. — xxx

27

28 “Within five (5) years from the effectivity of this Act and upon the
29 establishment of a system capable of storing and processing the
30 required date, the Bureau shall require taxpayers engaged in the
31 export of goods and service, taxpayers engaged in e-commerce, and
32 taxpayers under the jurisdiction of the Large Taxpayers Service to
33 issue AND TRANSMIT electronic receipts or sales or commercial
34 invoices [ in lieu of manual receipts or sales or commercial invoices
35 JTHRU DESIGNATED ELECTRONIC CHANNELS WITH A PUBLIC
36 CERTIFICATION SYSTEM ACCREDITED BY THE BUREAU, subject to
37 the rules and regulations to be issued by the Secretary of Finance
38 upon recommendation of the Commissioner [ and after a ] following
39 a public hearing [ shall have been ] held for this purpose: Provided,
40 That taxpayers not covered by the mandate of this provision may

23


1 issue electronic receipts of sales or commercial invoices in lieu of
2 manual receipts or sales or commercial invoices. PROVIDED
3 FURTHER, SUBJECT TO THE RULES AND REGULATIONS TO BE ISSUED
4 BY THE SECRETARY OF FINANCE, THE COMMISSIONER MAY
5 REQUIRE ANY TAXPAYER TO COMPLY WITH THE PROVISIONS OF
6 THIS SECTION.

7

8 The original of each receipt or invoice shall be issued to the
9 purchaser, customer, or client at the time the transaction is effected,
10 who, if engaged in the business or in the exercise of profession, shall
14 keep and preserve the same in his place of business for a period of
12 [three (3)] FIVE (5) years from the close of the taxable year in which
13 such invoice or receipt was issued, while the duplicate shall be kept
14 and preserved by the issue, also in his place of business, for a like
15 period: Provided, that in case of electronic receipts or sales or
16 commercial invoices, digital record of the same [shall be kept by the
17 purchaser, customer or client and the issuer for the same period
18 above stated] BEARING THE APPROVED ELECTRONIC TAX
19 TRANSACTION NUMBER SHALL BE SUFFICIENT COMPLIANCE.
20

2 The Commissioner may, in meritorious cases, exempt any person
22 subject to internal revenue tax from compliance with the provision of
23 this Section.”

24

25 SEC. 21. Sec. 237-A of the National Internal Revenue Code of 1997, as
26 amended, is hereby amended to read as follows:

27
28 “SEC. 237-A. Electronic Sales Reporting System. — Within five (5)
29 years from the effectivity of this Act and upon the establishment of a
30 system capable of storing and processing the required data, the
3 Bureau shall require taxpayers engaged in the export of goods and
32 services, taxpayers engaged in e-commerce, and taxpayers under the
33 jurisdiction of the Large Taxpayers Service to USE A SYSTEM
34 CAPABLE OF ISSUING ELECTRONIC RECEIPTS OR SALES OR
35 COMMERCIAL INVOICES, COLLECT TRANSACTION RECORDS, AND
36 TRANSMIT THE SAME THROUGH THE DESIGNATED ELECTRONIC
37 CHANNELS OF THE BUREAU IN THE FORMAT REQUIRED[
38 electronically report their sales data to the Bureau of through the use
39 of electronic point of sales systems, ] subject to the rules and
40 regulations to be issued by the Secretary of Finance upon

24


ONY FHRYONS

recommendation of the Commissioner of Internal Revenue: Provided,
That the POINT OF SALE (POS) machines, VALUE ADDED NETWORK
(VAN) TERMINALS, fiscal devices, and fiscal memory devices WITH
CAPACITY TO MAKE SUCH TRANSMISSION shall be at the expense of
the taxpayers: PROVIDED, FURTHER, SUBJECT TO THE RULES AND
REGULATIONS TO BE ISSUED BY THE SECRETARY OF FINANCE, THE
COMMISSIONER MAY REQUIRE ANY TAXPAYER TO COMPLY WITH
THE PROVISIONS OF THIS SECTION.

IN YEAR ONE TO YEAR FOUR OF THE IMPLEMENTATION PERIOD, A
TAXPAYER WHO ADOPTS THE REQUIRED SYSTEM SHALL BE
GRANTED A TAX CREDIT OF 0.1% OF THE PURCHASE VALUE, NET OF
VALUE ADDED TAX, FOR EVERY ELECTRONIC RECEIPT OR SALE OR
COMMERCIAL INVOICE TRANSMITTED THROUGH THE DESIGNATED
ELECTRONIC CHANNELS OF THE BUREAU AND ISSUED AN
ELECTRONIC TAX TRANSACTION NUMBER.

IN SUPPORT OF THE ELECTRONIC SALES REPORTING SYSTEM, THE
BUREAU OF INTERNAL REVENUE MAY GRANT TAX INCENTIVES FOR
ELECTRONICALLY TRACEABLE PAYMENTS (ETP) IN THE FORM OF
ALLOWABLE DEDUCTIBLE EXPENSE OF UP TO 10% OF THE ETP
MADE BY THE TAXPAYER. AN ANNUAL LIMIT ON THE ALLOWED ETP
DEDUCTIBLE EXPENSE PER TAXPAYER MAYBE SET BY THE
COMMISSIONER WITH THE APPROVAL OF THE SECRETARY OF
FINANCE.

ELECTRONICALLY TRACEABLE PAYMENTS REFER TO CREDIT CARD,
DEBIT CARD, OR OTHER METHODS OF PAYMENT WITH A SYSTEM
TO VERIFY OR LINK THE PAYMENT TO THE IDENTITY OF PAYOR.

THE BUREAU MAY LIKEWISE ESTABLISH A RECEIPT AND INVOICE
LOTTERY PROGRAM FOR ELECTRONIC RECEIPTS OR SALES OR
COMMERCIAL INVOICES TRANSMITTED THROUGH THE DESIGNATED
ELECTRONIC CHANNELS OF THE BUREAU AND ISSUED AN
ELECTRONIC TAX TRANSACTION NUMBER.

The data processing of sales and purchase data shall comply with the

provisions of Republic Act No. 10173, otherwise known as the "Data
Privacy Act" and Section 270 of the NIRC, as amended, on unlawful

25


divulgence of taxpayer information and such other laws relating to
the confidentiality of information.

The Bureau shall also establish policies, risk management
approaches, actions, training, and technologies to protect the cyber
environment, organization, and data in compliance with Republic Act
No. 10175 or the "Cybercrime Prevention Act of 2012."

SEC. 22. Sec. 255 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

“SEC. 255. Failure to File Return, Supply Correct and Accurate
Information, Pay Tax Withhold and Remit Tax and Refund Excess
Taxes Withheld on Compensation. - Any person required under this
Code or by rules and regulations promulgated thereunder to pay any
tax make a return, keep any record, or supply correct the accurate
information, who willfully fails to pay such tax, make such return,
keep such record, or supply correct and accurate information, or
withhold or remit taxes withheld, or refund excess taxes withheld on
compensation, at the time or times required by law or rules and
regulations shall, in addition to other penalties provided by law, upon
conviction thereof, be punished by a fine of not less than [Ten
thousand pesos (P10,000) ] ONE HUNDRED THOUSAND (P100,000)
BUT NOT MORE THAN ONE MILLION TWO HUNDRED THOUSAND
PESOS (P1,200,000) and suffer imprisonment of not less than one (1)
year but not more than ten (10) years.

Any person who attempts to make it appear for any reason that he or
another has in fact filed a return or statement, or actually files a
return or statement and subsequently withdraws the same return or
statement after securing the official receiving seal or stamp of receipt
of internal revenue office wherein the same was actually filed shall,
upon conviction therefore, be punished by a fine of not less than [
Ten thousand pesos (P10,000) but not more than Twenty thousand
pesos (P20,000) ] ONE HUNDRED THOUSAND PESOS (P100,000)
BUT NOT MORE THAN ONE MILLION TWO HUNDRED THOUSAND
PESOS (P1,200,000) and suffer imprisonment of not less than one (1)
year but not more than three (3) years.”

26


SEC. 23. Sec. 256 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

“SEC. 256. Penal Liability of Corporations. - Any corporation,
association or general co-partnership liable for any of the acts or
omissions penalized under this Code, in addition to the penalties
imposed herein upon the responsible corporate officers, partners, or
employees shall, upon conviction for each act or omission, be
Punished by a fine of not less than [Fifty thousand pesos (P50,000)
but not more than One hundred thousand pesos (P100,000)] TWO.
HUNDRED THOUSAND PESOS (P200,000) BUT NOT MORE THAN
TWO MILLION FOUR HUNDRED THOUSAND PESOS (P2,400,000).”

SEC. 24. Sec. 257 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

“SEC. 257. Penal Liability for Making False Entries, Records or
Reports, or Using Falsified or Fake Accountable Forms. —

(A) Any financial officer or independent Certified Public Accountant
engaged to examine and audit books of accounts of taxpayers under
Section 232 (A) and any person under his direction who:

(2) Willfully falsifies any report or statement bearing on any
examination or audit, or renders a report, including exhibits,
statements, schedules or other forms of accountancy work
which has not been verified by him personally or under his
supervision or by a member of his firm or by a member of his
staff in accordance with sound auditing practices; or

(2) Certifies financial statements of a business enterprise
containing an essential misstatement of facts or omission in
respect of the transactions, taxable income, deduction and
exemption of his client; or

(B) Any person who:

(1) Not being an independent Certified Public Accountant
according to Section 232(B) or a financial officer, examines and
audits books of accounts of taxpayers; or

27


(2) Offers to sign and certify financial statements without
audit; or

(3) Offers any taxpayer the use of accounting bookkeeping
records for internal revenue purposes not in conformity with
the requirements prescribed in this Code or rules and
regulations promulgated thereunder; or

(4) Knowingly makes any false entry or enters any false or
fictitious name in the books of accounts or record mentioned
in the preceding paragraphs; or

(5) Keeps two (2) or more sets of such records or books of
accounts; or

(6) In any way commits an act or omission, in violation of the
provisions of this Section; or

(7) Fails to keep the books of accounts or records mentioned in
Section 232 in a native language, English or Spanish, or to
make a true and complete translation as required in Section
234 of this Code, or whose books of accounts or records kept
in a native language, English or Spanish, and found to be at
material variance with books or records kept by him in another
language; or

(8) Willfully attempts in any manner to evade or defeat any tax
imposed under this Code, or knowingly uses fake or falsified
revenue official receipts, Letters of Authority, certificates
authorizing registration, Tax Credit Certificates, Tax Debit
Memoranda and other accountable forms shall, upon
conviction for each act or omission, be punished by a fine not
less than [Fifty thousand pesos (PS0,000) but not more than
One hundred thousand pesos (P100,000)] THREE HUNDRED
THOUSAND PESOS (P300,000) BUT NOT MORE THAN ONE
MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000) and
suffer imprisonment of not less than two (2) years but not
more than six (6) years.

28


1 If the offender is a Certified Public Accountant, his certificate as a
2 Certified Public Accountant shall be automatically revoked or
3 cancelled upon conviction.

4

5 In the case of foreigners, conviction under this Code shall result in
6 [his] THEIR immediate deportation after serving sentence, without
7 further proceedings for deportation.”

8

9 SEC. 25. Sec. 258 of the National Internal Revenue Code of 1997, as
10 amended, is hereby amended to read as follows:

1"

12 “SEC. 258. Unlawful Pursuit of Business. - Any person who carries on
13 any business for which an annual registration fee is imposed without
14 paying the tax as required by law shall, upon conviction for each act
15 or omission, be punished by a fine of not less than [ Five
16 thousand pesos (P5,000) but not more than Twenty thousand pesos
17 (P20,000) ] FIFTY THOUSAND PESOS (P50,000) BUT NOT MORE
18 THAN THREE HUNDRED THOUSAND PESOS (P300,000) and suffer
19 imprisonment of not less than six (6) months but not more than two
20 (2) years: Provided, That in the case of a person engaged in the
21 business of distilling, rectifying, repacking, compounding or
22 manufacturing any article subject to excise tax, he shall, upon
23 conviction for each act or omission, be punished by a fine of not less
24 than [ Thirty thousand pesos (P30,000) but not more than Fifty
25 thousand pesos (P50,000) ] THREE HUNDRED THOUSAND PESOS
26 (P300,000) BUT NOT MORE THAN SEVEN HUNDRED THOUSAND
27 PESOS (P700,000) and suffer imprisonment of not less than two (2)
28 years but not more than four (4) years.”

29

30 SEC. 26. Sec. 260 of the National Internal Revenue Code of 1997, as
31 amended, is hereby amended to read as follows:

32

33 “SEC. 260. Unlawful Possession of Cigarette Paper in Bobbins or Rolls,
34 Etc. - It shall be unlawful for any person to have in his possession
35 cigarette paper in bobbins or rolls, cigarette tipping paper or
36 Cigarette filter tips, without the corresponding authority therefor
37 issued by the Commissioner. Any person, importer, manufacturer of
38 cigar and cigarettes, who has been found guilty under this Section,
39 shall, upon conviction for each act or omission, be punished by a fine
40 of not less than than[ Twenty thousand pesos (P20,000) but not

29


more than One hundred thousand pesos (P100,000) ] ONE MILLION
FIVE HUNDRED THOUSAND PESOS (P1,500,000) BUT NOT MORE
THAN FIFTEEN MILLION PESOS (P15,000,000) and suffer
imprisonment for a term of not less than six (6) years and one (1) day
but not more than twelve (12) years.”

SEC. 27. Sec. 261 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

“SEC. 261. Unlawful Use of Denatured Alcohol. - Any person who for
the purpose of manufacturing any beverage, uses denatured alcohol
or alcohol specially denatured to be used for motive power or
withdrawn under bond for industrial uses or alcoho! knowingly
misrepresented to be denatured to be unfit for oral intake or who
knowingly sells or offers for sale any beverage made in whole or in
part from such alcohol or who uses such alcohol for the manufacture
of liquid medicinal preparations taken internally, or knowingly sells
or offers for sale such preparations containing as an ingredient such
alcohol, shall upon conviction for each act or omission be punished
by a fine of not less than than[Twenty thousand pesos (P20,000) but
not more than One hundred thousand pesos (P100,000) ] ONE
MILLION FIVE HUNDRED THOUSAND PESOS (P1,500,000) BUT NOT
MORE THAN FIFTEEN MILLION PESOS (P15,000,000) and suffer
imprisonment for a term of not less than six (6) years and one (1) day
but not more than twelve (12) years.

Any person who shall unlawfully recover or attempt to recover by
distillation or other process any denatured alcohol or who knowingly
sells or offers for sale, conceals or otherwise disposes of alcohol so
recovered or redistilled shall be subject to the same penalties
imposed under this Section.”

SEC. 28. Sec. 262 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

“SEC. 262. Shipment or Removal of Liquor or Tobacco Products under
False Name or Brand or as an Imitation of any Existing or Otherwise
Known Product Name or Brand. - Any person who ships, transports or
removes spirituous, compounded or fermented liquors, wines or any
manufactured products of tobacco under any other than the proper

30


name or brand known to the trade as designating the kind and
quality of the contents of the cask, bottle or package containing the
same or as an imitation of any existing or otherwise known product
name or brand or causes such act to be done, shall, upon conviction
for each act or omission, be punished by a fine of not less than [
Twenty thousand pesos (P20,000) but not more than One hundred
thousand pesos (P100,000) ] ONE MILLION FIVE HUNDRED
THOUSAND PESOS (P1,500,000) BUT NOT MORE THAN FIFTEEN
MILLION PESOS (P15,000,000) and suffer imprisonment of not less
than six (6) years and one (1) day but not more than twelve (12)
years.”

SEC. 29. Sec. 263 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

“SEC. 263. Unlawful Possession or Removal of Articles Subject to
Excise Tax without Payment of the Tax.- Any person who owns
and/or is found in possession of imported articles subject to excise
tax, the tax on which has not been paid in accordance with law, or
any person who owns and/or is found in possession of imported tax-
exempt articles other than those to whom they are legally issued
shall be punished by:

(a) A fine of not less than [ One thousand pesos (P1,000) ]TWENTY
FIVE THOUSAND PESOS (P25,000) [ nor } BUT NOT more than [ Two
thousand pesos (P2,000) JSEVENTY FIVE THOUSAND PESOS
(P75,000) and suffer imprisonment of not less than [ sixty (60) days
but not more than one hundred (100) days _] THIRTY (30) DAYS BUT
NOT MORE THAN SIX (6) MONTHS if the appraised value, to be
determined in the manner prescribed in the [ Tariff and Customs
Code JCUSTOMS MODERNIZATION AND TARIFF ACT, including
duties and taxes, of the articles does not exceed [ One thousand
pesos (P1,000). ]TWO HUNDRED FIFTY THOUSAND PESOS
(250,000).

(b) A fine of not less than [ Ten thousand pesos (P10,000) ] SEVENTY
FIVE THOUSAND PESOS (P75,000) but not more than [ Twenty
thousand pesos (P20,000) JONE HUNDRED FIFTY THOUSAND PESOS
(P150,000) and suffer imprisonment of not less than [ two (2) years
but not more than four (4) years ]SIX (6) MONTHS AND ONE (1) DAY

31


BUT NOT MORE THAN ONE (1) YEAR if the appraised value, to be
determined in the manner prescribed in the [ Tariff and Customs
Code JCUSTOMS MODERNIZATION AND TARIFF ACT, including
duties and taxes, of the articles exceeds [ One thousand pesos
(P1,000) ] TWO HUNDRED FIFTY THOUSAND PESOS (P250,000) but
does not exceed [ Fifty thousand pesos (P50,000) ]FIVE HUNDRED
THOUSAND PESOS (P500,000);

(c) A fine of not less than [ Thirty thousand pesos (P30,000) ] ONE
HUNDRED FIFTY THOUSAND PESOS (P150,000) but not more than [
Sixty thousand pesos (P60,000) JTHREE HUNDRED THOUSAND
PESOS (P300,000) and suffer imprisonment of not less than [
four (4) years but not more than six (6) years ] ,ONE (1) YEAR AND
ONE (1) DAY BUT NOT MORE THAN THREE (3) YEARS, if the
appraised value, to be determined in the manner prescribed in the [
Tariff and Customs Code J]CUSTOMS MODERNIZATION AND TARIFF
ACT, including duties and taxes of the articles is more than [
Fifty thousand pesos (P50,000) but does not exceed One hundred
fifty thousand pesos (P150,000) ]FIVE HUNDRED THOUSAND PESOS
(P500,000) BUT DOES NOT EXCEED ONE MILLION PESOS
(P1,000,000); or

(d) A fine of not less than [ Fifty thousand pesos (P50,000) JTHREE
HUNDRED THOUSAND PESOS (P300,000) but not more than [ One
hundred thousand pesos (P100, 000) ] ONE MILLION FIVE HUNDRED
THOUSAND PESOS (P1,500, 000) and suffer imprisonment of [ not
less than ten (10) years but not more than twelve (12) years ] THREE
(3) YEARS AND ONE (1) DAY BUT NOT MORE THAN SIX (6) years, if
the appraised value, to be determined in the manner prescribed in
the [ Tariff and Customs Code ] CUSTOMS MODERNIZATION AND
TARIFF ACT, including duties and taxes, of the articles exceeds [ One
hundred fifty thousand pesos (P150,000) ] IS MORE THAN ONE
MILLION PESOS (P1,000,000.00) BUT NOT MORE THAN FIVE
MILLION PESOS (P5,000,000.00);

(E) A FINE OF NOT LESS THAN ONE MILLION FIVE HUNDRED
THOUSAND PESOS (P 1,500,000.00) BUT NOT MORE THAN FIFTEEN
MILLION PESOS (P15,000,000.00), AND SUFFER IMPRISONMENT OF
NOT LESS THAN SIX (6) YEARS AND ONE (1) DAY BUT NOT MORE
THAN TWELVE (12) YEARS, IF THE APPRAISED VALUE, TO BE

32


eYOHRON GA

DETERMINED IN THE MANNER PRESCRIBED IN THE CUSTOMS
MODERNIZATION AND TARIFF ACT, INCLUDING DUTIES AND TAXES,
OF THE ARTICLES IS MORE THAN FIVE MILLION PESOS (P5,000,000)
BUT NOT MORE THAN FIFTY MILLION PESOS (P50,000,000);

(F) A FINE OF NOT LESS THAN FIFTEEN MILLION PESOS (P
15,000,000.00) BUT NOT MORE THAN FIFTY MILLION PESOS
(P50,000,000), AND SUFFER IMPRISONMENT OF NOT LESS THAN
TWELVE (12) YEARS AND ONE (1) DAY BUT NOT MORE THAN
TWENTY (20) YEARS, IF THE APPRAISED VALUE, TO BE DETERMINED
IN THE MANNER PRESCRIBED IN THE CUSTOMS MODERNIZATION
AND TARIFF ACT, INCLUDING DUTIES AND TAXES, OF THE ARTICLES
IS MORE THAN FIFTY MILLION PESOS (P50,000,000.00) BUT NOT
MORE THAN TWO HUNDRED MILLION PESOS (P200,000,000); OR

(G) IF THE APPRAISED VALUE OF THE GOODS UNLAWFULLY
IMPORTED TO BE DETERMINED IN THE MANNER PRESCRIBED
UNDER IN THE CUSTOMS MODERNIZATION AND TARIFF ACT,
INCLUDING DUTIES AND TAXES, EXCEEDS TWO HUNDRED MILLION
PESOS (P200,000,000) OR IF THE AGGREGATE AMOUNT OF THE
APPRAISED VALUE OF THE GOODS WHICH ARE THE SUBJECT OF
UNLAWFUL IMPORTATION COMMITTED IN MORE THAN ONE
INSTANCE, INCLUDING DUTIES AND TAXES, EXCEEDS TWO
HUNDRED MILLION PESOS (P200,000,000), THE SAME SHALL BE
PUNISHABLE WITH A PENALTY OF TWENTY YEARS ONE DAY BUT
NOT MORE THAN THIRTY YEARS AND A FINE OF NOT LESS THAN
FIFTY MILLION PESOS (P50,000,000.00).

