SIXTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES) 
First Regular Session 
) 
SENATE 
.i,U' 
S. B. 
,,~ \) 
Introduced by Senator Cynthia Villar 
._-- ._-.-_ .. _-----_._. 
EXPLANATORY NOTE 
This bill 
is 
designed to 
harmonize and simplify the 
government's 
administration of programs and policies on the grant of fiscal and non-fiscal 
incentives to promote foreign and domestic investments in the Philippines. 
This is hoped to be achieved by the empowerment of the Board of 
Investments (BOI) as governed by its Board of Governors which shall be composed 
of representatives from key Departments of the government. 
A more efficient system is likewise hoped to be in place through the creation 
of an Investment Promotion Action Center (i-PAC) that will serve as a melting pot 
for information from concerned agencies and as a link thereto to fast track dealings 
with them, 
Straight forward incentives to registered enterprises are provided from direct 
tax incentives (such as INet operating Loss Carryover) and indirect taxes like zero 
percent Value Added Tax. Income Tax holiday or Reduced Income Tax is still in 
place to qualified enterlPrises. Varying incentives are likewise given to different 
Registered Enterprises, Le. Export, Domestic, and Strategic Enterprises and those 
located in Ecozones and Freeport Zones. Special incentives are likewise given to 
Domestic Enterprises located in the identified thirty Poorest Province or Less 
Developed Areas. 
Considering the serious need for congruent laws on investments and 
incentives, early enactment of this bill is earnestly sought. 
/L/I'1J 
/ C~N~I::;;ILLA~ 


SIXTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHIUPPINES ) 
First Regular Session 
) 
SENATE 
Introduced by Senator Cynthia Villar 
'/:1 
JUL·\ 
THE INVESTMENITS AND INCENTIVES CODE OF THE PHILIPPINES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
1 
PRELIMINARY TITLE 
2 
CHAPTER I 
3 
TITLE AND DECLARATION OF POLICY 
4 
5 
SECTION 1. Title.- This Act shall be known as "The Investments and Incentives 
6 
Code of the Philippines" 
7 
8 
SEC. 2. Declaration of Investment Policies. - The national economy shall be 
9 
developed so as to enllance its competitiveness in the global economy through 
10 
investment promotion anel industrial development activities geared towards employment 
11 
generation and countrywide development. Accordingly, the following are Ihe declared 
12 
poliCies of the State: 
13 
(a) The State shall pursue a market-responsive investment regime; 
14 
(b) The State shall formulate industry and sectoral development programs; 
15 
(c) The State stlall undertake investment promotion activities; 
16 
(d) The State shall grant incentives that are simple to administer, time-bound and 
17 
performance-based; and 
18 
(e) The State re,cognizes that industrial peace is essential to attracting 
19 
investments. 
20 
21 
CHAPTER II 
22 
ORGANIZATION Jl,ND FUNCTIONS OF THE BOARD OF INVESTMENTS 
23 
24 
SEC. 3. The Board of Investments (801). - The Board of Investments hereinafter 
25 
referred to as the "801" shall implement the provisions of this Code except as otherwise 
26 
provided therein. 
27 
28 
SEC. 4. Composition of the 801 Board of Governors. - The 801 Board of 
29 
Governors, hereinafter f!9ferred to as the "Board", shall be composed of nine (9) 
30 
governors: the Secretary of the Department of Trade and Industry (DTI), the Secretary 
31 
of the Department of Finance (DOF), the Director General of the National Economic and 
32 
Development Authority (NEDA), the DTI Undersecretary for Investments and Industry 
33 
Group (IIG), the DTI Undersecretary of International Trade Group (ITG), the DTI 
34 
Undersecretary of Regional Operations Group (HOG) and three (3) representatives 
1 


I 
from the private sector. The Secretary of the DTI shall concurrently be the Chairman of 
2 
the BOI and the DTI Undersecretary for Investments and Industry Group shall be the 
3 
concurrent Vice Chairman and Managing Governor of the BOL The three (3) 
4 
representatives from the private sector shall be appOinted by the President for a term 
5 
not exceeding four (4) years: Provided, That a governor may be reappointed: Provided, 
6 
further, That a governor shall serve as such until his successor shall have been 
7 
appointed and qualified. 
8 
9 
The Managing Governor of the BOT shall be assisted by four (4) career officials 
10 
with the ranI< of Deputy Managing Governor, who shall be appointed by the Board, upon 
II 
the recommendation of the Managing Governor. 
12 
[3 
Members of the Board shall receive a reasonable per diem for every meeting 
14 
attended. 
IS 
[6 
SEC. 5, Qualifications of the BOI Board of Governors. - The governors of the BOI 
17 
shall be citizens of the Philippines, at least thirty-five (35) years old, with proven probity 
18 
and integrity, of good moral character and of recognized competence in economics, 
19 
business, marketing, advertising, management or its equivalent. 
20 
21 
SEC. 6. Powers and Functions of the Board. - The Board shall be responsible for 
22 
the regulation and promotion of investments. It shall hold meetings at least once a weel< 
23 
for the conduct of business or as often as may be necessary upon the call of the 
24 
Chairman or upon the request of the Managing Governor. The notice of regular and 
25 
special meetings shall be given to all the members of the Board and the presence of 
26 
five (5) members shall constitute a quorum and the affirmative vote of five (5) members 
27 
in a meeting validly held shall be necessary to exercise its powers and perform its 
28 
functions which shall include the following: 
29 
30 
A. Investment Promotion-Related Functions: 
31 
(1) Formulate an evolving National Framework for Investment Promotions 
32 
(NFIP), that will govern all Investments Promotion Agencies (IPAs); 
33 
(2) Promulgate rules, regulations and policies to implement the NFIP in 
34 
consultation with all IPAs and exercise monitoring functions over all investment 
35 
promotion activities of all IPAs; 
36 
(3) Enter into agreements with other agencies for the simplification of systems 
37 
and procedures involved in the promotion of investments, operation of economic zones 
38 
and registered 
enterprises, 
and other activities 
necessary 
for 
the effective 
39 
implementation of this Code; 
40 
(4) Establish the Investment Promotion Action Center (i-PAC); 
41 
(5) Establish and operate regional investment centers in the Philippines, and 
42 
establish and operate overseas investment offices. 
43 
44 
B. Regulatory Functions: 
45 
(1) Formulate an evolving National Framework for Industrial Development 
46 
(NFID). The NFID shall identify I<ey emerging marl<ets or industries that will 
47 
substantially enhance the competitiveness of the country's industries, such as, but 
48 
not limited to agricultural technology, biomedical devices and systems, renewable 
49 
energy, logistics and information communications and technologies; 
50 
(2) Promulgate rules, regulations and poliCies to implement the NFID in 
51 
consultation with the private sector; 
2 


1 
(3) Plan and implement industrial programs to hasten economic development 
2 
including those relating to the implementation of international trade, investment and 
3 
industry-related environmental agreements and protocols; 
4 
(4) Formulate positions for bilateral, multilateral and regional investments and 
5 
investment-related trade agreements and/or arrangements; 
6 
(5) Act on investment projects covered by bilateral, multilateral, and regional 
7 
agreements subject to rules and guidelines to be formulated by the Board; 
8 
(6) Recommend to the President the suspension of the nationality requirement 
9 
provided for in this Code in appropriate cases such as those involving bilateral, 
10 
multilateral, or regional investments, or other trading agreements of the Philippines with 
II 
other countries; or when the