Any person who is found in possession of locally manufactured
articles subject to excise tax, the tax on which has not been paid in
accordance with law, or any person who is found in possession of
such articles which are exempt from excise tax other than those to
whom the same is lawfully issued shall be punished with a fine of not
less than (10) times the amount of excise tax due on the articles
found but not less than [ Five hundred pesos (PSO0) JTWENTY FIVE
THOUSAND PESOS (P25,000) and suffer imprisonment of not less
than two (2) years but not more than four (4) years.

Any manufacturer, owner or person in charge of any article
subject to excise tax who removes or allows or causes the unlawful

33


removal of any such articles from the place of production or bonded
warehouse, upon which the excise tax has not been paid at the time
and in the manner required, and any person who knowingly aids or
abets in the removal of such articles as aforesaid, or conceals the
same after illegal removal shall, for the first offense, be punished
with a fine of not less than ten (10) times the amount of excise tax
due on the articles but not less than [ One thousand pesos (P1,000)
JTWENTY FIVE THOUSAND (P25,000) and suffer imprisonment of not
less than [ one (1) year but not more than two (2) years ] TWO (2)
YEARS BUT NOT MORE THAN FOUR (4) YEARS.

The mere unexplained possession of articles subject to excise
tax, the tax on which has not been paid in accordance with law, shall
be punishable under this Section.”

SEC. 30. Sec. 264 of the National Internal Revenue Code of 1997, as
amended, is hereby amended to read as follows:

“SEC. 264. Failure or refusal to Issue Receipts or Sales or Commercial
Invoices, Violations related to the Printing of such Receipts or Invoices
and Other Violations. -

(a) Any person who, being required under Section 237 to
issue receipts or sales or commercial invoices, fails or
refuses to issue such receipts of invoices, issues receipts
or invoices that do not truly reflect and/or contain all
the information required to be shown therein, or uses
multiple or double receipts or invoices, shall, upon
conviction for each act or omission, be punished by a
fine of not less than [ One thousand pesos (P1,000) but
not more than Fifty thousand pesos (P50,000) JONE
HUNDRED THOUSAND PESOS (P100,000) BUT NOT
MORE THAN FIVE HUNDRED THOUSAND PESOS
(P500,000) and suffer imprisonment of not less than [
two (2) years but not more than four (4) years ] FOUR
(4) YEARS BUT NOT MORE THAN EIGHT (8) YEARS.

(b) Any person who commits any of the acts enumerated
hereunder shall be penalized in the same manner and to
the same extent as provided for in this Section:

34


(1) Printing of receipts or sales or commercial invoices
without authority from the Bureau of Internal Revenue;
or

(2) Printing of double or multiple sets of invoices or
receipts; or

(3) Printing of unnumbered receipts or sales or

10 commercial invoices, not bearing the name, business

"1 style, Taxpayer Identification Number, and business

12 address of the person or entity.”

13

14 SEC. 31. Sec. 265 of the National Internal Revenue Code of 1997, as
15 amended, is hereby amended to read as follows:

16

17 “SEC. 265. Offenses Relating to Stamps. - Any person who commits
18 any of the acts enumerated hereunder shall, upon conviction
19 thereof, be punished by a fine of not less than [ Twenty thousand
20 pesos (P20,000) ] SEVEN HUNDRED THOUSAND PESOS
21 (P700,000.00) but not more than [ Fifty thousand pesos (P50,000) ]
22 ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000) and
23 suffer imprisonment of not less than four (4) years but not more than
24 eight (8) years:

25

26 (a) Making, importing, selling, using or possessing without express
27 authority from the Commissioner, any die for printing or making
28 stamps, labels, tags or playing cards;

29

30 (b) Erasing the cancellation marks of any stamp previously
31 used, or altering the written figures or letters or cancellation
32 marks on internal revenue stamps;

33

34 (c) Possessing false, counterfeit, restored or altered stamps,
36 labels or tags or causing the commission of any such offense by
36 another;

37

38 (d) Selling or offering for sale any box or package containing
39 articles subject to excise tax with false, spurious or counterfeit

35


1 stamps or labels or selling from any such fraudulent box,
2 package or container as aforementioned; or

3

4 (e) Giving away or accepting from another, or selling, buying or
5 using containers on which the stamps are not completely
6 destroyed.”

7

8 SEC.32. Sec. 266 of the National Internal Revenue Code of 1997, as
9 amended, is hereby amended to read as follows:

10

1 “SEC. 266. Failure to Obey Summons. - Any person who, being duly
12 summoned to appear to testify, or to appear and produce books of
13 accounts, records, memoranda or other papers, or to furnish
14 information as required under the pertinent provisions of this Code,
15 neglects to appear or to produce such books of accounts, records,
16 memoranda or other papers, or to furnish such information, shall,
17 upon conviction, be punished by a fine of not less than [Five
18 thousand pesos (P5,000) ] ONE HUNDRED THOUSAND PESOS
19 (P100,000) but not more than [ ten thousand pesos (P10,000) ]
20 THREE HUNDRED THOUSAND PESOS (P300,000)) and suffer
21 imprisonment of not less than [ one (1) year but not more than two
22 (2) years.”

23

24 SEC. 33. Sec. 275 of the National Internal Revenue Code of 1997, as
25 amended, is hereby amended to read as follows:

26

27 “SEC. 275. Violation of Other Provisions of this Code or Rules and
28 Regulations in General. - Any person who violates any provision of
29 this Code or any rule or regulation promulgated by the Department
30 of Finance, for which no specific penalty is provided by law, shall,
31 upon conviction for each act or omission, be punished by a fine of
32 not more than [ One thousand pesos (P1,000) ] TEN THOUSAND.
33 PESOS (P10,000) or suffer imprisonment of not more than

34 [ six (6) months ] TWO (2) YEARS, or both.”

35

36 SEC. 34. A new section is hereby inserted after Section 282 of the National
37 __ Internal Revenue Code of 1997, as amended, to read as follows:

38

39 “SEC. 282-A. VIOLATION OF THE PROVISIONS OF THIS CODE
40 AMOUNTING TO ECONOMIC SABOTAGE. — ANY VIOLATION OF

36


Corea eons

SECTION 254 OF THIS CODE THAT UNDERMINES, WEAKENS OR
RENDERS INTO DISREPUTE THE ECONOMIC SYSTEM OR VIABILITY
OF THE COUNTRY OR TENDS TO BRING OUT SUCH EFFECTS, IN LIEU
OF THE PENALTY SET IN THE PRECEDING PROVISIONS, SHALL
CONSTITUTE ECONOMIC SABOTAGE, AND, UPON CONVICTION FOR
EACH ACT OR OMISSION, BE PUNISHED BY A FINE OF NOT LESS
THAN FIFTY MILIION (P50,000,000) AND RECLUSION TEMPORAL.

SEC. 35. Sec. 290 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:

“SEC. 290. Congressional Oversight Committee. —
x

The Committee shall, among others, in aid of legislation:

(1) xxx;

(2) xxx;

(3) xxx; [and]
(4) xxx];

(5) REVIEW THE PERFORMANCE OF FUNCTIONS OF THE
INVESTMENT PROMOTION AGENCIES AND THE FISCAL INCENTIVES
REVIEW BOARD, PARTICULARLY IN THE GRANT OF INCENTIVES TO
REGISTERED ENTERPRISES AND IN THE REVIEW AND EVALUATION
OF GRANTED INCENTIVES, RESPECTIVELY, AS WELL AS IN THE
FORMULATION OF THE STRATEGIC INVESTMENTS PRIORITY PLAN;

AND

Xxx’

SEC. 36. A new title is hereby inserted beginning Section 291, Title XIII of
the National Internal Revenue Code of 1997, as amended, to read as follows:

“TITLE XIII

CHAPTER |

37


erearena

GENERAL PROVISIONS ON TAX INCENTIVES

SEC 291. SCOPE AND COVERAGE. — THIS TITLE SHALL COVER ALL
EXISTING INVESTMENT PROMOTION AGENCIES (IPAS) AS DEFINED IN THIS
CODE OR RELATED LAWS, AND ALL OTHER IPAS AND OTHER SIMILAR
AUTHORITIES THAT MAY BE CREATED BY LAW.

THE IPAS SHALL MAINTAIN THEIR FUNCTIONS AND POWERS AS
PROVIDED UNDER THE SPECIAL LAWS GOVERNING THEM EXCEPT ON THE
EXTENT MODIFIED BY THE PROVISIONS OF THIS CODE.

SEC. 292. GOVERNING PROVISION FOR IPAS. — ALL IPAS VESTED
WITH THE POWER TO CONFER AND ADMINISTER INCENTIVES SHALL
GRANT TAX INCENTIVES PROVIDED IN THIS TITLE TO REGISTERED
ENTERPRISES ONLY TO THE EXTENT OF THEIR APPROVED REGISTERED
PROJECTS OR ACTIVITIES UNDER THE STRATEGIC INVESTMENT PRIORITY
PLAN (SIPP). THE PERIOD OF AVAILMENT OF INCENTIVES SHALL BE
RECKONED FROM THE START OF COMMERCIAL OPERATION.

INCOME OR SALES DERIVED FROM NON-REGISTERED ACTIVITY OR
PROJECT SHALL BE SUBJECT TO APPROPRIATE TAXES UNDER THIS CODE.

UNLESS OTHERWISE PROVIDED IN THIS CODE, VALUE-ADDED TAX
SHALL FOLLOW THE DESTINATION PRINCIPLE WHERE EXPORTS ARE ZERO-
RATED AND DOMESTIC SALES ARE SUBJECT TO THE REGULAR VALUE-
ADDED TAX RATE.

SEC. 293. DEFINITIONS - WHEN USED IN THIS TITLE TO AVAIL OF
INCENTIVES:

(A) THE TERM ‘ANNUAL FISCAL INCENTIVES REPORT’ REFERS TO THE
DETAILED REPORT ON FISCAL INCENTIVES AVAILED IN A TAXABLE YEAR
AND BENEFITS CORRESPONDING THERETO. THE REPORT SHALL CONTAIN
FIRM- OR ENTITY-LEVEL DATA SUCH AS BUT NOT LIMITED TO THE ACTUAL
AMOUNT OF INVESTMENTS, TAXES WITHHELD AND FOREGONE,
EMPLOYMENT IMPACT, AND EXPORTS, IMPORTS AND DOMESTIC INPUTS.

(B) THE TERM ‘CAPITAL EQUIPMENT’ REFERS TO MACHINERY,
EQUIPMENT, MAJOR COMPONENTS THEREOF, FITTINGS AND

38


ACCOMPANIMENTS WHICH ARE DIRECTLY AND REASONABLY NEEDED IN
THE REGISTERED ACTIVITY OF THE REGISTERED ENTERPRISE.

(C) THE TERM ‘FISCAL INCENTIVES’ SHALL MEAN TAX INCENTIVES
SUCH AS INCOME TAX HOLIDAY, REDUCED INCOME TAX RATE,
ADDITIONAL INCOME TAX DEDUCTIONS, CUSTOMS DUTY EXEMPTION,
VAT EXEMPTION AND ZERO-RATING, LOCAL TAX EXEMPTIO, AND OTHER
EXEMPTIONS AND SPECIAL RATE AS MAY BE PROVIDED BY LAW TO
REGISTERED BUSINESS ENTERPRISES AND OTHER REGISTERED ENTITIES.

(D) THE TERM ‘INVESTMENT PROMOTION AGENCIES (IPAS)’ SHALL
REFER TO GOVERNMENT ENTITIES CREATED BY LAW, EXECUTIVE ORDER,
DECREE OR OTHER ISSUANCE, IN CHARGE OF PROMOTING INVESTMENTS,
ADMINISTERING TAX AND NON-TAX INCENTIVES, AND/OR OVERSEEING
THE OPERATIONS FOR THE DIFFERENT ECONOMIC ZONES AND FREEPORTS
IN ACCORDANCE WITH THEIR RESPECTIVE CHARTERS. THESE INCLUDE THE
BOARD OF INVESTMENTS (BO!I), REGIONAL BOARD OF INVESTMENTS
AUTONOMOUS REGION IN MUSLIM MINDANAO (RBOI-ARMM),
PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA), BASES CONVERSION
AND DEVELOPMENT AUTHORITY (BCDA), SUBIC BAY METROPOLITAN
AUTHORITY (SBMA), CLARK DEVELOPMENT CORPORATION (CDC), JOHN
HAY MANAGEMENT CORPORATION (JHMC), PORO POINT MANAGEMENT
CORPORATION (PPMC), CAGAYAN ECONOMIC ZONE AUTHORITY (CEZA),
ZAMBOANGA CITY SPECIAL ECONOMIC ZONE AUTHORITY (ZCSEZA),
PHIVIDEC INDUSTRIAL AUTHORITY (PIA), AURORA PACIFIC ECONOMIC
ZONE AND FREEPORT AUTHORITY (APECO), AUTHORITY OF THE FREEPORT
AREA OF BATAAN (AFAB), TOURISM INFRASTRUCTURE AND ENTERPRISE
ZONE AUTHORITY (TIEZA), AND ALL OTHER SIMILAR AUTHORITIES
EXISTING OR THAT MAY BE CREATED BY LAW.

(E) THE TERM ‘OTHER GOVERNMENT AGENCIES ADMINISTERING
FISCAL INCENTIVES (OGA)’ SHALL REFER TO GOVERNMENT AGENCIES
OTHER THAN IPAS WHICH REGISTER OR ADMINISTER FISCAL INCENTIVES
OF ANY KIND TO ANY SPECIFIC ENTITIES AND/OR CLASS OF PERSONS
PURSUANT TO ANY LAW. THESE SHALL INCLUDE, BUT SHALL NOT BE
LIMITED TO THE COOPERATIVE DEVELOPMENT AUTHORITY (CDA),
DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT (DSWD),
COMMISSION ON HIGHER EDUCATION (CHED), BUREAU OF INTERNAL
REVENUE (BIR), DEPARTMENT OF AGRARIAN REFORM (DAR),
DEPARTMENT OF AGRICULTURE (DA), DEPARTMENT OF

39


TRANSPORTATION AND COMMUNICATIONS (DOTC), CIVIL AVIATION
AUTHORITY OF THE PHILIPPINES (CAAP), DEPARTMENT OF PUBLIC
WORKS AND HIGHWAYS (DPWH), REGIONAL GOVERNMENT-
AUTONOMOUS REGION IN MUSLIM MINDANAO, REGIONAL
GOVERNMENT- CORDILLERA ADMINISTRATIVE REGION, DEPARTMENT OF
TOURISM (DOT), BANGKO SENTRAL NG PILIPINAS (BSP), NATIONAL
BOOK DEVELOPMENT BOARD (NBDB), BOY SCOUT OF THE PHILIPPINES,
GIRL SCOUT OF THE PHILIPPINES, DEPARTMENT OF FINANCE (DOF),
BUREAU OF CUSTOMS (BOC), NATIONAL TELECOMMUNICATIONS
COMMISSION (NTC), PRESIDENTIAL COMMUNICATIONS OPERATIONS
OFFICE (PCOO), NATIONAL COUNCIL FOR CHILDREN’S TELEVISION (NCCT),
NATIONAL COMMISSION FOR CULTURE AND THE ARTS (NCCA),
NATIONAL HISTORICAL COMMISSION OF THE PHILIPPINES (NHCP), FILM
DEVELOPMENT COUNCIL, NATIONAL COUNCIL FOR DISABILITY AFFAIRS,
SECURITIES AND EXCHANGE COMMISSION (SEC), COMMISSION ON
HIGHER EDUCATION (CHED), DEPARTMENT OF EDUCATION (DEPED),
DEPARTMENT OF SCIENCE AND TECHNOLOGY (DOST), TECHNICAL
EDUCATION AND SKILLS DEVELOPMENT AUTHORITY (TESDA),
COMMISSION ON ELECTIONS (COMELEC), NATIONAL ELECTRIFICATION
ADMINISTRATION (NEA), NATIONAL POWER CORPORATION (NPC),
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR),
NATIONAL DISASTER AND RISK REDUCTION MANAGEMENT COUNCIL
(NDRRMC), DEPARTMENT OF FOREIGN AFFAIRS (DFA), DEPARTMENT OF
HEALTH (DOH), PHILIPPINE RED CROSS, HOUSING AND URBAN
DEVELOPMENT COORDINATING COUNCIL (HUDCC), NATIONAL
GOVERNMENT CENTER ADMINISTRATION COMMITTEE, HOUSING AND
LAND USE REGULATORY BOARD (HLURB), NATIONAL COMMISSION ON
INDIGENOUS PEOPLE (NCIP), QUEZON CITY DEVELOPMENT AUTHORITY,
SOCIAL SECURITY SYSTEM (SSS), GOVERNMENT SERVICE INSURANCE
SYSTEM (GSIS), PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC),
SUPREME COURT (SC), DEPARTMENT OF LABOR AND EMPLOYMENT
(DOLE), OVERSEAS WORKERS WELFARE ADMINISTRATION (OWWA),
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA),
DEPARTMENT OF JUSTICE (DOJ), DEPARTMENT OF INTERIOR AND LOCAL
GOVERNMENT (DILG), NATIONAL ANTI-POVERTY COMMISSION (NAPC),
PARTIDO DEVELOPMENT ADMINISTRATION, PHILIPPINE VETERANS
AFFAIRS OFFICE (PVAO), DEPARTMENT OF NATIONAL DEFENSE (DND),
PHILIPPINE PORTS AUTHORITY (PPA), PHILIPPINE SPORTS COMMISSION
(PSC), NATIONAL YOUTH COMMISSION, AND HUMAN RIGHTS
VIOLATIONS VICTIM’S MEMORIAL COMMISSION, AMONG OTHERS.

40


(F) THE TERM ‘OTHER REGISTERED ENTITIES (OREs}’ REFER TO ANY
INDIVIDUAL, PARTNERSHIP, ORGANIZATION, CORPORATION, PHILIPPINE
BRANCH OF A_ FOREIGN CORPORATION, OR OTHER ENTITY
INCORPORATED AND/OR ORGANIZED AND EXISTING UNDER PHILIPPINE
LAWS, AND REGISTERED WITH OTHER OGAS ADMINISTERING FISCAL
INCENTIVES.

(G) THE TERM ‘REGISTERED BUSINESS ENTERPRISE (RBE)’ SHALL
MEAN INDIVIDUAL, PARTNERSHIP, CORPORATION, PHILIPPINE BRANCH
OF A FOREIGN CORPORATION, OR OTHER ENTITY ORGANIZED AND
EXISTING UNDER PHILIPPINE LAWS AND REGISTERED WITH AN IPA AS
DEFINED UNDER REPUBLIC ACT (RA) NO. 10708, OR THE TIMTA LAW:
PROVIDED, HOWEVER, THAT THE TERM “REGISTERED ENTERPRISE” SHALL
NOT INCLUDE ANY OF THE FOLLOWING SERVICE ENTERPRISES SUCH AS,
BUT NOT LIMITED TO, THOSE ENGAGED IN CUSTOMS BROKERAGE,
TRUCKING OR FORWARDING SERVICES, JANITORIAL SERVICES, SECURITY
SERVICES, INSURANCE, BANKING, AND OTHER FINANCIAL SERVICES,
CONSUMERS’ COOPERATIVES, CREDIT UNIONS, CONSULTANCY SERVICES,
RETAIL BUSINESS, RESTAURANTS, OR SUCH OTHER SIMILAR SERVICES, AS
MAY BE DETERMINED BY THE FISCAL INCENTIVES REVIEW BOARD (FIRB)
OR IPA BOARD, IRRESPECTIVE OF LOCATION, WHETHER INSIDE OR
OUTSIDE THE ECOZONES, DULY ACCREDITED AND/OR LICENSED BY ANY
OF THE IPAS AND WHOSE INCOME DELIVERED WITHIN THE ECONOMIC
ZONES SHALL BE SUBJECT TO TAXES UNDER THE NATIONAL INTERNAL
REVENUE CODE (NIRC) OF 1997, AS AMENDED.

(H) THE TERM ‘SPECIAL ECONOMIC ZONE’ OR ‘ECOZONE’ SHALL
REFER TO A SELECTED AREA, WHICH SHALL BE OPERATED AND MANAGED
AS A SEPARATE CUSTOMS TERRITORY THAT IS HIGHLY DEVELOPED OR
HAS THE POTENTIAL TO BE DEVELOPED INTO AN AGRO-INDUSTRIAL,
INDUSTRIAL, INFORMATION TECHNOLOGY, OR TOURIST/RECREATIONAL,
WHOSE METES AND BOUNDS ARE FIXED OR DELIMITED BY PRESIDENTIAL
PROCLAMATIONS AND WITHIN A SPECIFIC GEOGRAPHICAL AREA. AN
ECOZONE MAY CONTAIN ANY OR ALL OF THE FOLLOWING: INDUSTRIAL
ESTATES (IES), EXPORT PROCESSING ZONES (EPZS), ICT PARKS AND
CENTERS, AND FREE TRADE ZONES: PROVIDED, HOWEVER, THAT AREAS
WHERE MINING EXTRACTIONS ARE UNDERTAKEN SHALL NOT BE
DECLARED AS ECOZONES: PROVIDED, FURTHER, THAT VERTICAL
ECONOMIC ZONES, SUCH AS BUT NOT LIMITED TO BUILDINGS, SELECTED

a


ONOHRONS

FLOORS WITHIN BUILDINGS, AND SELECTED AREAS ON A FLOOR, SHOULD
COMPLY WITH THE MINIMUM CONTIGUOUS LAND AREA AS DETERMINED

BY THE FIRB.

(I) THE TERM ‘SPECIAL PROJECTS/ACTIVITIES’ SHALL REFER TO
PROJECTS/ACTIVITIES DEFINED AS FOLLOWS:

(1) REGISTERED PROJECTS WITH INVESTMENT AMOUNT OF FIFTY
MILLION PESOS (PHP 50,000,000) AND ABOVE, AS MAY BE
ADJUSTED IN THE IMPLEMENTING RULES AND REGULATIONS;

(2) REGISTERED PROJECTS OR ACTIVITIES THAT ARE:

(2.1) “ENVIRONMENTALLY RISKY PROJECTS” SUCH AS BUT
NOT LIMITED TO:

(a) THOSE FALLING WITHIN THE SCOPE OF THE
ENVIRONMENTAL IMPACT STATEMENT (EIS)
SYSTEM ESTABLISHED UNDER PD NO. 1586 AND
PROCLAIMED PURSUANT TO _ PRESIDENTIAL
PROCLAMATION (PP) NO. 2146, AS AMENDED BY PP
NO. 803, OR AS MAY BE AMENDED IN THE FUTURE:

(i)

ENVIRONMENTALLY CRITICAL PROJECTS (ECP)
WHICH HAVE A HIGH POTENTIAL FOR
NEGATIVE ENVIRONMENTAL IMPACTS AND
WHOSE PROPONENTS ARE REQUIRED TO
SUBMIT ENVIRONMENTAL IMPACT
STATEMENTS (EIS), SUCH AS BUT NOT
LIMITED TO: (A) HEAVY INDUSTRIES (NON-
FERROUS METAL INDUSTRIES, IRON AND
STEEL MILLS, PETROLEUM AND
PETROCHEMICAL INDUSTRIES, AND SMELTING
PLANTS); (B) | RESOURCE EXTRACTIVE
INDUSTRIES (MAJOR MINING AND
QUARRYING PROJECTS, FORESTRY PROJECTS,
DIKES AND  FISHPOND DEVELOPMENT
PROJECTS); (C) INFRASTRUCTURE PROJECTS
(MAJOR DAMS, MAJOR POWER PLANTS,

42


(ii)

MAJOR RECLAMATION PROJECTS, MAJOR
ROAD AND BRIDGES); AND (D) GOLF COURSE
PROJECTS.

PROJECTS LOCATED IN ENVIRONMENTALLY
CRITICAL AREAS (ECA) WHOSE PROJECT
PROPONENT IS REQUIRED TO SUBMIT AN EIS
LATER, IF DEEMED NECESSARY, IS REQUIRED.
SUCH AREAS INCLUDE BUT ARE NOT LIMITED
TO: (A) ALL AREAS DECLARED BY LAW AS
NATIONAL PARKS, WATERSHED RESERVES,
WILDLIFE PRESERVES, AND SANCTUARIES; (B)
AREAS SET ASIDE AS AESTHETIC POTENTIAL
TOURIST SPOTS; (C) | AREAS WHICH
CONSTITUTE THE HABITAT FOR ANY
ENDANGERED OR THREATENED SPECIES OF
INDIGENOUS PHILIPPINE WILDLIFE (FLORA
AND FAUNA); (D) AREAS OF UNIQUE
HISTORIC, ARCHEOLOGICAL OR SCIENTIFIC
INTEREST; (E) AREAS WHICH ARE
TRADITIONALLY OCCUPIED BY CULTURAL
COMMUNITIES OR TRIBES (INDIGENOUS
CULTURAL COMMUNITIES); (F) AREAS
FREQUENTLY VISITED AND/OR HARD-HIT BY
NATURAL CALAMITIES (GEOLOGIC HAZARDS,
FLOODS, TYPHOONS, VOLCANIC ACTIVITY,
ETC.); (G) AREAS WITH CRITICAL SLOPES; (H)
AREAS CLASSIFIED AS PRIME AGRICULTURAL
LANDS; (I) RECHARGED AREAS OF AQUIFERS;
()) WATER BODIES CHARACTERIZED BY ONE
OR ANY COMBINATION OF THE FOLLOWING
CONDITIONS: (I.) TAPPED FOR DOMESTIC
PURPOSES, (II) WITHIN THE CONTROLLED
AND/OR PROTECTED AREAS DECLARED BY
APPROPRIATE AUTHORITIES, (III) WHICH
SUPPORT WILDLIFE AND FISHERY ACTIVITIES;
(kK) MANGROVE AREAS CHARACTERIZED BY
ONE OR ANY COMBINATION OF THE
FOLLOWING CONDITIONS: (I) WITH PRIMARY

43


erYaarona

PRISTINE AND DENSE YOUNG GROWTH, (II)
ADJOINING MOUTH OF MAJOR RIVER
SYSTEMS, (Ill) NEAR OR ADJACENT TO
TRADITIONAL PRODUCTIVE FRY OR FISHING
GROUNDS, (IV) WHICH ACT AS NATURAL
BUFFERS AGAINST SHORE EROSION, STRONG
WINDS AND STORM FLOODS, (V) ON WHICH
PEOPLE ARE DEPENDENT FOR THEIR
LIVELIHOOD; AND (Ll) CORAL REEFS
CHARACTERIZED BY ONE OR ANY
COMBINATION OF THE FOLLOWING
CONDITIONS: (I) WITH FIFTY PERCENT (50%)
AND ABOVE LIVE CORALLINE COVER, (II)
SPAWNING AND NURSERY GROUNDS FOR
FISH, (III) WHICH ACT AS NATURAL
BREAKWATER OF COASTLINES.

(b) PROJECTS AND ACTIVITIES THAT REQUIRE THE

IMPORTATION, MANUFACTURE, PROCESSING, SALE,
DISTRIBUTION, USE AND DISPOSAL OF CHEMICAL
SUBSTANCES AND MIXTURES THAT PRESENT
UNREASONABLE RISK AND/OR INJURY TO HEALTH
AND/OR ENVIRONMENT UNDER RA_ 6969,
OTHERWISE KNOWN AS THE “TOXIC SUBSTANCES
AND HAZARDOUS AND NUCLEAR WASTES CONTROL
ACT OF 1990”;

INDUSTRIES THAT DISCHARGE REGULATED
EFFLUENTS AND ARE REQUIRED TO SECURE A
DISCHARGE PERMIT FROM THE DENR UNDER RA
9275, OTHERWISE KNOWN AS THE “PHILIPPINE
CLEAN WATER ACT OF 2004”;

(2.2) “HEALTH RISKY PROJECTS” OR THOSE FALLING UNDER
THE SCOPE OF THE PHILIPPINE NATIONAL FRAMEWORK
AND GUIDELINES FOR ENVIRONMENTAL HEALTH
IMPACT ASSESSMENT SUCH AS PROJECTS THAT HAVE
HEALTH-SENSITIVE COMPONENTS AND THOSE
LOCATED IN HEALTH-SENSITIVE PROJECT LOCATIONS

44


AS DETERMINED BY THE DEPARTMENT OF HEALTH
(DOH), OTHER GOVERNMENT AGENCIES AND
RELEVANT ENTITIES, WITHOUT PREJUDICE TO THE
ESTABLISHMENT OF A HEALTH IMPACT ASSESSMENT
(HIA) SYSTEM IN THE FUTURE, AND ISSUANCE OF A
PRESIDENTIAL PROCLAMATION ON THE MATTER.

(2.3) “ECONOMICALLY RISKY PROJECTS” OR PROJECTS THAT
POSE RISKS TO ECONOMIC STABILITY WHICH INCLUDE
THOSE THAT HAVE HIGH RELIANCE ON IMPORTS, LIMIT
COMPETITION, AND ARE POTENTIALLY SPECULATIVE IN
NATURE.

(3) REGISTERED PROJECTS OR ACTIVITIES WHOSE APPROVAL IN
THE IPA BOARD LEVEL DOES NOT MEET THE MINIMUM
REQUIRED VOTES OF AT LEAST TWO-THIRDS.

(J) THE TERM ‘TAX SUBSIDY OR TAX EXPENDITURE SUBSIDY’ SHALL
REFER TO SUBSIDY GIVEN TO NATIONAL GOVERNMENT AGENCIES, GOCCS
AND GOVERNMENT INSTRUMENTALITIES, STATE UNIVERSITIES AND
COLLEGES (SUCS), AND OTHER GOVERNMENT ENTITIES AS MAY BE
PROVIDED UNDER THE ANNUAL GENERAL APPROPRIATIONS ACT (GAA),
IN LIEU OF PAYMENT OF TAXES AND CUSTOM DUTIES, CHARGEABLE
AGAINST THE TAX EXPENDITURE FUND.

CHAPTER II
TAX AND DUTY INCENTIVES

SEC. 294. INCENTIVES. - REGISTERED PROJECTS OR ACTIVITIES
UNDER THE STRATEGIC INVESTMENTS PRIORITY PLAN SHALL BE
QUALIFIED TO ANY OF THE FOLLOWING INCENTIVES:
(A) INCOME TAX INCENTIVES

(1) INCOME TAX HOLIDAY (ITH). — THE ITH SHALL BE GRANTED FOR

A PERIOD NOT EXCEEDING THREE (3) YEARS: PROVIDED, THAT

AFTER THE EXPIRATION OF THE ITH, THE FOLLOWING INCENTIVES

MAY BE APPLIED FOR A PERIOD NOT EXCEEDING FIVE (5) YEARS,

45


OYRFHRONG

‘WHICH INCLUDES THE PERIOD OF ITH AVAILMENT, EXCEPT THOSE
PROVIDED UNDER SECTIONS 294 (7) and (9), 295, 296, AND 297.

(2) REDUCED CORPORATE INCOME TAX. - A REDUCED TAX RATE OF
EIGHTEEN PERCENT (18%) OF THE TAXABLE INCOME AS DEFINED
UNDER SECTION 31 OF THIS CODE. PROVIDED, THAT IN THE CASE
OF REGISTERED ENTERPRISES WITHIN ECONOMIC ZONES AND
FREEPORTS, THAT TAX SHALL BE PAID AS FOLLOWS:

FIFTEEN PERCENT (15%) TO THE NATIONAL
GOVERNMENT;

ONE POINT FIVE PERCENT (1.5%) TO BE DIRECTLY
REMITTED TO THE TREASURER’S OFFICE OF THE
PROVINCE WHERE THE ENTERPRISE IS LOCATED, IN
LIEU OF THE LOCAL BUSINESS TAX;

ONE POINT FIVE PERCENT (1.5%) TO BE DIRECTLY
REMITTED TO THE TREASURER'S OFFICE OF THE
MUNICIPALITY OR COMPONENT CITY WHERE THE
ENTERPRISE IS LOCATED, IN LIEU OF THE LOCAL
BUSINESS TAX;

PROVIDED, THAT IF THE ENTERPRISE IS UNDER THE
JURISDICTION OF A HIGHLY URBANIZED CITY (HUC),
THE 3% SHARE OF THE LGU SHALL BE DIRECTLY
REMITTED TO THE TREASURER'S OFFICE OF THE HUC.

(3) DEPRECIATION ALLOWANCE OF THE ASSETS THAT IS ACQUIRED
FOR THE ENTITY’S PRODUCTION OF GOODS AND SERVICES
(QUALIFIED CAPITAL EXPENDITURE) OF TEN PERCENT (10%) FOR
BUILDINGS; AND TWENTY PERCENT (20%) FOR MACHINERIES AND
EQUIPMENT. PROVIDED, THAT DEPRECIATION MAY BE COMPUTED
USING ACCELERATED DEPRECIATION METHOD ON RATE NOT
EXCEEDING TWICE THE RATE WHICH WOULD HAVE BEEN USED HAD
THE ANNUAL ALLOWANCE BEEN COMPUTED IN ACCORDANCE WITH
THE RULES AND REGULATIONS PRESCRIBED BY THE SECRETARY OF
FINANCE AND THE PROVISIONS OF THE NIRC OF 1997, AS
AMENDED: PROVIDED FURTHER, THAT THE ASSETS ARE ACQUIRED
DIRECTLY FOR THE ENTITY'S PRODUCTION OF GOODS AND

46


SERVICES OTHER THAN ADMINISTRATIVE AND OTHER SUPPORT
SERVICES.

(4) UP TO FIFTY PERCENT (50%) ADDITIONAL DEDUCTION ON THE
INCREMENT OF LABOR EXPENSE: PROVIDED, THAT THIS DOES NOT
INCLUDE INDIRECT LABOR, SALARIES AND WAGES, AND OTHER
PERSONNEL COSTS INCURRED FOR ADMINISTRATIVE AND OTHER
SUPPORT SERVICES.

(5) UP TO ONE HUNDRED PERCENT (100%) ADDITIONAL
DEDUCTION ON THE INCREMENT OF RESEARCH AND
DEVELOPMENT INCURRED IN THE TAXABLE YEAR: PROVIDED, THAT
IT IS DIRECTLY RELATED TO THE REGISTERED ACTIVITIY/IES OF THE
ENTITY, AND

(6) UP TO ONE HUNDRED PERCENT (100%) ADDITIONAL
DEDUCTION ON THE INCREMENT OF TRAINING INCURRED IN THE
TAXABLE YEAR: PROVIDED, THAT IT IS GIVEN TO THE EMPLOYEES
ENGAGED DIRECTLY IN THE ENTITY’S PRODUCTION OF GOODS AND.
SERVICES: PROVIDED, FURTHER, THAT THE CONCERNED IPA HAS.
ISSUED A CORRESPONDING CERTIFICATE OF ENTITLEMENT UPON
APPLICATION, AND A CERTIFICATE OF APPROVAL AFTER A REVIEW.
OF DOCUMENTATION OF TRAININGS SUBMITTED BY THE
ENTERPRISE AT THE END OF THE TAXABLE YEAR, OTHERWISE, THIS
INCENTIVE SHALL BE DEEMED WAIVED.

(7) UP TO ONE HUNDRED PERCENT (100%) DEDUCTION ON
INFRASTRUCTURE DEVELOPMENT. — REGISTERED ENTERPRISES
ESTABLISHING THEIR ACTIVITY IN AN AREA THAT THE STRATEGIC
INVESTMENT PRIORITY PLAN (SIPP) DESIGNATES AS NECESSARY
FOR COUNTRY-WIDE DEVELOPMENT OR IN AN AREA FOUND TO BE
DEFICIENT IN INFRASTRUCTURE, PUBLIC UTILITIES, AND OTHER
FACILITIES, SUCH AS IRRIGATION, DRAINAGE, OR OTHER SIMILAR
WATERWORKS INFRASTRUCTURE, MAY DEDUCT FROM THE GROSS
INCOME AN AMOUNT EQUIVALENT TO UP TO ONE HUNDRED
PERCENT (100%) OF NECESSARY AND MAJOR INFRASTRUCTURE
‘WORKS IT MAY HAVE UNDERTAKEN WITH THE PRIOR APPROVAL
AND RECOMMENDATION OF THE IPA CONCERNED: PROVIDED,
THAT THE TITLE TO ALL SUCH INFRASTRUCTURE WORKS SHALL

47


UPON COMPLETION, BE TRANSFERRED TO THE PHILIPPINE
GOVERNMENT: PROVIDED FURTHER, THAT ANY AMOUNT NOT
DEDUCTED FOR A PARTICULAR YEAR MAY BE CARRIED OVER FOR
DEDUCTION FOR SUBSEQUENT YEARS NOT EXCEEDING FIVE (5)
YEARS FROM COMMERCIAL OPERATION.

(8) DEDUCTION FOR REINVESTMENT ALLOWANCE TO
MANUFACTURING INDUSTRY. - WHEN A MANUFACTURING
REGISTERED ENTERPRISE REINVESTS ITS UNDISTRIBUTED PROFIT OR
SURPLUS IN ANY OF THE ACTIVITIES LISTED IN THE SIPP, THE
AMOUNT SO REINVESTED TO A MAXIMUM OF FIFTY PERCENT (50%)
SHALL BE ALLOWED AS A DEDUCTION FROM ITS TAXABLE INCOME
WITHIN A PERIOD OF FIVE (5) YEARS FROM THE TIME OF SUCH
REINVESTMENT: PROVIDED, THAT PRIOR APPROVAL AND
RECOMMENDATION BY THE IPA CONCERNED OF SUCH
REINVESTMENT WAS OBTAINED BY THE REGISTERED ENTERPRISE
PLANNING SUCH REINVESTMENT.

(9) | ENHANCED NET OPERATING LOSS CARRY-OVER (NOLCO). -
THE NET OPERATING LOSS OF THE REGISTERED ACTIVITY DURING
THE FIRST THREE (3) YEARS FROM THE START OF COMMERCIAL
OPERATION WHICH HAD NOT BEEN PREVIOUSLY OFFSET AS
DEDUCTION FROM GROSS INCOME MAY BE CARRIED OVER AS
DEDUCTION FROM GROSS INCOME WITHIN THE NEXT FIVE (5)
CONSECUTIVE TAXABLE YEARS IMMEDIATELY FOLLOWING THE
YEAR OF SUCH LOSS.

(10) UP TO FIFTY PERCENT (50%) ADDITIONAL DEDUCTION ON
THE INCREMENT OF DOMESTIC INPUT EXPENSE INCURRED IN THE
TAXABLE YEAR: PROVIDED, THAT IT IS DIRECTLY RELATED TO AND
ACTUALLY USED IN THE REGISTERED EXPORT ACTIVITY OF THE
REGISTERED ENTITY.”

PROVIDED, THAT IN LIEU OF THE ITH UNDER SECTION 294 (A) (1) OR THE
REDUCED TAX RATE OF EIGHTEEN PERCENT (18%) UNDER SECTION 294 (A)
(2), THE TAX INCENTIVES UNDER SECTION 294 (A) (3), (4), (5), (6), (7), (8),
(9), AND (10) MAY BE GRANTED ON AN INDUSTRY-SPECIFIC BASIS AS
DETERMINED BY THE BO! IN THE STRATEGIC INVESTMENT PRIORITY PLAN.
THE BO! SHALL PRESCRIBED THE LEVEL OF ADDITIONAL DEDUCTION FOR
SELECTED INDUSTRIES.

48


PROVIDED, FURTHER, THAT IN NO SUCH CASE SHALL AN INCOME TAX
INCENTIVE BE EXTENDED BEYOND THE INITIAL GRANT OF FIVE (5) YEARS,
EXCEPT THOSE PROVIDED UNDER SECTION 294 (A)(7) AND (9), SECTIONS.
295, 296, AND 297.

(B) EXEMPTION FROM CUSTOMS DUTY ON IMPORTATION OF CAPITAL
EQUIPMENT AND RAW MATERIALS DIRECTLY AND EXCLUSIVELY USED IN
THE REGISTERED ACTIVITY FOR A PERIOD NOT EXCEEDING FIVE (5) YEARS
BY REGISTERED ENTERPRISES: PROVIDED, THAT THE FIVE YEARS LIMIT IN
THIS SUBSECTION SHALL NOT APPLY TO SPECIAL ECONOMIC ZONES AS
DEFINED UNDER THIS TITLE.

PROVIDED, FURTHER, THAT EXPANSION OF REGISTERED ACTIVITIES MAY
BE GRANTED DUTY EXEMPTION ON CAPITAL EQUIPMENT ONLY, SUBJECT
TO THE FOLLOWING CONDITIONS:

(1) THE ACTIVITY IS STILL COVERED BY THE STRATEGIC
INVESTMENTS PRIORITY PLAN (SIPP) OR IS AN INNOVATION
PROJECT AS DEFINED IN THE STRATEGIC INVESTMENT
PRIORITY PLAN;

(2) CUSTOMS DUTY EXEMPTION WILL ONLY APPLY ON THE
INCREMENTAL PORTION OF THE ACTIVITY; AND

(3) THE CUSTOMS DUTY EXEMPTION EXTENSION SHALL NOT
EXCEED FIVE (5) YEARS.

SEC. 295. INCENTIVES FOR AGRIBUSINESS. AGRIBUSINESS PROJECTS
OR ACTIVITIES OF REGISTERED ENTERPRISES LOCATED OUTSIDE METRO
MANILA AND OTHER URBAN AREAS AS IDENTIFIED IN THE STRATEGIC
INVESTMENT PRIORITY PLAN SHALL BE ENTITLED TO ADDITIONAL TWO (2)
YEARS OF INCENTIVE UNDER SECTION 294, OF WHICH ONE (1) YEAR MAY.
BE AN ADDITIONAL YEAR OF INCOME TAX HOLIDAY.

SEC. 296. PROJECTS LOCATED IN LESS DEVELOPED AREAS OR THOSE
RECOVERING FROM ARMED CONFLICT OR A MAJOR DISASTER. PROJECTS
OR ACTIVITIES OF REGISTERED ENTERPRISES LOCATING IN LESS
DEVELOPED AREAS AS IDENTIFIED IN THE STRATEGIC INVESTMENT

49


PRIORITY PLAN, OR THOSE RECOVERING FROM ARMED CONFLICT
AND/OR A MAJOR DISASTER AS DETERMINED BY THE OFICE OF THE
PRESIDENT SHALL BE ENTITLED TO ADDITIONAL TWO (2) YEARS OF
INCENTIVE UNDER SECTION 294, OF WHICH ONE (1) YEAR MAY BE AN
ADDITIONAL YEAR OF INCOME TAX HOLIDAY.

SEC. 297. RELOCATION PROJECTS OR ACTIVITIES. REGISTERED
PROJECTS OR ACTIVITIES PRIOR TO THE EFFECTIVITY OF THIS ACT
RELOCATING FROM METRO MANILA AND SELECTED AREAS OF REGIONS III
AND IV-A TO OTHER AREAS OF THE COUNTRY SHALL BE ENTITLED TO
ADDITIONAL TWO (2) YEARS OF INCENTIVE UNDER SECTION 294, OF
WHICH ONE (1) YEAR MAY BE AN ADDITIONAL YEAR OF INCOME TAX
HOLIDAY.

CHAPTER Ill
GOVERNANCE OF FISCAL INCENTIVES

SEC. 298. COMPOSITION OF THE FIRB - FOR PURPOSES OF THIS ACT, THE
FISCAL INCENTIVES REVIEW BOARD OR FIRB CREATED UNDER PRESIDENTIAL
DECREE (PD) NO. 776, AS AMENDED BY PD 1931 AND PD 1955, OFFICE OF THE
PRESIDENT MEMORANDUM ORDER NO. 23, SERIES OF 1986 AND EXECUTIVE
ORDER 93, SERIES OF 1986, SHALL BE RECONSTITUTED AS FOLLOWS:

(A) BOARD. — THE BOARD SHALL BE COMPOSED OF THE SECRETARY OF
FINANCE AS CHAIRPERSON, AND FOUR (4) MEMBERS CONSISTING
OF: (1) THE EXECUTIVE SECRETARY OF THE OFFICE OF THE
PRESIDENT; (2) THE SECRETARY OF TRADE AND INDUSTRY; (3) THE
DIRECTOR-GENERAL OF THE NATIONAL ECONOMIC DEVELOPMENT
AUTHORITY; AND (4) THE SECRETARY OF BUDGET AND
MANAGEMENT;

TECHNICAL COMMITTEE. — THE TECHNICAL COMMITTEE SHALL BE
COMPOSED OF AN UNDERSECRETARY OF FINANCE DESIGNATED BY
THE SECRETARY OF FINANCE AS CHAIRPERSON AND SIX (6) MEMBERS
CONSISTING OF: (1) A DEPUTY OR ASSISTANT DEPUTY EXECUTIVE
SECRETARY OF THE OFFICE OF THE PRESIDENT; (2) AN
UNDERSECRETARY OR ASSISTANT SECRETARY OF TRADE AND

s

50


eNonnone

(C)

INDUSTRY; (3) A DEPUTY OR ASSISTANT DIRECTOR GENERAL OF
NATIONAL ECONOMIC DEVELOPMENT AUTHORITY; (4) AN
UNDERSECRETARY OR ASSISTANT SECRETARY OF BUDGET AND
MANAGEMENT; (5) THE COMMISSIONER OR DEPUTY
COMMISSIONER OF INTERNAL REVENUE; AND (6) THE
COMMISSIONER OR DEPUTY COMMISSIONER OF CUSTOMS.

SECRETARIAT. — THE NATIONAL TAX RESEARCH CENTER (NTRC) SHALL
BE THE SECRETARIAT OF THE FIRB. THE EXECUTIVE DIRECTOR OF
NTRC SHALL ACT AS HEAD OF THE SECRETARIAT.

SEC. 299. EXPANDED FUNCTIONS OF THE FIRB. —- THE POWERS AND

FUNCTIONS OF THE FIRB WHICH SHALL BE VESTED IN AND EXERCISED BY
THE BOARD SHALL BE EXPANDED AS FOLLOWS:

(A) TO EXERCISE OVERSIGHT FUNCTIONS OVER THE IPAS. FOR THIS

PURPOSE, THE FIRB SHALL:

(1) SET AND REVIEW THE GENERAL POLICY WITH REGARD TO THE
GRANT OF FISCAL INCENTIVES;

(2) REVIEW AND AUDIT THE COMPLIANCE OF IPAS AND OGAS TO
THE GENERAL POLICY ON INCENTIVES SET BY THE FIRB AS
MANDATED IN THIS ACT, THE STRATEGIC INVESTMENT
PRIORITY PLAN, AND THE RESPECTIVE CHARTERS OF THE IPAS
AND OGAS; AND IMPOSE SANCTIONS ON VIOLATION OR
NON-COMPLIANCE OF IPAS AND OGAS SUCH AS BUT NOT
LIMITED TO SUSPENSION OR CANCELATION OF THEIR POWER
TO GRANT FISCAL INCENTIVES;

(3) CANCEL, SUSPEND, OR WITHDRAW THE ENJOYMENT OF
FISCAL INCENTIVES OF CONCERNED RBES AND ORES, AND
ENDORSE THE SAME TO THE CONCERNED REVENUE AGENCIES
FOR ASSESSMENT AND COLLECTION OF TAXES AND DUTIES
DUE, INCLUDING FINES OR PENALTIES, IF WARRANTED, FOR
THE FOLLOWING REASONS: (A) FAILURE TO MAINTAIN THE
QUALIFICATIONS REQUIRED BY THE CONCERNED IPA OR BY
THE FIRB FOR AVAILMENT OF INCENTIVES; AND (B)
VIOLATION OF ANY PROVISIONS OF THIS ACT, RULES AND

51


REGULATIONS ISSUED UNDER THE RESPECTIVE CHARTERS OF
THE IPAS, OR OF THE TERMS AND CONDITIONS OF
REGISTRATION;

(4) REQUIRE IPAS AND OGAS TO SUBMIT, REGULARLY OR WHEN
NECESSARY, SUMMARIES OF APPROVED INVESTMENT AND
INCENTIVES GRANTED, AND FIRM- OR ENTITY-LEVEL FISCAL
INCENTIVES AND BENEFITS DATA AS INPUT TO THE FIRB’S
REVIEW AND AUDIT FUNCTION AND EVALUATION OF
PERFORMANCE OF RECIPIENTS OF FISCAL INCENTIVES;

(5) PUBLISH THE NAMES OF THE RBES AND ORES WITH DETAILED
ESTIMATED AMOUNT OF FISCAL INCENTIVES, TAX
PAYMENTS, AND OTHER RELATED INFORMATION, INCLUDING
BENEFITS DATA; AND

(6) IN THE CASE OF VERTICAL ZONES, DETERMINE THE MINIMUM
CONTIGUOUS FLOOR AREA THAT ECONOMIC ZONES SHOULD
COMPLY WITH, SUCH AS BUT NOT LIMITED TO BUILDINGS,
SELECTED FLOORS WITHIN BUILDINGS, AND SELECTED AREAS
ON A FLOOR.

(B) TO APPROVE OR DISAPPROVE THE GRANT OF FISCAL INCENTIVES TO
SPECIAL PROJECTS/ACTIVITIES AS DEFINED IN THIS ACT UPON THE
RECOMMENDATION OF THE IPA BOARD: PROVIDED, THAT FOR THESE
SPECIAL PROJECTS/ACTIVITIES, THE IPA BOARD SHALL RECOMMEND
TO THE FIRB THE APPROVAL OF SUCH GRANT OF FISCAL INCENTIVES
ONLY AFTER A THOROUGH REVIEW OF THE APPLICATION;

(C) TO APPROVE APPLICATIONS FOR TAX SUBSIDIES TO GOCCS,
GOVERNMENT INSTRUMENTALITIES, (Gis), GOVERNMENT
COMMISSARIES, AND STATE UNIVERSITIES AND COLLEGES (SUCS);

(D)

TO CANCEL, SUSPEND, OR WITHDRAW THE ENJOYMENT OF TAX
SUBSIDY OF CONCERNED GOCCcs, GIS, GOVERNMENT
COMMISSARIES, AND SUCS AND ENDORSE THE SAME TO THE
CONCERNED REVENUE AGENCIES FOR ASSESSMENT AND COLLECTION
OF TAXES AND DUTIES DUE, INCLUDING FINES OR PENALTIES, IF
WARRANTED, FOR VIOLATIONS OF ANY OF THE CONDITIONS

52


(F)

(¢)

(H)

10)

)

IMPOSED IN THE GRANT OF TAX SUBSIDY, OR PROVISIONS OF THIS
ACT, OR APPLICABLE RULES AND REGULATIONS;

TO CONDUCT REGULAR MONITORING AND EVALUATION OF
INVESTMENT AND NON-INVESTMENT FISCAL INCENTIVES IN
ACCORDANCE WITH SECTION 306 OF THIS ACT, SUCH AS USING COST-
BENEFIT ANALYSIS (CBA), TO DETERMINE THEIR IMPACT ON THE
ECONOMY AND WHETHER AGREED PERFORMANCE TARGETS ARE
MET;

TO CHECK AND VERIFY REGULARLY THE COMPLIANCE OF RBES WITH
SPECIAL PROJECTS/ACTIVITIES GRANTED FISCAL INCENTIVES BY THE
FIRB WITH THE TERMS AND CONDITIONS OF THEIR AVAILMENT, THE
RELEVANT PROVISIONS AND RULES AND REGULATIONS OF THIS ACT,
AND OTHER RELEVANT LAWS OR ISSUANCES;

TO DECIDE ON ISSUES, AFTER DUE HEARING, CONCERNING THE
APPROVAL, DISAPPROVAL, CANCELLATION, SUSPENSION,
WITHDRAWAL OR FORFEITURE OF FISCAL INCENTIVES OR TAX
SUBSIDY IN ACCORDANCE WITH THIS ACT;

TO REQUIRE THE SUBMISSION AND PRODUCTION OF DOCUMENTS,
RECORDS, BOOKS, OR OTHER DATA RELEVANT OR MATERIAL TO THE
EVALUATION OF APPLICATION FOR FISCAL INCENTIVES AND TAX
SUBSIDIES, FROM IPAS, OGAS, RBES, ORES, GOCCS, GIS,
GOVERNMENT COMMISSARIES, AND SUCS, LOCAL GOVERNMENT
UNITS (LGUS), AMONG OTHERS.

TO OBTAIN INFORMATION, SUMMON, EXAMINE, INQUIRE AND
RECEIVE FROM IPAS, OGAS, RBES, ORES, GOCCS, GIS, GOVERNMENT
COMMISSARIES, SUCS, AND LGUS, DOCUMENTS, RECORDS, BOOKS,
OR OTHER DATA RELEVANT OR MATERIAL TO THE RESOLUTION OF
ISSUES ARISING FROM THE APPROVAL, DISAPPROVAL,
CANCELLATION, SUSPENSION, WITHDRAWAL OR FORFEITURE OF
FISCAL INCENTIVES OR TAX SUBSIDY, OR IN IMPOSING PENALTIES
FOR VIOLATIONS OF THE TERMS AND CONDITIONS ON THE
AVAILMENT OF FISCAL INCENTIVES AND TAX SUBSIDY, OR ANY OF
THE PROVISIONS OF THIS ACT;


35
36
37
38

(J) TO SUBMIT ANNUAL REPORTS TO THE OFFICE OF THE PRESIDENT, AS
PART OF THE BUDGET PROCESS COVERING ITS POLICY AND
ACTIVITIES IN THE ADMINISTRATION OF THIS ACT, INCLUDING
RECOMMENDATIONS ON FISCAL INCENTIVE POLICIES AND APPROVAL
OF FISCAL INCENTIVES;

TO FIX AND IMPOSE REASONABLE FEES AND CHARGES FOR THE
PROCESSING OF APPLICATIONS FOR FISCAL INCENTIVES OR TAX
SUBSIDIES: PROVIDED, THAT THE PROCEEDS THEREOF SHALL ACCRUE
DIRECTLY AND AUTOMATICALLY TO THE FIRB.

(K)

(Lt) TO EXERCISE ALL OTHER POWERS NECESSARY OR INCIDENTAL TO
ATTAIN THE PURPOSES OF THIS ACT AND OTHER LAWS VESTING
ADDITIONAL FUNCTIONS ON THE FIRB; AND

(M) TO PROMULGATE SUCH RULES AND REGULATIONS AS MAY BE
NECESSARY TO IMPLEMENT THE INTENT AND PROVISIONS OF THIS
ACT.

PROVIDED, THAT, AS CHAIR OF THE FIRB AND AS THE CUSTODIAN OF
FISCAL PRUDENCE AND RESPONSIBILITY, THE SECRETARY OF FINANCE
SHALL EXERCISE OVERSIGHT FUNCTIONS AND SHALL HAVE VETO POWER
OVER THE APPROVAL AND CANCELLATION OF TAX INCENTIVES UNDER
SEC. 302 HEREOF.

PROVIDED, FURTHER, THAT THE SECRETARY OF FINANCE SHALL
AUTOMATICALLY BE THE CO-CHAIR OF ALL THE EXISTING AND FUTURE
IPAS.

PROVIDED, FINALLY, THAT THE NATIONAL ECONOMIC AND
DEVELOPMENT AUTHORITY (NEDA) AND THE DEPARTMENT OF TRADE
AND INDUSTRY (DTI) SHALL BE MEMBERS OF ALL THE EXISTING AND
FUTURE IPAS.

SEC. 300. ROLES AND RESPONSIBILITIES OF THE TECHNICAL COMMITTEE. -

THE TECHNICAL COMMITTEE SHALL HAVE THE FOLLOWING ROLES AND
RESPONSIBILITIES:

54


(A)

(B)

(Cc)

(D)

TO EVALUATE APPLICATIONS FOR FISCAL INCENTIVES AND TAX
SUBSIDIES FORWARDED BY THE SECRETARIAT;

TO RECOMMEND TO THE BOARD THE APPROVAL, DISAPPROVAL,
SUSPENSION, OR WITHDRAWAL OF FISCAL INCENTIVES AND TAX
SUBSIDIES AND PERTINENT MATTERS RELATIVE THERETO;

TO ASSIST THE BOARD IN THE EFFECTIVE DISCHARGE OF ITS
FUNCTIONS AND RECOMMEND OTHER POLICIES AND MEASURES
DEEMED NECESSARY TO CARRY OUT THE OBJECTIVES OF THIS ACT;
AND

TO PERFORM OTHER FUNCTIONS AS MAY BE DIRECTED BY THE
BOARD.

SEC. 301. ROLES AND RESPONSIBILITIES OF THE SECRETARIAT. — THE
SECRETARIAT SHALL HAVE THE FOLLOWING ROLES AND RESPONSIBILITIES:

(A)

(D)

TO RECEIVE, REVIEW, AND PROCESS APPLICATIONS ON FISCAL
INCENTIVES COVERING SPECIAL PROJECTS/ACTIVITIES OF
REGISTERED BUSINESS ENTERPRISES, SUBSIDIES OF GOCCS, GIS,
GOVERNMENT COMMISSARIES AND SUCS, AND OTHER MATTERS
REGARDING FISCAL INCENTIVES AND TAX SUBSIDIES, AND
RECOMMEND TO THE TECHNICAL COMMITTEE THE APPROVAL,
DISAPPROVAL, SUSPENSION, OR WITHDRAWAL OF FISCAL
INCENTIVES AND TAX SUBSIDIES AND OTHER PERTINENT MATTERS
RELATIVE THERETO;

TO ASSIST THE BOARD IN THE MONITORING AND EVALUATION OF
INVESTMENT AND NON-INVESTMENT FISCAL INCENTIVES AND TAX
SUBSIDIES IN ACCORDANCE WITH SECTION 306 OF THIS ACT;

TO MAINTAIN, ORGANIZE, AND SECURE DATA RECEIVED FROM
OTHER ENTITIES, SUCH AS BUT NOT LIMITED TO IPAS, OGAS, RBES,
AND ORES;

TO PREPARE THE AGENDA, MINUTES, TRANSCRIPTIONS OF THE
MEETINGS, AND SUCH OTHER DOCUMENTS AS MAY BE REQUIRED BY
THE BOARD OR THE TECHNICAL COMMITTEE;

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33

(E)

(F)

(G

TO ACT AS THE CUSTODIAN OF ALL FIRB RECORDS AND DOCUMENTS;

TO COLLECT AND RECEIVE REASONABLE FEES AND CHARGES FOR THE
PROCESSING OF APPLICATIONS FOR FISCAL INCENTIVES OR
SUBSIDIES; AND

TO PERFORM SUCH OTHER DUTIES AS MAY BE ASSIGNED BY THE
TECHNICAL COMMITTEE AND THE BOARD.

SEC. 302. COVERAGE AND SCOPE OF THE POWER OF THE FIRB TO GRANT
FISCAL INCENTIVES. ~ THE FIRB HAS THE POWER TO GRANT FISCAL INCENTIVES
TO THE FOLLOWING SPECIAL PROJECTS/ACTIVITIES AS DEFINED UNDER SEC.
293(I) OF THIS ACT.

(A) REGISTERED PROJECTS WITH INVESTMENT AMOUNT OF FIFTY

(B)

(Cc)

MILLION PESOS (PHP 50,000,000) AND ABOVE;

REGISTERED PROJECTS OR ACTIVITIES THAT POSE RISK TO THE
ENVIRONMENT, HEALTH AND ECONOMIC STABILITY. THE FIRB
JOINTLY WITH THE IPAS AND IN CONSULTATION WITH THE DOH,
DENR, NEDA, AND OTHER CONCERNED AGENCIES SHALL DETERMINE
WHICH PROJECTS AND ACTIVITIES FALL UNDER THIS CATEGORY AS
MAY PROVIDED IN THE IMPLEMENTING RULES AND REGULATIONS
OF THIS ACT; AND

REGISTERED PROJECTS OR ACTIVITIES WHOSE APPROVAL IN THE IPA
BOARD LEVEL DOES NOT MEET THE MINIMUM REQUIRED VOTES OF
AT LEAST TWO-THIRDS. FOR THIS PURPOSE, THE IPA BOARD SHALL
ELEVATE TO THE FIRB THESE TYPES OF PROJECTS OR ACTIVITIES
TOGETHER WITH THE ENTIRE DOCKET, FOR APPROPRIATE ACTION.

SEC. 303. REVIEW OF APPLICATIONS FOR FISCAL INCENTIVES ON SPECIAL
PROJECTS AND ACTIVITIES. - AFTER A DETERMINATION THAT THE APPLICATION
FALLS UNDER THE SPECIAL PROJECTS/ACTIVITIES ENUMERATED IN THE
PREVIOUS SECTION, THE IPA CONCERNED SHALL FORWARD THE ENTIRE
APPLICATION DOCKET TO THE FIRB FOR ITS REVIEW AND APPROVAL.


WITHIN FIFTEEN (15) WORKING DAYS FROM THE RECEIPT THEREOF, THE
SECRETARIAT SHALL ENSURE THE COMPLETENESS OF THE DOCUMENTS
SUBMITTED, CONDUCT AN INITIAL EVALUATION OF THE DOCUMENTS
SUBMITTED, AND ELEVATE ITS RECOMMENDATION TO THE TECHNICAL
COMMITTEE FOR THEIR REVIEW AND EVALUATION. THE TECHNICAL
COMMITTEE SHALL HAVE TEN (10) WORKING DAYS TO ISSUE THEIR
RECOMMENDATION AND SUBMIT THE SAME TO THE BOARD FOR APPROPRIATE
ACTION.

SEC. 304. ISSUANCE OF THE FIRB RESOLUTION AND CERTIFICATE OF
ENTITLEMENT TO FISCAL INCENTIVES. - THE BOARD SHALL ISSUE ITS
RESOLUTION WITHIN FIVE (5) WORKING DAYS FROM RECEIPT OF THE
RECOMMENDATION OF THE TECHNICAL COMMITTEE. IF THE APPLICATION FOR
FISCAL INCENTIVES IS APPROVED, A CERTIFICATE OF ENTITLEMENT TO FISCAL
INCENTIVES SHALL BE ISSUED TO THE APPLICANT.

CHAPTER IV
FISCAL INCENTIVES MANAGEMENT AND TRANSPARENCY

SEC. 305. FILING OF TAX RETURNS AND SUBMISSION OF FISCAL
INCENTIVES REPORTS. — ALL RBES AND ORES WHETHER TAXABLE OR EXEMPT,
ARE REQUIRED TO FILE THEIR TAX RETURNS AND PAY THEIR TAX LIABILITIES, ON
OR BEFORE THE DEADLINE AS PROVIDED UNDER THE NIRC, AS AMENDED,
USING THE ELECTRONIC SYSTEM FOR FILING AND PAYMENT OF TAXES WITH THE
BIR.

FOR RBES AND ORES AVAILING OF INCENTIVES ADMINISTERED BY THE IPAS AND.
OGAS, THEY SHALL FILE WITH THEIR RESPECTIVE IPAS OR OGAS A COMPLETE
ANNUAL FISCAL INCENTIVES REPORT OF THEIR INCOME-BASED FISCAL
INCENTIVES, VALUE-ADDED TAX EXEMPTIONS AND ZERO-RATING, AND
CUSTOMS DUTY EXEMPTIONS, DEDUCTIONS, CREDITS OR EXCLUSIONS FROM.
THE INCOME TAX BASE, AND EXEMPTIONS FROM LOCAL TAXES, AS PROVIDED
IN THE CHARTER OF THE IPA CONCERNED OR OGA, AND RESPECTIVE LAWS, AND
BENEFITS DATA SUCH AS BUT NOT LIMITED TO THE ACTUAL AMOUNT OF
INVESTMENTS, TAXES PAID, WITHHELD, AND FOREGONE, EMPLOYMENT
IMPACT, AND EXPORTS, IMPORTS, AND DOMESTIC INPUTS WITHIN THIRTY (30)
CALENDAR DAYS FROM THE STATUTORY DEADLINE FOR FILING OF TAX

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COVOHRONA

RETURNS AND PAYMENT OF TAXES; PROVIDED, THAT, A COPY OF THE REPORT
SHALL BE SIMULTANEOUSLY SUBMITTED TO THE FIRB IN ELECTRONIC FORM.

THE IPAS AND OGAS SHALL, WITHIN SIXTY (60) CALENDAR DAYS FROM THE END
OF THE STATUTORY DEADLINE FOR FILING OF THE RELEVANT TAX RETURNS,
SUBMIT TO THE BIR, THEIR RESPECTIVE ANNUAL FISCAL INCENTIVES REPORTS
BASED ON THE LIST OF THE RBES AND ORES WHICH HAVE FILED SAID FISCAL
INCENTIVES REPORT.

THE DETAILS OF THE FISCAL INCENTIVES REPORTS, AS PROVIDED IN THE
PRECEDING PARAGRAPHS, SHALL BE PROVIDED IN THE IRR OF THIS ACT.

THE FOREGOING PROVISIONS SHALL BE WITHOUT PREJUDICE TO THE RIGHT OF
THE BIR AND THE BUREAU OF CUSTOMS (BOC) TO ASSESS AND/OR AUDIT TAX
LIABILITIES, IF ANY, WITHIN THE PRESCRIBED PERIOD PROVIDED IN THE NIRC, AS
AMENDED, AND THE CUSTOMS MODERNIZATION AND TARIFF ACT (CMTA), AS
AMENDED, RESPECTIVELY.

SEC. 306. MONITORING, EVALUATION AND REPORTING OF FISCAL
INCENTIVES. — THE BIR AND THE BOC SHALL SUBMIT TO THE DOF
NOTWITHSTANDING ANY LAW TO THE CONTRARY: (A) THE TAX AND DUTY
INCENTIVES OF RBES AND ORES AS REFLECTED IN THEIR FILED TAX RETURNS
AND IMPORT ENTRIES; AND (B) ACTUAL TAX AND DUTY INCENTIVES AS
EVALUATED AND DETERMINED BY THE BIR AND THE BOC.

THE DOF SHALL MAINTAIN A SINGLE DATABASE FOR MONITORING AND
ANALYSIS OF FISCAL INCENTIVES GRANTED.

THE FIRB IS MANDATED TO CONDUCT A SYSTEMATIC COLLECTION OF
INFORMATION FROM THE DOF, IPAS, OGAS, RBES AND ORES, AS WELL AS
EVALUATE AND ASSESS THE PROCESS, OUTCOMES, AND IMPACT OF INCENTIVES
GRANTED TO FIRMS TO DETERMINE WHETHER AGREED PERFORMANCE
TARGETS AND INTENDED RESULTS AND OUTCOMES ARE MET. THE METHOD OF
EVALUATION MAY INCLUDE THE CONDUCT OF COST-BENEFIT ANALYSIS OR
OTHER PROCESS AND IMPACT EVALUATION METHODS: PROVIDED, THAT FOR
PURPOSES OF THIS ACT, THE TERM COST-BENEFITS ANALYSIS REFERS TO THE
SYSTEMATIC EVALUATION OF THE TOTAL COSTS OF GRANTING FISCAL
INCENTIVES VIS-A-VIS THE TOTAL BENEFITS DERIVED FROM THE GRANT OF
FISCAL INCENTIVES BASED ON THE ANNUAL FISCAL INCENTIVE REPORT AND
OTHER RELATED SOURCES, TO CALCULATE THE NET BENEFIT OR COST

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ASSOCIATED TO FISCAL INCENTIVES AND EVALUATE THE OVERALL IMPACT OF
FISCAL INCENTIVES IN MONETIZED TERMS.

FOR PURPOSES OF MONITORING AND TRANSPARENCY, THE DOF SHALL SUBMIT
TO THE DBM AGGREGATE DATA ON A SECTORAL AND PER INDUSTRY BASIS OF:
(1) THE AMOUNT OF FISCAL INCENTIVES AVAILED BY RBES AND ORES; (2) THE
ESTIMATE CLAIMS OF FISCAL INCENTIVES IMMEDIATELY PRECEDING THE
CURRENT YEAR; (3) THE PROGRAMMED FISCAL INCENTIVES FOR THE CURRENT
YEAR; AND (4) THE PROJECTED FISCAL INCENTIVES FOR THE FOLLOWING YEAR.
SUCH INFORMATION SHALL BE GIVEN TO THE JOINT CONGRESSIONAL
OVERSIGHT COMMITTEE CREATED UNDER SECTION 9 OF RA NO. 10708 OR THE
TIMTA LAW.

THE AFORESAID DATA SHALL BE REFLECTED BY THE DBM IN THE ANNUAL
BUDGET OF EXPENDITURES AND SOURCES OF FINANCING (BESF), WHICH SHALL
BE KNOWN AS THE FISCAL INCENTIVES INFORMATION (Fl!) SECTION: PROVIDED,
THAT THE Fil SHALL BE LIMITED TO THE AGGREGATE DATA RELATED TO
INCENTIVES AVAILED OF BY RBES AND ORES BASED ON THE SUBMISSIONS OF
THE DOF AND THE CONCERNED IPAS AND OGAS, CATEGORIZED BY SECTOR, BY
IPA OR OGA AND BY TYPE OF FISCAL INCENTIVE.

NOTHING IN THIS ACT SHALL BE CONSTRUED TO DIMINISH OR LIMIT, IN
WHATEVER MANNER, THE AMOUNT OF INCENTIVES THAT THE IPAS OR OGAS
MAY GRANT PURSUANT TO THEIR CHARTERS AND EXISTING LAWS; OR TO
PREVENT, DETER, OR DELAY THE PROMOTION AND REGULATION OF
INVESTMENTS, PROCESSING OF APPLICATIONS FOR REGISTRATIONS, AND
EVALUATION OF ENTITLEMENT OF INCENTIVES BY IPAS OR OGAS.

SEC. 307. PENALTIES FOR NONCOMPLIANCE WITH FILING AND
REPORTORIAL REQUIREMENTS. — ANY RBE OR ORE WHICH FAILS TO COMPLY
WITH FILING AND REPORTORIAL REQUIREMENTS WITH THE APPROPRIATE IPAS.
OR OGAS AND/OR WHICH FAILS TO SHOW PROOF OF FILING OF TAX RETURNS
USING THE ELECTRONIC SYSTEM FOR FILING AND PAYMENT OF TAXES OF THE
BIR UNDER SECTION 305 HEREOF, SHALL BE IMPOSED THE FOLLOWING
PENALTIES BY THE APPROPRIATE IPA OR OGA:

(A) FIRST VIOLATION - PAYMENT OF A FINE AMOUNTING TO ONE
HUNDRED THOUSAND PESOS (P100,000.00);

(B) SECOND VIOLATION - PAYMENT OF A FINE AMOUNTING TO FIVE
HUNDRED THOUSAND PESOS (P500,000.00); AND

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(C) THIRD VIOLATION - CANCELLATION OF THE REGISTRATION OF THE
REGISTERED BUSINESS ENTERPRISE OR REGISTERED ENTITY WITH THE
IPA OR OGA.

PROVIDED, THAT \F THE FAILURE TO SHOW SUCH PROOF IS NOT DUE TO THE
FAULT OF THE RBES OR ORES, THE SAME SHALL NOT BE A GROUND FOR THE
SUSPENSION OF THE ITH AND/OR OTHER FISCAL INCENTIVES AVAILMENT:
PROVIDED, FURTHER THAT COLLECTIONS FROM THE PENALTIES SHALL ACCRUE
TO THE GENERAL FUND.

ANY GOVERNMENT OFFICIAL OR EMPLOYEE WHO FAILS WITHOUT JUSTIFIABLE
REASON TO PROVIDE OR FURNISH THE REQUIRED FISCAL INCENTIVES REPORT
OR OTHER DATA OR INFORMATION AS REQUIRED UNDER SECTIONS 305 AND
306 OF THIS ACT SHALL BE PENALIZED, AFTER DUE PROCESS, BY A FINE
EQUIVALENT TO THE OFFICIAL’S OR EMPLOYEE’S BASIC SALARY FOR A PERIOD
OF ONE (1) MONTH TO SIX (6) MONTHS OR BY SUSPENSION FROM
GOVERNMENT SERVICE FOR NOT MORE THAN ONE (1) YEAR, OR BOTH, IN
ADDITION TO ANY CRIMINAL AND ADMINISTRATIVE PENALTIES IMPOSABLE
UNDER EXISTING LAWS.

CHAPTER V
SUSPENSION AND FORFEITURE OF FISCAL INCENTIVES

SEC. 308. SUSPENSION OF INCENTIVES. - THE FIRB MAY SUSPEND AND/OR
FORFEIT THE INCENTIVES GRANTED TO THE RBES OR ORES WHENEVER THERE
ARE VIOLATIONS OF THE TERMS AND CONDITIONS ON THE AVAILMENT OF
INCENTIVES BY THE LATTER, WITHOUT PREJUDICE TO THE CANCELLATION OF
THE REGISTRATION OF SAID ENTERPRISES.

SEC. 309. CANCELLATION OF CERTIFICATE OF ENTITLEMENT TO FISCAL
INCENTIVES OR CERTIFICATE OF ENTITLEMENT TO TAX SUBSIDY. — IN CASE OF
CANCELLATION OF CERTIFICATE OF ENTITLEMENT TO FISCAL INCENTIVES OR
CERTIFICATE OF ENTITLEMENT TO TAX SUBSIDY, THE FIRB SHALL ENDORSE ITS
DECISION TO THE CONCERNED REVENUE AGENCIES FOR PROPER ASSESSMENT
AND COLLECTION OF TAXES, CUSTOMS DUTIES, AND ANY APPLICABLE
PENALTIES THEREON.

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CHAPTER VI
ADMINISTRATIVE REMEDIES

SEC. 310. PERIOD OF FILING. — A REQUEST FOR RECONSIDERATION OF THE
DENIAL OF THE APPLICATION FOR TAX SUBSIDY OR FISCAL INCENTIVES, MAY BE
FILED WITH THE FIRB, WITHIN FIFTEEN (15) WORKING DAYS FROM THE RECEIPT
OF NOTICE OF DENIAL/SUSPENSION/FORFEITURE.

SEC. 311. RESOLUTION OF MOTION. - THE REQUEST FOR
RECONSIDERATION SHALL BE RESOLVED WITHIN THIRTY (30) WORKING DAYS
FROM THE DATE IT WAS SUBMITTED.

SEC. 312. NO SECOND MOTION FOR RECONSIDERATION. — NO SECOND
MOTION FOR RECONSIDERATION SHALL BE ENTERTAINED.

CHAPTER VII
QUALIFIED ACTIVITIES FOR TAX INCENTIVES

SEC. 313. ‘STRATEGIC INVESTMENTS PRIORITY PLAN’ (SIPP). - THE BOARD
OF INVESTMENTS (BOI), IN COORDINATION WITH THE OFFICE OF THE
PRESIDENT, THE FIRB, THE CONCERNED IPAS, AND OTHER GOVERNMENT
AGENCIES AND THE PRIVATE SECTOR, SHALL FORMULATE THE SIPP TO BE
SUBMITTED TO THE PRESIDENT FOR HIS APPROVAL NOT LATER THAN
DECEMBER OF THE THIRD YEAR SET FOR PERIODIC REVIEW. THE PLAN SHALL BE
VALID FOR A PERIOD OF THREE (3) YEARS SUBJECT TO REVIEW AND
AMENDMENT, OR AS THE NEED ARISES. ALL SECTORS OR INDUSTRIES THAT
MAY BE INCLUDED IN THE SIPP SHALL UNDERGO AN EVALUATION PROCESS TO
DETERMINE THE SUITABILITY AND POTENTIAL OF THE INDUSTRY OR THE
SECTOR IN PROMOTING LONG-TERM GROWTH AND DEVELOPMENT, AND THE
NATIONAL INTEREST.

THE SIPP SHALL:

(A) INCLUDE ACTIVITIES THAT COMPLY WITH THE FOLLOWING:

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(1)

(2)

THE ACTIVITY SHALL BE COVERED BY THE
PHILIPPINE DEVELOPMENT PLAN OR_ ITS
EQUIVALENT AND OTHER GOVERNMENT
PROGRAMS;

THE ACTIVITY SHALL TAKE INTO ACCOUNT ANY OF
THE FOLLOWING:

(A) SUBSTANTIAL AMOUNT OF INVESTMENTS;

(B) CONSIDERABLE GENERATION OF
EMPLOYMENT;

(C)ADOPT INCLUSIVE BUSINESS ACTIVITIES AND
VALUE ADDING PRODUCTION BY MSMES;

(0

USE OF MODERN OR NEW TECHNOLOGY;

({E) ADOPTION OF ADEQUATE ENVIRONMENTAL
PROTECTION SYSTEMS;

(F) ADDRESS MISSING GAPS IN THE
SUPPLY/VALUE CHAIN OR MOVE UP THE
VALUE CHAIN OR PRODUCT LADDER; OR

(G) PROMOTION OF MARKET COMPETITIVENESS.

(B) IDENTIFY AGRIBUSINESS PROJECTS OR ACTIVITIES, AND PROJECTS AND
ACTIVITIES IN AREAS THAT ARE LESS DEVELOPED OR THOSE
RECOVERING FROM ARMED CONFLICT OR MAJOR DISASTER.

(C) DETERMINE SERVICES AND ACTIVITIES THAT CAN SPUR REGIONAL OR
GLOBAL OPERATIONS IN THE COUNTRY.

(D)INCLUDE EXISTING REGISTERED PROJECTS OR ACTIVITIES THAT SHALL
RELOCATE FROM METRO MANILA TO OTHER AREAS OF THE COUNTRY.

THE ACTIVITIES MUST COMPLY WITH THE SPECIFIC QUALIFICATION
REQUIREMENTS OR CONDITIONS FOR A PARTICULAR SECTOR OR

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35
36
37

39
40

INDUSTRY AND OTHER LIMITATIONS AS SET AND DETERMINED BY THE
Bol.

THE THRESHOLD AMOUNT OF INVESTMENTS AND EMPLOYMENT
GENERATION REQUIRED FOR A SPECIFIC ACTIVITY SHALL BE SUBJECT TO A
PERIODIC REVIEW EVERY THREE (3) YEARS TAKING INTO CONSIDERATION
INTERNATIONAL STANDARDS AND OTHER INDICATORS.

SEC. 314. POWER OF THE PRESIDENT TO GRANT INCENTIVES. - THE
PRESIDENT MAY, IN THE INTEREST OF NATIONAL ECONOMIC DEVELOPMENT
AND UPON THE RECOMMENDATION OF THE BOARD OF INVESTMENTS AND THE
ECONOMIC MANAGERS, GRANT INCENTIVES IN ADDITION TO THOSE THAT ARE
PROVIDED UNDER THIS CODE, INCLUDING A LONGER PERIOD, TO HIGHLY
DESIRABLE PROJECTS: PROVIDED, THAT THE BENEFITS THAT THE GOVERNMENT
MAY DERIVE FROM SUCH INVESTMENT THERETO IS CLEAR AND CONVINCING
AND FAR OUTWEIGH THE COST OF INCENTIVES THAT WILL BE GRANTED.

SEC. 314-A. CRITERIA FOR AVAILMENT. THE BOARD OF INVESTMENTS
SHALL CONSIDER THE FOLLOWING CRITERIA IN DETERMINING THE TYPES OF
INCENTIVES AND THE DURATION THEREOF THAT MAY BE GRANTED:

(A) THE PROJECT HAS A COMPREHENSIVE SUSTAINABLE
DEVELOPMENT PLAN WITH CLEAR INCLUSIVE BUSINESS
APPROACHES AND INNOVATIONS; OR

(B) MINIMUM INVESTMENT OF FIVE HUNDRED MILLION US
DOLLARS (US$500,000,000) OR A MINIMUM DIRECT EMPLOYMENT
GENERATION OF AT LEAST ONE THOUSAND FIVE HUNDRED (1,500)
WITHIN THREE YEARS FROM THE START OF COMMERCIAL
OPERATION.

THE THRESHOLD SHALL BE SUBJECT TO A PERIODIC REVIEW EVERY THREE (3)
YEARS TAKING INTO CONSIDERATION INTERNATIONAL STANDARDS AND OTHER
INDICATORS.

THE BO! MAY IMPOSE OTHER TERMS AND CONDITIONS TAKING INTO

CONSIDERATION THE AMOUNT OR KIND OF INCENTIVES THAT WILL BE
GRANTED TO SUCH INVESTMENTS.

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SEC. 314-B. USE OF RESOURCES. - IN THE EXERCISE OF THE POWER OF THE
PRESIDENT TO GRANT INCENTIVES, THE GOVERNMENT MAY UTILIZE ITS
RESOURCES SUCH AS LAND USE, WATER APPROPRIATION, POWER PROVISION,
AMONG OTHERS, AS MAY BE IDENTIFIED BY THE BOI.

SEC. 315. AMENDMENTS. — SUBJECT TO PUBLICATION REQUIREMENTS
AND THE CRITERIA FOR INVESTMENT PRIORITY DETERMINATION, THE BOI MAY,
AT ANY TIME, INCLUDE ADDITIONAL AREAS IN THE SIPP, ALTER ANY OF THE
TERMS OF THE DECLARATION OF AN INVESTMENT AREA, AND TEMPORARILY OR
PERMANENTLY SUSPEND ACTIVITIES ON THE SIPP IF IT CONSIDERS THAT SUCH
ACTIVITY IS NO LONGER A PRIORITY. IN NO CASE SHALL THE IPAS ACCEPT
APPLICATIONS UNLESS THE ACTVITY IS LISTED IN THE SIPP.

SEC. 316. PUBLICATION. —- UPON APPROVAL OF THE PLAN, IN WHOLE OR
IN PART, OR UPON APPROVAL OF AN AMENDMENT THEREOF, THE PLAN OR THE
AMENDMENT, SPECIFYING AND DECLARING THE AREAS OF INVESTMENTS SHALL
BE PUBLISHED IN AT LEAST ONE (1) NEWSPAPER OF GENERAL CIRCULATION OR
THE OFFICIAL GAZETTE AND ALL SUCH AREAS SHALL BE OPEN FOR APPLICATION
UNTIL PUBLICATION OF AN AMENDMENT OR DELETION THEREOF.

SEC. 317. QUALIFICATIONS OF A REGISTERED ENTERPRISE FOR TAX
INCENTIVES. — \N THE REVIEW AND GRANT OF TAX INCENTIVES, A REGISTERED
ENTERPRISE MUST:

A. BE ENGAGED IN AN ACTIVITY INCLUDED IN THE SIPP;

B. INSTALL AN ADEQUATE ACCOUNTING SYSTEM THAT SHALL
IDENTIFY THE INVESTMENTS, REVENUES, COSTS AND PROFITS OR
LOSSES OF EACH REGISTERED PROJECT UNDERTAKEN BY THE
ENTERPRISE SEPARATELY FROM THE AGGREGATE INVESTMENTS,
REVENUES, COSTS AND PROFITS OR LOSSES OF THE WHOLE
ENTERPRISE; OR ESTABLISH A SEPARATE CORPORATION FOR EACH
REGISTERED PROJECT IF THE IPA SHOULD SO REQUIRE;

C. COMPLY WITH THE E-INVOICE AND E-SALES REQUIREMENT IN
ACCORDANCE WITH SECTION 237-A OF THIS CODE.

CHAPTER VIII
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AVAILMENT OF TAX INCENTIVES

SEC. 318. INCOME TAX-BASED INCENTIVES. - ALL REGISTERED
ENTERPRISES ARE REQUIRED TO FILE ALL THEIR TAX RETURNS USING THE
ELECTRONIC FACILITIES OF THE BUREAU OF INTERNAL REVENUE (BIR). IN
AVAILING THE INCOME TAX-BASED INCENTIVES, THE REGISTERED ENTERPRISE
SHALL BE REQUIRED TO SECURE A CERTIFICATE OF ENTITLEMENT ISSUED BY THE
IPA AND ATTACH THE SAME TO ITS INCOME TAX RETURN (ITR) OR ANNUAL
INFORMATION RETURN (AIR), WHICHEVER IS APPLICABLE. THEREAFTER, THE
REGISTERED ENTERPRISE SHALL FILE ITS CLAIM WITH THE BIR FOR VALIDATION.

FAILURE TO SECURE AND ATTACH THE CERTIFICATION TO THE ITR OR AIR,
AND/OR FILE THE INCENTIVE AVAILMENT APPLICATION SHALL CAUSE THE
FORFEITURE OF THE INCENTIVE FOR THAT TAXABLE PERIOD.

SEC. 319. CUSTOMS DUTY EXEMPTION ON CAPITAL EQUIPMENT.
IMPORTATION OF CAPITAL EQUIPMENT, MACHINERY AND SPARE PARTS
EXCLUSIVELY USED FOR CAPITAL EQUIPMENT AND MACHINERY INCLUDING
CONSIGNMENT THEREOF BY REGISTERED ENTERPRISES MAY BE EXEMPTED TO
THE EXTENT OF ONE HUNDRED PERCENT (100%) OF THE CUSTOMS DUTY:
PROVIDED, THAT THE FOLLOWING CONDITIONS ARE COMPLIED WITH:

(A) THE CAPITAL EQUIPMENT AND/OR SPARE PARTS ARE DIRECTLY
AND REASONABLY NEEDED AND WILL BE USED EXCLUSIVELY IN
AND AS PART OF THE DIRECT COST OF THE REGISTERED ACTIVITY
OF THE REGISTERED ENTERPRISE, AND ARE NOT MANUFACTURED
DOMESTICALLY IN SUFFICIENT QUANTITY, OF COMPARABLE
QUALITY AND AT REASONABLE PRICES. PRIOR APPROVAL OF THE
IPA MAY BE SECURED FOR THE PART TIME UTILIZATION OF SAID
EQUIPMENT IN A NON-REGISTERED ACTIVITY TO MAXIMIZE USAGE
THEREOF: PROVIDED, THAT THE PROPORTIONATE TAXES AND
DUTIES ARE PAID ON A SPECIFIC EQUIPMENT AND MACHINERY IN
PROPORTION TO ITS UTILIZATION FOR NON-REGISTERED
ACTIVITIES. IN THE EVENT THAT IT SHALL BE USED FOR A NON-
REGISTERED ACTIVITY OF THE REGISTERED ENTERPRISE AT
ANYTIME WITHIN THE FIRST FIVE (5) YEARS FROM DATE OF
IMPORTATION, THE REGISTERED ENTERPRISE SHALL FIRST SEEK
PRIOR APPROVAL OF THE AUTHORITY, AND PAY THE TAXES AND

65


CUSTOMS DUTIES THAT WERE NOT PAID UPON ITS IMPORTATION;
AND

(B) THE APPROVAL OF THE IPA WAS OBTAINED BY THE REGISTERED
ENTERPRISE PRIOR TO THE IMPORTATION OF SUCH CAPITAL
EQUIPMENT AND/OR SPARE PARTS.

APPROVAL OF THE IPA MUST BE SECURED BEFORE THE SALE,
TRANSFER OR DISPOSITION OF THE CAPITAL EQUIPMENT AND/OR SPARE
PARTS WHICH WERE GRANTED TAX AND CUSTOMS DUTY EXEMPTION
HEREUNDER, AND SHALL BE ALLOWED ONLY UNDER THE FOLLOWING
CIRCUMSTANCES:

(1) IF MADE TO ANOTHER ENTERPRISE ENJOYING CUSTOMS
DUTY EXEMPTION ON IMPORTED CAPITAL EQUIPMENT
AND/OR SPARE PARTS;

(2) IF MADE TO ANOTHER ENTERPRISE NOT DUTY
EXEMPTION ON IMPORTED CAPITAL EQUIPMENT AND/OR
SPARE PARTS, UPON PAYMENT OF ANY TAXES AND DUTIES
DUE ON THE NET BOOK VALUE OF THE CAPITAL EQUIPMENT
AND/OR SPARE PARTS TO BE SOLD;

(3) | EXPORTATION OF CAPITAL EQUIPMENT, MACHINERY,
SPARE PARTS OR SOURCE DOCUMENTS, OR THOSE REQUIRED
FOR POLLUTION ABATEMENT AND CONTROL; OR

(4) FOR REASONS OF PROVEN TECHNICAL OBSOLESCENCE.

PROVIDED, THAT IF THE REGISTERED ENTERPRISE SELLS, TRANSFERS OR
DISPOSES THE AFOREMENTIONED IMPORTED ITEMS WITHOUT PRIOR
APPROVAL, THE REGISTERED ENTERPRISE AND THE VENDEE, TRANSFEREE, OR
ASSIGNEE SHALL BE SOLIDARILY LIABLE TO PAY TWICE THE AMOUNT OF THE
DUTY EXEMPTION THAT SHOULD HAVE BEEN PAID DURING ITS IMPORTATION:
PROVIDED, FURTHER, THAT EVEN IF THE SALE, TRANSFER OR DISPOSITION OF
THE CAPITAL EQUIPMENT WAS MADE AFTER FIVE (5) YEARS FROM DATE OF
IMPORTATION WITH THE APPROVAL OF THE IPA, THE REGISTERED ENTERPRISE
IS STILL LIABLE TO PAY THE DUTIES BASED ON THE NET BOOK VALUE OF THE
CAPITAL EQUIPMENT IF IT HAS VIOLATED ANY OF ITS REGISTRATION TERMS.
AND CONDITIONS.

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37

CHAPTER IX
MISCELLANEOUS PROVISIONS

SEC. 320. SUBMISSION OF ANNUAL REPORT TO THE PRESIDENT AND
CONGRESS. — A REPORT SHALL BE SUBMITTED ANNUALLY TO THE PRESIDENT OF
THE PHILIPPINES AND THE CONGRESS SUMMARIZING THE TAX SUBSIDIES AND
FISCAL INCENTIVES GRANTED BY THE FIRB, IPAS AND OGAS, AS WELL AS THE
RESULT OF THE MONITORING AND EVALUATION OF FISCAL INCENTIVES.

CHAPTER X
FINAL PROVISIONS

SEC. 321. NO DOUBLE REGISTRATION OF ENTERPRISES. — REGISTERED
ENTERPRISES SHALL NOT BE ALLOWED TO REGISTER THEIR ACTIVITIES IN MORE
THAN ONE (1) IPA.

SEC. 322. GOVERNANCE RULES. - THE DIFFERENT IPAS MAY REQUIRE
DOMESTIC 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 WITHIN FIVE (5)
YEARS FROM DATE OF REGISTRATION.

SEC. 323. INVESTMENTS PRIOR TO THE EFFECTIVITY OF THIS ACT.
EXISTING REGISTERED ACTIVITIES GRANTED THE INCOME TAX HOLIDAY SHALL
BE ALLOWED TO CONTINUE WITH THE AVAILMENT OF THE SAID INCENTIVE FOR
THE REMAINING PERIOD OF THE ITH OR FOR A PERIOD OF FIVE (5) YEARS ONLY,
WHICHEVER COMES FIRST: PROVIDED, THAT OTHER TAX INCENTIVES GRANTED
TO EXISTING REGISTERED ACTIVITIES, SUCH AS THE FIVE PERCENT (5%) TAX ON
GROSS INCOME EARNED IN LIEU OF ALL TAXES, BOTH NATIONAL AND LOCAL,
SHALL BE ALLOWED TO CONTINUE FOLLOWING THE SCHEDULE STATED HEREIN:

(A) TWO (2) YEARS FOR ACTIVITIES ENJOYING THE TAX INCENTIVE
FOR MORE THAN TEN (10) YEARS;

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@YOHRYNG

(B) THREE (3) YEARS FOR ACTIVITIES ENJOYING THE TAX INCENTIVE
BETWEEN FIVE (5) AND TEN (10) YEARS;

(C) FIVE (5) YEARS FOR ACTIVITIES ENJOYING THE TAX INCENTIVE
BELOW FIVE (5) YEARS.

PROVIDED, THAT THE FIVE PERCENT (5%) TAX ON GROSS INCOME EARNED
SHALL COMMENCE AFTER THE ITH PERIOD HAS LAPSED ONLY FOR THE
REMAINING YEARS WITHIN THE FIVE-YEAR PERIOD.

SEC. 324. SUSPENSION AND FORFEITURE OF TAX INCENTIVES OF
REGISTERED ENTERPRISES, REFUND AND PENALTIES; WAIVER AND
CONDONATION. — THE IPA MAY IMPOSE FINES AND PENALTIES, SUSPEND
AND/OR FORFEIT THE INCENTIVES GRANTED TO THE REGISTERED ENTERPRISES
WHENEVER THERE ARE VIOLATIONS OF THE REGISTRATION TERMS AND
CONDITIONS BY THE LATTER, WITHOUT PREJUDICE TO THE CANCELLATION OF
THE REGISTRATION OF SAID ENTERPRISE.

WHEN THERE IS PROBABLE CAUSE TO BELIEVE THAT THE REGISTERED
ENTERPRISE HAS VIOLATED ITS REGISTRATION TERMS AND CONDITIONS, THE
IPA SHALL SUSPEND THE AVAILMENT OF INCENTIVES UNTIL PROVEN
OTHERWISE: PROVIDED, THAT FOR PROJECTS OR ACTIVITIES UNDER SECTION
302, THE CONCERNED IPA SHALL RECOMMEND TO THE FIRB THE SUSPENSION
OF ITS AVAILMENT OF INCENTIVES.

IN CASE OF CANCELLATION OF THE CERTIFICATE OF REGISTRATION, THE
CONCERNED IPA MAY, IN APPROPRIATE CASES, REQUIRE PAYMENT OF TAXES,
CUSTOMS DUTIES AND ANY APPLICABLE PENALTIES THEREON TO THE
APPROPRIATE AGENCY, AND IMPOSE ADDITIONAL FINES AND PENALTIES.

FOR THIS PURPOSE, THE IPAS SHALL PREPARE A SCHEDULE OF FEES, FINES
AND PENALTIES TO BE IMPOSED ON ERRING REGISTERED ENTERPRISES
DEPENDING ON THE GRAVITY OF THE VIOLATION INCURRED.

IN MERITORIOUS CASES, THE IPA MAY WAIVE, CONDONE OR REDUCE
FINES OR PENALTIES IMPOSED ON REGISTERED ENTERPRISES BY THE IPAS:
PROVIDED, THAT THE MINIMUM COMPROMISE RATE, IN CASE OF REDUCTION,
SHALL NOT BE LESS THAN FORTY PERCENT (40%) OF THE BASIC ASSESSED FINES
OR PENALTIES.

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SEC. 325. ENHANCED TAX EXPENDITURE FUND SYSTEM - ALL INTERNAL
REVENUE TAX AND DUTY OBLIGATIONS OF GOVERNMENT-OWNED AND/OR
CONTROLLED CORPORATIONS SHALL BE CHARGEABLE TO THE TAX
EXPENDITURE FUND OF THE GOVERNMENT UPON THE ESTABLISHMENT AND
IMPLEMENTATION OF AN ENHANCED TAX EXPENDITURE FUND SYSTEM THAT
GRANTS TAX SUBSIDY WITHIN THIRTY (30) DAYS FROM THE FILING OF
APPLICATION WITH THE FIRB.

SEC. 326. THE NAME OF RECIPIENTS OF INCENTIVES AND THE AMOUNT OF
INCENTIVES AVAILED SHALL BE REPORTED BY THE INVESTMENT PROMOTION
AGENCIES ANNUALLY TO CONGRESS, THE REPORT SHALL BE MADE AVAILABLE
TO THE PUBLIC.

SEC. 37. Title XIIl of the National Internal Revenue Code of 1997, as amended, is
hereby retitled as Title XIV.

SEC. 38. Title XIV of the National Internal Revenue Code of 1997, as amended, is
hereby retitled as Title XV.

SEC. 39. Amendatory Clause. —

(A) To ensure that the DOF, NEDA and DTI are represented in the Governing
Boards of all IPAS, where the DOF shall automatically serve as Co-chair, and DTI
and NEDA as members, pursuant to Section 299 of this Act, the following
provisions, among others, are amended accordingly:

(1) Article 4 of Executive Order No. 226, as amended, entitled “The
Omnibus Investments Code of 1987;”

(2) Sections 9 and 13 (c) of Republic Act No. 7227, entitled “An Act
Accelerating the Conversion of Military Reservations into Other Productive
Uses, Creating the Bases Conversion and Development Authority for this
Purpose, Providing Funds therefor and for Other Purposes;”

(3) Section 3 of Executive Order No. 80, series of 1993, entitled
“Authorizing the Establishment of the Clark Development Corporation as the
Implementing Arm of the Bases Conversion and Development Authority for
the Clark Special Economic Zone, and Directing All Heads of Departments,

69


Bureaus, Offices, Agencies and Instrumentalities of Government to Support
the Program;”

(4) Section 6 of Executive Order No. 132, series of 2002, entitled
“Authorizing the Creation of the Poro Point Management Corporation as the
Implementing Arm of the Bases Conversion Development Authority over the
Poro Point Special Economic and Freeport Zone and Renaming the John Hay
Poro Point Development Corporation as the John Hay Management
Corporation;”

(5) Section 9 of Republic Act No. 7903, entitled “An Act Creating a
Special Economic Zone and Freeport in the City of Zamboanga Creating for
this Purpose the Zamboanga City Special Economic Zone Authority,
Appropriating Funds therefor, and for other Purposes;”

(6) Section 14 of Republic Act No. 9728, entitled “An Act Converting the
Bataan Economic Zone Located in the Municipality of Mariveles, Province of
Bataan, into the Freeport Area of Bataan (FAB), Creating for this Purpose the
Authority of the Freeport Area of Bataan (AFAB), Appropriating Funds
therefor and for other Purposes;”

(7) Section 65 of Republic Act No. 9593, entitled “An Act Declaring a
National Policy for Tourism as an Engine of Investment, Employment, Growth
and National Development, and Strengthening the Department of Tourism
and its Attached Agencies to Effectively and Efficiently implement that Policy,
and Appropriating Funds therefor;”

(8) Section 15 of Republic Act No. 9490, entitled “An Act Establishing the

Aurora Special Economic Zone in the Province of Aurora, Creating for the
Purpose the Aurora Special Economic Zone Authority, Appropriating Funds
Therefor and for other Purposes,” as amended by Republic Act No. 10083;

(9) Section 7 of Republic Act No. 7922, entitled “An Act Establishing a
Special Economic Zone and Freeport in the Municipality of Santa Ana and the
Neighboring Islands in the Municipality of Aparri, Province of Cagayan
Providing Funds Therefor, and for other Purposes;

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(10) Section 6 of Presidential Decree No. 538, entitled “Creating and
Establishing the PHIVIDEC Industrial Authority and Making It a Subsidiary
Agency of the Philippine Veterans Investment Development Corporation
Defining its Powers, Functions and Responsibilities, and for Other Purposes,”
as amended by Executive Order No. 1031, series of 1985;

(11) Section 11 of Republic Act No. 7916, entitled “An Act Providing for
the Legal Framework and Mechanisms for the Creation, Operation,
Administration, and Coordination of Special Economic Zones in the
Philippines, Creating For This Purpose, The Philippine Economic Zone
Authority (PEZA), and for Other Purposes.”

(B) The following laws are hereby amended to mandate all internal revenue tax
and duty obligations of the relevant entities be chargeable to the Tax Expenditure
Fund (TEF) pursuant to Section 325 of this Act:

(1) Section 18 of Republic Act No. 7884, entitled “An Act Creating the
National Dairy Authority to Accelerate the Development of the Dairy
Industry in the Philippines, Providing for a Dairy Development Fund, and for
Other Purposes;”

(2) Section 8 of Republic Act No. 7903, entitled “An Act Creating Special
Economic Zone and Freeport in the City of Zamboanga for this Purpose the
Zamboanga City Special Economic Zone Authority, Appropriating Funds
Therefor, and for Other Purpose;”

(3) Section 12-a of Republic Act No. 10083, entitled “An Act Amending
Republic Act No. 9490, otherwise known as the Aurora Special Economic
Zone Act of 2007;”

(4) Sections 29, 57, 74, 95 (c) of Republic Act No. 9593, entitled “An Act
Declaring Tourism as Engine of Investment, Employment, Growth and
National Development and Strengthening the Department of Tourism or
Tourism Act of 2009;”

(5) Section 10 of Presidential Decree No. 538, entitled “Creating and
Establishing the PHIVIDEC Industrial Authority and Making it a Subsidiary
Agency of the Philippine Veterans Investment Development Corporation

m1


Defining its Powers, Functions and kesponsibilities, and for Other
Purposes;”

(6) Section 16 (a) (b) of Republic Act No. 9497, entitled “An Act Creating
the Civil Aviation Authority of the Philippines, Authorizing the
Appropriation of Funds Therefor, and for Other Purposes;”

(7) Section 8 of Republic Act No. 7278, entitled, An Act Amending
Commonwealth Act 111, as amended by PD 460, entitled An Act to Create a
Public Corporation known as the Boy Scouts of the Philippines and to define
its Powers and Purposes,” by strengthening the volunteer and democratic
character of the Boy Scouts of the Philippines and for other Purposes;”

(8) Section 11 (A), (B), (C), (D) of Republic Act No. 10073, entitled, “An
Act Instituting the New Girl Scouts of the Philippines Charter, Penalizing
Violations Therefor and for other Purposes;

(9) Section 14 of Republic Act No. 7354, entitled “An Act Creating the
Philippine Postal Corporation, Defining its Powers, Functions and
Responsibilities, Providing For Regulation of the industry and for Other
Purposes Connected Therewith;”

(10) Section 8 and 14 of Presidential Decree No. 269, entitled “Creating
the National Electrification Administration as a Corporation, Prescribing its
Powers and Activities, Appropriating the Necessary Funds Therefore and
Declaring a National Policy Objective for the Total Electrification of the
Philippines on an Area Coverage Service Basis, the Organization, Promotion
and Development of Electric Cooperatives to Attain the Said Objective,
Prescribing Terms and Conditions for their Operations, the Repeal Of
Republic Act 6038, and for Other Purposes;”

(11) Section 2 and 19 of Republic Act No. 9679, entitled “An Act
Amending The Home Development Mutual Fund Otherwise Known as the
Pag-Ibig Fund;”

(12) Section 17 (c) under section 8 of Republic Act No. 9576, entitled “An

Act Increasing the Maximum Deposit Insurance Coverage, and in
connection therewith, to strengthen the regulatory and administrative

72


authority, and financial capability of the Philippine Deposit Insurance
Corporation (PDIC) amending for this purpose Republic Act Numbered
Three Thousand Five Hundred Ninety One, as amended otherwise known as
the PDIC Charter and for other purposes;”

(13) Section 13 of Republic Act No. 7820, entitled “An Act Creating the
Partido Development Administration, Defining its Powers and Functions,
Providing Funds Therefor, and for Other Purposes;”

(14) Section 5 (j) of Republic Act No. 9510, entitled “An Act Establishing
the Credit Information System and for Other Purposes;”

(15) Section 13 (e) of Presidential Decree No. 857, entitled “Providing for
the Reorganization of Port Administrative and Operation Functions in the
Philippines, Revising Presidential Decree No. 505 dated July 11, 1974,
Creating the Philippine Port Authority, by substitution, and for other
Purposes;”

(16) Section 19 of Republic Act No. 6847, entitled “An Act Creating and
Establishing the Philippine Sports Comi ion, Defining its Powers,
Functions, and Responsibilities, Appropriating Funds Therefor, and for
Other Purposes;”

(17) Section 8 (a) (b) and section 13 of Republic Act No. 6395, entitled “An
Act Revising the Charter of the National Power Corporation;”

(18) Section 1 of Republic Act No. 7291, entitled, An Act Restoring the Tax
and Duty Incentives Previously Enjoyed by the Veterans Federation of the
Philippines Under Republic Act Numbered Twenty-Six Hundred and Forty;
and

(19) Section 21 of Republic Act No. 7306, entitled “An Act Providing for
the Establishment of the People’s Television Network, Inc., Defining its
Powers and Functions, Providing for its Sources of Funding and for Other
Purposes.”

Sec. 40. Repealing Clauses. -

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(A) In consideration of the franchise and rights granted under applicable laws,
the grantee shall pay to the Philippine Government during the life of its franchise
all the applicable taxes and impositions levied under the National Internal
Revenue Code, as amended, and the Local Government Code, as amended, for
revenues earned from all activities: Provided, That the Secretary of Finance shall
be consulted on any changes in the tax and duty treatment of any grantee. For
this purpose, the following provisions of laws shall be amended or repealed in
conformity with this Section:

(1) Section 14 of Republic Act No. 7783 entitled “An Act Granting
The Major Telecoms, Inc., A Franchise To Establish, Install, Maintain,
Lease And Operate Wire And/Or Wireless Telecommunications
Systems, Lines, Circuits And Stations Throughout The Philippines For
Public Domestic And International Communications, And For Other
Purposes”;

(2) Section 10 of Republic Act No 7939 entitled “An Act Granting
The Island Country Telecommunications, Inc., A Franchise To
Establish, Install, Maintain, Lease And Operate Were And/Or Wireless
Telecommunication System And Services, Lines, Circuits And Stations
Within And Without The Philippines, And For Other Purposes”;

(3) Section 9 of Republic Act No. 7961 entitled “An Act Granting To
Cruz Telephone Company, Inc., (Cruztelco), A Franchise To Install,
Operate And Maintain A Telecommunications System Throughout
The Philippines”;

(4) Section 8 of Republic Act No. 7962 entitled “An Act Granting
The Philippine Broadcasting Corporation A Franchise To Construct,
Install, Operate And Maintain Radio And Television Broadcasting
Stations Within The Philippines, And For Other Purposes”;

(5) Section 8 of Republic Act No. 7963 entitled “An Act Granting
The Cebu Broadcasting Company A Franchise To Construct, Install,
Operate And Maintain Radio And Television Broadcasting Stations
Within The Philippines And For Other Purposes”;

14


(6) Section 8 of Republic Act No. 7966 entitled “An Act Granting
The ABS-CBN Broadcasting Corporation A Franchise To Construct,
Install, Operate And Maintain Television And Radio Broadcasting
Stations In The Philippines And For Other Purposes”;

(7) Section 8 of Republic Act No. 7967 entitled “An Act Granting
The Pacific Broadcasting System, Inc. A Franchise To Construct,
Install, Operate And Maintain Radio And Television Broadcasting
Stations Within The Philippines And For Other Purposes”;

(8) Section 8 of Republic Act No. 7969 entitled “An Act Granting
The Central Catv, Inc. A Franchise To Establish, Maintain And Operate
For Commercial Purposes Cable/Community Antennae Television
Systems In The Philippines”;

(9) Section 13 of Republic Act No. 8004 entitled “An Act Granting
To Millennia Telecommunications Corporation A Franchise To Install,
Operate And Maintain Telecommunication Services Within The
Philippines And International Points, And For Other Purposes”;

(10) Section 9 of Republic Act No. 10900 entitled “An Act Extending
For Another Twenty-Five (25) Years The Franchise Granted To Bell
Telecommunication Philippines, Inc., Amending For The Purpose
Republic Act No. 7692, Entitled "An Act Granting Bell
Telecommunication Philippines, Inc., A Franchise To Install, Operate,
And Maintain Telecommunications Systems Throughout The
Philippines And For Other Purposes”;

(11) Section 3 of Republic Act No. 7859 entitled “An Act Amending
Section One Of The Franchise Of Worldwide Communications, Inc.,
Granted Under Republic Act No. Five Thousand Three Hundred
Twenty-One And Extending It For Another Twenty-Five (25) Years,
And For Other Purposes”;

(12) Section 8 of Republic Act No. 8060 entitled “An Act Granting
Palawan Broadcasting Corporation A Franchise To Install, Construct,
Operate And Maintain Commercial Radio And_ Television
Broadcasting Stations Throughout The Philippines”;

75


Ce ns

(13) Section 8 of Republic Act No. 8063 entitled “An Act Granting
The Beacon Communications Systems, Inc., A Franchise To Construct,
Install, Establish, Operate And Maintain Commercial Radio Stations In
The Philippines”;

(14) Section 9 of Republic Act No. 8065 entitled “An Act Granting
The Isla Cellular Communications, Inc., A Franchise To Construct,
Maintain, Establish, Operate Commercial Mobile And Fixed Wireless
Telecommunications System In The Philippines”;

(15) Section 9 of Republic Act No. 8066 entitled “An Act Granting
The Isla Paging Company, A Franchise To Construct, Maintain,
Establish, And Operate Commercial Radio Paging Services In The
Philippines”;

(16) Section 8 of Republic Act No. 8067 entitled “An Act Granting
The Radio Gubat Network, Inc., A Franchise To Construct, Install,
Operate And Maintain Radio Broadcasting Stations In The Bicol
Region”;

(17) Section 8 of Republic Act No. 8068 entitled “An Act Granting A
Franchise To Agusan Communications Foundation, Inc., To Construct,
Operate And Maintain Stations For Radio And Television In The
Province Of Agusan Del Sur And For Other Purposes”;

(18) Section 8 of Republic Act No. 8071 entitled “An Act Granting
Vismin Radio And Television Broadcasting Network, Incorporated A
Franchise To Construct, Install, Operate And Maintain For
Commercial Purposes Radio And Television Broadcasting Stations In
The Visayas And Mindanao, And For Other Purposes”;

(19) Section 8 of Republic Act No. 8080 entitled “An Act Granting
The Asian-Pacific Broadcasting Company, Inc., A Franchise To
Construct, Install, Operate And Maintain Broadcasting Stations In The
Philippines”;

(20) Section 8 of Republic Act No. 8094 entitled “An Act Granting
The Ipil Broadcasting News Network, Inc. A Franchise To Construct,

76


Install, Operate And Maintain Radio And Television Broadcasting
Stations In Zamboanga Del Sur And For Other Purposes”;

(21) Section 10 of Republic Act No. 8095 entitled “An Act Granting
The Islatel Corporation A Franchise To Construct, Maintain, Establish
And Operate Commercial Nationwide And Regional Transmission
Network And Other Telephone Services In The Philippines”;

(22) Section 8 of Republic Act No. 8096 entitled “An Act Granting
The Allied Broadcasting Center, Incorporated A Franchise To
Construct, Operate And Maintain Stations For Radio In Cebu City And
Other Areas In The Philippines Where Frequencies Are Still Available
For Radio Broadcasting For Educational And Cultural, As Well As For
Commercial Purposes”;

(23) Section 8 of Republic Act No. 8097 entitled “An Act Granting
The Partido Broadcasting Corporation A Franchise To Construct,
Install, Establish, Operate And Maintain Broadcast And Cable Radio
And Television Stations In The Bicol Region”;

(24) Section 8 of Republic Act No. 8098 entitled “An Act Granting
Broadcast Enterprises And Affiliated Media (Beam), Inc., A Franchise
To Establish, Construct, Operate And Maintain Commercial Radio
And Television Broadcast Stations Including Cable Television Systems
In The Philippines”;

(25) Section 8 of Republic Act No. 8099 entitled “An Act Granting A
Franchise To Sagay Broadcasting Corporation (Sbc) To Construct,
Operate And Maintain Stations For Radio And Television In The
Philippines And For Other Purposes”;

(26) Section 7 of Republic Act No. 8102 entitled “An Act Granting
The Ultimate Entertainment, Inc., A Franchise To Construct, Install,
Maintain And Operate Radio Broadcasting Stations Within The
Philippines”;

(27) Section 8 of Republic Act No. 8116 entitled, “An Act Granting
The Vimcontu Broadcasting Corporation A Franchise To Construct,

7


Install, Operate And Maintain Radio And Television Broadcasting
Stations, Within The Philippines And For Other Purposes”;

(28) Section 8 of Republic Act No. 8119 entitled “An Act Granting
The Good News Sorsogon Foundation, Inc., A Franchise To Construct,
Install, Operate And Maintain For Religious, Educational And
Commercial Purposes, Radio And Television Broadcasting Stations
Within The Philippines And For Other Purposes”;

(29) Section 5 of Republic Act No. 8120 entitled “An Act Granting
The Andres Bonifacio College Broadcasting System, Inc., A Franchise
To Construct, Maintain And Operate Radio Broadcasting Stations And
Stations For Television In The Island Of Mindanao For Educational,
Cultural, And Commercial Purposes”;

(30) Section 8 of Republic Act No. 8121 entitled “An Act Granting
The M.S. Network Management, Inc. A Franchise To Construct,
Install, Operate And Maintain For Commercial Purposes, Radio
Broadcasting Stations In The Philippines And For Other Purposes”;

(31) Section 7 of Republic Act No. 8123 entitled “An Act Granting
The Royal Broadcasting Corporation. A Franchise To Construct,
Operate And Maintain For Commercial Purposes, Radio And
Television Broadcasting Stations In The Philippines And For Other
Purposes”;

(32) Section 8 of Republic Act No. 8128 entitled “An Act Granting. A
Franchise To The Oriental Mindoro Management Resources
Corporation (Omarco) To Construct, Install, Establish, Operate,
Manage And Maintain A Network Of Radio And Television Stations
Anywhere In The Philippines, And For Other Purposes”;

(33) Section 8 of Republic Act No. 8132 entitled “An Act Granting
Jose M. Luison And Sons, inc., A Franchise To Construct, Install,
Operate And Maintain For Commercial Purposes Radio And
Television Broadcasting Stations In The Philippines”;

78


(34) Section 7 of Republic Act No. 8144 entitled “An Act Granting
The Azimuth Broadcasting Corporation Of Franchise To Construct,
Operate And Maintain For Commercial Purposes Radio And
Television Broadcasting Stations In The Philippines”;

(35) Section 8 of Republic Act No. 8145 entitled “An Act Granting
The Radyo Pilipino Corporation Afranchise To Construct, Install,
Operate And Maintain Commercial Radio And _ Television
Broadcasting Stations, Satellite And Cable Stations In The
Philippines”;

(36) Section 14 of Republic Act No. 8147 entitled “An Act Granting
The Southern Broadcasting Network Afranchise To Construct,
Maintain, Establish And Operatecommercial Radio/Television
Broadcasting Stations, In The Philippines”;

(37) Section 8 of Republic Act No. 8149 entitled “An Act Granting
The Tagbilaran Broadcasting System Afranchise To Construct, Install,
Operate And Maintain Radio And Television Broadcasting Stations, In
The Visayas Region, And For Other Purposes”;

(38) Section 8 of Republic Act No. 8154 entitled “An Act Granting
Prime Broadcasting Network, Incorporated, A Franchise To Construct,
Operate And Maintain Stations For Radio And Television In The
Philippines;”

(39) Section 4 of Republic Act No. 8158 entitled “An Act Extending
The Franchise Granted To Jorge D. Bayona Under Republic Act
Numbered Fifty-Seven Hundred Eighty-Nine, Assigning It In Favor Of
Pbn Broadcasting Network Inc., And Renewing The Term Thereof For
Another Twenty-Five (25) Years From The Date Of The Effectivity Of
This Act”;

(40) Section 8 of Republic Act No. 8169 entitled “An Act Granting
GV Broadcasting System, Inc., A Franchise To Construct, Install,
Maintain And Operate For Commercial Purposes Radio Broadcasting
Stations In The Island Of Luzon And For Other Purposes”;

79


(41) Section 5 of Republic Act No. 10926 entitled “An Act Extending
For Twenty-Five (25) Years The Franchise Granted To Smart
Communications, Inc., (Formerly Smart Information Technologies,
Inc.) Amending For The Purpose Republic Act No. 7294, Entitled, “An
Act Granting Smart Information Technologies Inc. (Smart) A Franchise
To Establish, Maintain, Lease And Operate Integrated
Telecommunications/Computer/Electronic Services, And Stations
Throughout The Philippines For Public Domestic And International
Telecommunications, And For Other Purposes”;

(42) Section 9 of Republic Act No. 9511 entitled “An Act Granting
The National Grid Corporation Of The Philippines A Franchise To
Engage In The Business Of Conveying Or Transmitting Electricity
Through High Voltage Back-Bone Systems Of Interconnected
Transmission Lines, Substations And Related Facilities”;

(43) Section 13 of Presidential Decree 1869 — Restored Per Office
Of The President Memorandum Dated August 24, 1995 Consolidating
And Amending Presidential Decree Nos. 1067-A, 1067-B, 1067-C,
1399 And 1632 Relative To The Franchise And Powers Of The
Philippine Amusement And Gaming Corporation (PAGCOR);

(44) Section 9 of Republic Act No. 7953 entitled “An Act Amending
Ra 6632 Entitled, “An Act Granting The Philippine Racing Act, Inc., A
Franchise To Operate And Maintain A Race Track For Horse Racing In
The Province Of Rizal, And Extending The Said Franchise By 25 Years
From The Expiration Of The Term Thereof”;

(45) Section 12 of Republic Act No. 8407 entitled “An Act Amending
Ra 6631 Entitled, “An Act Granting Manila Jockey Club, Inc., A
Franchise To Construct, Operate And Maintain A Race Track For
Horse Racing In The City Of Manila Or Any Place Within The Provinces
Of Bulacan, Cavite Or Rizal And Extending The Said Franchise By 25
Years From The Expiration Of The Term Thereof”;

(46) Section 9 of Republic Act No. 8298 entitled “An Act Amending

Republic Act Numbered Seventy-Nine Hundred Seventy-Eight,
Entitled, “An Act Granting The Metro Manila Turf Club, Inc., A

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Franchise To Construct, Operate And Maintain A Racetrack For Horse
Racing In The City Of Kalookan”;

(47) Section 12 of Republic Act No. 8446 entitled “An Act Granting
The Fil-Asia Racing Club A Franchise To Construct, Operate And
Maintain A Racetrack For Horse Racing In Rizal Or Tarlac, Or
Pampanga Or Batangas Or Quezon City”;

(48) Section 3, paragraph 2 of Republic Act No. 4540 entitled, “An
Act Amending Certain Sections of Republic Act Numbered Four
Hundred and Two, As Amended”;

(49) Section 11 of Republic Act No. 7633 entitled “An Act Amending
Certain Sections Of Republic Act No. 3259, As Amended, Entitled "An
Act Granting The International Communications Corporation A
Franchise To Establish Radio Stations, For Domestic
Telecommunications, Radiophone," Extending The Term Of The
Franchise By Twenty-Five (25) Years From August 9, 1996 As Provided
In Republic Act No. 4905, And For Other Purposes”;

(50) Section 8 of Republic Act No. 8153 entitled “An Act Granting
The Rex Electronics Communications System, Inc., A Franchise To
Construct, Operate And Maintain Public Radiotelephone And
Radiotelegraph Stations For The Reception And Transmission Of
Radiotelephone And Radiotelegraph Communications Within The
Philippines”;

(51) Section 10 of Republic Act No. 10972 entitled “An Act
Renewing For Another Twenty-Five (25) Years The Franchise Granted
To Infocom Communications Network, Inc. (Presently Known As Now
Telecom Company, Inc.) Under Republic Act No. 7301, Entitled “ An
Act Granting Infocom Communications Network, Inc. (Icni), A
Franchise To Construct, Establish, Operate And Maintain Mobile
Radio Systems Such As Radio, Paging Systems, Cellular Phone
Systems, Personal Communication Network (Pcn), And Trunked Radio
Systems Within And Without The Philippines For A Period Of Twenty-
Five (25) Years, And For Other Purposes”, As Amended By The
Republic Act No. 7940”;

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(52) Section 8 of Republic Act No. 7816 entitled “An Act Granting
The Manila Broadcasting Company A Franchise To Construct, Install,
Operate And Maintain Radio And Television Broadcasting Stations
Within The Philippines, And For Other Purposes”;

(53) Section 8 of Republic Act No. 8027 entitled “An Act Granting A
Franchise To The Kaissar Broadcasting Network, Inc. (Kbni), To
Construct, Install, Establish, Operate, Manage And Maintain A
Network Of Radio And Television Stations Anywhere In The
Philippines, And For Other Purposes”;

(54) Section 8 of Republic Act No. 8032 entitled “An Act Granting
The Philippine Radio Corporation A Franchise To Construct, Install,
Establish, Operate And Maintain Commercial Radio Stations In The
Philippines”; And

(55) Section 8 of Republic Act No. 8122 entitled “An Act Granting
The Swara Sug Media Corporation Of The Philippines A Franchise To
Construct, Install, Operate And Maintain For Commercial Purposes
Radio And Television Broadcasting Stations In The Philippines And For
Other Purposes”

(56) Section 10 of Republic Act No. 11089, entitled “An Act
Granting the Streamtech Systems Technologies Inc. A Franchise to
Construct, Install, Establish, Operate and Maintain
Telecommunications Systems Throughout the Philippines

(57) Section 1, paragraph 17 of Republic Act No. 11151 entitled,
“An Act Renewing for Another Twenty-Five (25) Years the Franchise
Granted to Isla Communications Company, Inc., Presently Known as
Innove Communications, Inc., Amending for the Purpose Republic Act
No. 7372, entitled, “An Act Granting the Isla Communications Co. a
Franchise to Install, Operate and Maintain Telecommunications
Services within the Territory of the Republic of the Philippines and
International Points and for Other Purposes”

{B) The provisions of the following laws, including the tax incentives, that are
inconsistent with this Act are hereby amended or repealed:

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RONa

(1) Section 5 of Republic Act No. (R.A.) 9379, or “An Act Defining
Handline Fishing, Providing Effective Regulations Therefor And For
Other Purposes”;

(2) Section 16, The Last Sentence Thereof, of R.A. 10601, or “An
Act Promoting Agricultural And Fisheries Mechanization
Development In The Country”;

(3) Section 32 of R.A. 10654, or “An Act To Prevent, Deter And
Eliminate Illegal, Unreported And Unregulated Fishing, Amending
Republic Act No. 8550, Otherwise Known As The Philippine Fisheries
Code Of 1998, And For Other Purposes”;

(4) Section 14 (B) of RA. 7308, or “The Seed Industry
Development Act Of 1992”;

(5) Section 18, 2nd and 3rd Paragraph Thereof, of R.A. 7884, or
“An Act Creating The National Dairy Authority To Accelerate The
Development Of The Dairy Industry In The Philippines, Providing For
A Dairy Development Fund, And For Other Purposes”;

(6) Section 9 (E), (F), (I), and (J) of R.A. 7900, or “An Act To
Promote The Production, Processing, Marketing, And Distribution Of
High Value Crops, Providing Funds Therefor, And For Other
Purposes”;

(7) Chapter 11, Article Il, Sec. 35 (B), (C) and (D) of R.A. 8550, or
“The Philippine Fisheries Code Of 1998”;

(8) Section 24 (A) and (F) of R.A. 10068, or “An Act Providing For
The Development And Promotion Of Organic Agriculture In The
Philippines And For Other Purposes”;

(9) Section 37 of R.A. 6848, or "The Charter Of The Al-Amanah
Islamic Investment Bank Of The Philippines";

(10) Section 17 of Republic Act No. 7906 Entitled, “An Act Providing

For The Regulation Of The Organization And Operations Of Thrift
Banks, And For Other Purposes;”

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(11) Section 15 of R.A. 7353, or The “Rural Bank Act Of 1992”;

(12) Book |, Title Ill, Article 39 (A), (B), (C), (D), (E), (G), (I), W), (K),
(M) And (N); Title IV, Article 40, Book III Article 59, 60, 61, 63, 64, 65,
66; Book IV Article 69, Book VI, Articles 77, 78, And 81 of Executive
Order No. 226, Series of 1987, or “The Omnibus Investments Code Of
1987”;

(13) Section 1 of R.A. 7918, “An Act Amending Article 39, Title III
The Omnibus Investments Code of 1987, As Amended”;

(14) Articles 62, 63, 64, 65, 66, 67 And 69 of R.A. 8756, or “An Act
Providing for the Terms, Conditions And Licensing Requirements Of
Regional Or Area Headquarters, Regional Operating Headquarters,
Regional Warehouses Of Multinational Companies Amending For The
Purpose Certain Provisions Of The Omnibus Investment Code Of
1987";

(15) Executive Order No. 22, s. of 2017 Amending E.0. 70, s. of
2012, E.0. 528, s. of 2006 and E.0. 313, s. of 2004, Entitled “Reducing
The Rates Of Duty On Capital Equipment, Spare Parts And
Accessories Imported By BOl-Registered New And Expanding
Enterprises”;

(16) Section 12 of R.A. 8047, or “An Act Providing For The
Development Of The Book Publishing industry Through The
Formulation And Implementation Of A National Book Policy And A
National Book Development Plan”;

(17) Section 17, In So Far As Tax Exemption and/or VAT Zero Rating
On Domestic Merchandise Is Concerned, and Section 18 (A), (B), (C)
and (F) of Presidential Decree No. 66, Entitled “Creating The Export
Processing Zone Authority And Revising Republic Act No. 5490”;

(18) Section 4 (£) and (F), In So Far As Tax Exemption and/or VAT
Zero Rating On Domestic Merchandise Is Concerned, of R.A. 7903, or
The “Zamboanga City Special Economic Zone Act Of 1995”;

(19) Section 4 (B) (C), In So Far As Tax Exemption and/or VAT Zero
Rating On Domestic Merchandise Is Concerned, of R.A. 7922, or “An

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Act Establishing A Special Economic Zone And Free Port In The
Municipality Of Santa Ana And The Neighboring Islands In The
Municipality Of Aparri, Province Of Cagayan Providing Funds
Therefor, And For Other Purposes”;

(20) Section 4 of R.A. 8748, or “An Act Amending Republic Act No.
7916, Otherwise Known As The Special Economic Zone Act Of 1995”;

(21) Sections 23 and 24 of R.A. 7916, or “The Special Economic
Zone Act Of 1995”;

(22) Sections 12 (B) and (C) and Section 15, second, third, and last
paragraph of R.A. 7227, or “An Act Accelerating The Conversion Of
Military Reservations Into Other Productive Uses, Creating The Bases
Conversion And Development Authority For This Purpose, Providing
Funds Therefor And For Other Purposes,” as amended by R.A. 9400;

(23) Section 1 of £.0. 619, s. of 2017 Entitled “Creating And
Designating Special Economic Zones Pursuant To Republic Act No.
7916, As Amended By Republic Act No. 8784, In Relation To Republic
Act No. 7227, As Amended By Republic Act No. 9400, Inside The Clark
Freeport Zone”;

(24) Sections 5, 6, 7, 8 And 9 of R.A 9490, or “An Act Establishing
The Aurora Special Economic Zone In The Province Of Aurora,
Creating For The Purpose The Aurora Special Economic Zone
Authority, Appropriating Funds Therefor And For Other Purposes”;

(25) Sections 3 (€) (F) (H) and 4 of R.A. No. 10083, or “An Act
Amending Republic Act No. 9490”;

(26) Section 4 (F), in so far as tax exemption and/or VAT zero rating
on domestic merchandise and capital equipment are concerned, and
Sections 5, 6 and 10 of R.A. 9728, or The “Freeport Area Of Bataan
(FAB) Act Of 2009”;

(27) Sections 12, 21, and 22 of P.D. 87 (Restored By FIRB Resolution
19-87), or The “Oil Exploration And Development Act”;

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(28) P.D. 529 (Restored By FIRB Resolution 19-87), Entitled
“Granting To Petroleum Exploration Concessionaires Under The
Petroleum Act Of 1949 Exemption From Customs Duty And
Compensating Tax On Importations Of Machinery And Equipment,
Spare Parts And Materials Required For Their Exploration
Operations”;

(29) Section 16 (A), (B), and (C) and Section 17 (A) to (E) of P.D. 972,
or “The Coal Development Act Of 1976”;

(30) Section 4 (A) of P.D. 1442 (Restored By FIRB Resolution 19-87),
or “An Act To Promote The Exploration And Development Of
Geothermal Resources”;

(31) Section 10 (1) to (6) of R.A. 7156, or The “Mini-Hydroelectric
Incentive Act”;

(32) Section 9 of R.A. 8479, or The “Downstream Oil Industry
Deregulation Act Of 1998”;

(33) Section 6, Fifth Paragraph of R.A. 9136, or the “Electric Power
Industry Reform Act Of 2001”;

(34) Chapter VII, Section 15 Except (H), Sections 19, 21 (A) to (D),
and 23 of R.A. 9513, or “An Act Promoting The Development,
Utilization And Commercialization Of Renewable Energy Resources
And For Other Purposes”;

(35) Section 6 (A) (B) of R.A. 9367, or “An Act To Direct The Use Of
Biofuels, Establishing For This Purpose The Biofuel Program,
Appropriating Funds Therefore, And For Other Purposes”;

(36) Sections 36 (E) and (F) of P.D. 705 Entitled, “Revising P.D. 389,
Or The ‘Revised Forestry Code Of The Philippines”;

(37) Section 45 (b) (1) (c) of R.A. 9003, Entitled “An Act Providing
For An Ecological Solid Waste Management Program, Creating The
Necessary Institutional Mechanisms And Incentives, Declaring
Certain Acts Prohibited And Providing Penalties, Appropriating Funds
Therefor And For Other Purposes”;

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(38) Section 26 A (1) to (3) of R.A. 9275, or The “Philippine Clean
Water Act Of 2004”;

(39) Sections 16 and 17 of R.A. 7844, or The “Export Development
Act Of 1994”;

(40) Section 13 of R.A. 10817, or “An Act Instituting The Philippine
Halal Export Development And Promotion Program, Creating For The
Purpose The Philippine Halal Export Development And Promotion
Board, And For Other Purposes”;

(41) Section 14 of R.A. 8423, or “An Act Creating The Philippine
Institute Of Traditional And Alternative Health Care (PITAHC) To
Accelerate The Development Of Traditional And Alternative Health
Care In The Philippines, Providing For A Traditional And Alternative
Health Care Development Fund And For Other Purposes”;

(42) Section 20 (D) (1) to (5) of R.A. 10884, or “An Act
Strengthening The Balanced Housing Development Program,
Amending For The Purpose Republic Act No. 7279, Or ‘The Urban
Development And Housing Act Of 1992’”;

(43) Section 10 of R.A. 7718, or “An Act Amending Certain Sections
Of RA. 6957, Entitled ‘An Act Authorizing The Financing,
Construction, Operation And Maintenance Of Infrastructure Projects
By The Private Sector, And For Other Purposes”;

(44) Section 6 (C) (D) (F) and Sections 7 and 8 of R.A. 7103, or “An
Act To Strengthen The Iron And Steel Industry And Promote
Philippine Industrialization And For Other Purposes”;

(45) Section 3 (A) to (D) and (H) of R.A. 8502, or “The Jewelry
Industry Development Act Of 1998”;

(46) Section 5 (A) (B) of R.A. 10771, or “An Act Promoting The

Creation Of Green Jobs, Granting Incentives And Appropriating Funds
Therefor”;

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(47) Section 7-B (h) (10) of R.A. 6977 or the “Magna Carta for
Micro, Small and Medium Enterprises (MSMEs),” as amended by R.A.
9501;

(48) Section 7 of R.A. 9178, or “An Act To Promote The
Establishment Of Barangay Micro Business Enterprises (BMBES),
Providing Incentives And Benefits Therefor, And For Other Purposes”;

(49) Chapter XV, Section 83; Chapter XVI, Sections 90, 91, 92, 93 of
R.A. 7942, or The “Philippine Mining Act Of 1995”;

(50) Chapter II, Section 4 and Chapter VIII, Section 19 of R.A. 9295,
or The “Domestic Shipping Development Act Of 2004”;

(51) Section 6 of R.A. 7471, As Amended, or The “Philippine
Overseas Shipping Development Act”;

(52) Subchapter V-A, Sections 86, 88, And 95 (A) and (B) of R.A.
9593, or The “Tourism Act of 2009”, as amended by Republic Act No.
11262;

(53) Section 8, Second and Third Paragraphs Thereof, of R.A. 10816,
or “An Act Providing For The Development And Promotion Of Farm
Tourism In The Philippines”;

(54) Sections 8 and 9, In So Far As Tax Exemption and VAT Zero
Rating of Domestic Merchandise, of P.D. 538 Entitled, “Creating And
Establishing The Phividec Industrial Authority And Making It A
Subsidiary Agency Of The Philippine Veterans Development
Corporation, Defining Its Powers, Functions And Responsibilities, And
For Other Purposes”, as amended by P.D. No. 1491;

(SS) Section 1 (1.1) of £.0. 97-A s. of 1993 Entitled, “Further
Clarifying The Tax And Duty-Free Privilege Within The Subic Special
Economic And Free Port Zone”;

(56) Section 4(F) and Section 5(C)(K), In So Far As Tax Exemption

and/or VAT Zero Rating on Domestic Merchandise Is Concerned, and
Section 12-B of Republic Act No. 10083 Entitled, “An Act Amending

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OYFHRONS

Republic Act No. 9490, Or ‘The Aurora Special Economic Zone Act Of
2007”;

(57) Section 5 (5.1) and (5.2) of £.0. 290 Entitled, “Implementing
The Natural Gas Vehicle Program For Public Transport”;

(58) Sections 18 and 20 of R.A. 6847 Entitled, “An Act Creating
And Establishing The Philippine Sports Commission, Defining its
Powers, Functions, And Responsibilities, Appropriating Funds
Therefor, And For Other Purposes”;

(59) Section 10 of P.D. 1174, Amending P.D. 972, or The "Coal
Development Act of 1976";

(60) Section 23 of R.A. 7925, or “An Act To Promote And Govern
The Development Of Philippine Telecommunications And Delivery Of
Public Telecommunications Services”;

(61) Section 8 (b) and (c) and Section 42 (C) of R.A. 7277, or “An Act
Providing For The Rehabilitation, Self-Development And Self-Reliance
Of Disabled Persons And Their Integration Into The Mainstream
Society And For Other Purposes”;

(62) Section (32) (a) (1-8) and Section 33 (a) of Republic Act No.
10754 Entitled, “An Act Expanding the Benefits and Privileges of
Persons with Disability (PWDs);

(63) Section 12 (a), (b), and (d) of Republic Act No. 11321 Entitled,
“An Act Instituting The Farmers And Fisherfolk Enterprise
Development Program Of The Department Of Agriculture”

(64) Section 25 of Republic Act No. 11285 Entitled, “An Act
Institutionalizing Energy Efficiency And Conservation, Enhancing The
Efficient Use Of Energy, And Granting Incentives To Energy And
Conservation Projects”

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(C) The provisions on Investment Priority Plan (IPP) under Chapter |, Article 26 and
Chapter Il of EO 226 s. of 1987, or the “Omnibus Investments Code of 1987”, are
hereby repealed.

(D) To expand the power of FIRB to include approval or disapproval of the grant of
fiscal incentives of special projects/activities as defined in this Act, as well as to
reconstitute the composition of the FIRB, the following provisions or laws are
hereby amended, accordingly.

(1) Sections 1 (6) and 2 of Presidential Decree No. 776, entitled “Repealing
All Laws, Acts, Decrees, Orders and Ordinances Granting Exemptions
from Taxes, Duties, Fees, Imposts and Other Charges under Certain
Exceptions and Creating a Fiscal Incentives Board”

(2)

Section 1 (c) and (d); Section 2 of Executive Order No. 93, series of
1986, entitled “Withdrawing All Tax and Duty Incentives, Subject to
Certain Exceptions, Expanding the Powers of the Fiscal Incentives
Review Board and for other Purposes”

(3) Memorandum Order No. 23, s. 1986, entitled “Expanding the
Membership of the Fiscal Incentives Review Board”

(E) To transfer to the FIRB the power of the IPA Board to review, approve or
disapprove fiscal incentives of special projects/activities as defined in this Act, and
to mandate the IPA Board to recommend to the FIRB after a thorough review of
the application, the approval or disapproval of the same, the following provisions
are hereby amended, accordingly.

(1)Article 7 of Executive Order No. 226, series of 1987, entitled “the
Omnibus Investments Code of 1987”, as amended by RA 7918, entitled
“An Act Amending Article 39, Title Ill of Executive Order No. 226, series
of 1987, entitled, ‘the Omnibus Investment Code of 1987, as Amended,
and for Other Purposes’”;

(2) Section 7 of RA 7903, entitled “An Act Creating a Special Economic Zone

and Freeport in the City of Zamboanga City Special Economic Zone
Authority, Appropriating Funds Therefor, and for Other Purposes”;

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(3) Section 1 of Executive Order No. 458, entitled “Devolving the Powers
and Functions of the Board of Investments Over Investments Within the
Autonomous Region in Muslim Mindanao to the Autonomous Regional
Government and for Other Purposes”;

(4) Section 13 of RA 9728, entitled “An Act Converting the Bataan Economic
Zone located in the Municipality of Mariveles, Province of Bataan, into
the Freeport Area of Bataan, Creating for this Purpose the Authority of
the Freeport Area of Bataan (AFAB), Appropriating Funds Therefor and
for Other Purposes”;

(5) Section 13 (b) of RA 7227, as amended by RA 9400 entitled “An Act
Accelerating the Conversion of Military Reservations into Other
Productive Uses, Creating the Bases Conversion and Development
Authority for the Purpose, Providing Funds Therefore and for Other
Purposes”;

(6) Section 8 of RA 9400, entitled “An Act Amending Republic Act No. 7227,
as amended, Otherwise Known as the Bases Conversion and
Development Act of 1992, and for Other Purposes”;

(7) Section 69 (n) of Subchapter IV-B of RA 9593, entitled “An Act Declaring
a National Policy for Tourism as an Engine of Investment, Employment,
Growth and National Development and Strengthening the Department
of Tourism and its Attached Agencies to Effectively Implement that
Policy, and Appropriating Funds Therefor”;

(8)Sections 7 and 12 of RA 9490, entitled “An Act Establishing the Aurora
Special Economic Zone in the Province of Aurora, Creating for the
Purpose the Aurora Special Economic Zone Authority, Appropriating
Funds Therefor and for Other Purposes”, as amended by RA 10083,
entitled “An Act Amending Republic Act No. 9490, Otherwise Known as
the "Aurora Special Economic Zone Act Of 2007”;

(9) Section 6 of RA 7922, entitled “An Act Establishing a Special Economic
Zone and Free Port in the Municipality of Santa Ana and the Neighboring
Islands of Cagayan, Providing Funds Therefor, and for Other Purposes”;

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37

(10) Section 4, of PD No. 538, entitled “Creating and Establishing the
PHIVIDEC Industrial Authority and Making it a Subsidiary Agency of the
Philippines Veterans Investment Development Corporation, Defining its
Powers, Functions and Responsibilities, and for Other Purposes”;

(11) Sections 13 and 21 of RA 7916, as amended by RA 8748 entitled “An
Act Providing for the Legal Framework and Mechanisms for the
Creation, Operation, Administration and Coordination of Special
Economic Zones in the Philippines, Creating for this Purpose, the
Philippine Economic Zone Authority and for Other Purposes;

(F) Sections 4, 5, 6, and 7 of RA 10708, entitled “An Act Enhancing Transparency in
the Management and Accounting of Tax Incentives Administered by Investment
Promotion Agencies”

(G) In general. - All other laws, decrees, Executive Orders, rules and
regulations, or parts thereof which are contrary to or inconsistent with this Code
are hereby repealed, amended or modified accordingly.

SEC. 41. Implementing Rules and Regulations. — Within thirty (30) days
from the effectivity of this Act, the Secretaries of Finance, and Trade and Industry,
shall, upon consultations with the Bureau of Internal Revenue and Board of
Investments and other Investment Promotion Agencies, promulgate the
necessary rules and regulations for its effective implementation.

SEC. 42. Separability Clause. — If any clause, sentence, Paragraph, or part
of this Code shall be adjudged by any Court of competent jurisdiction to be
invalid, such judgment shall not affect, impair, or invalidate the remainder of said
Code, but shall be confined in its operation to the clause, sentence, Paragraph, or
part thereof directly involved in the controversy.

SEC. 43. Effectivity. This Act shall take effect on January 1, 2020 following
its complete publication in the Official Gazette or in a newspaper of general
circulation.

Approved,

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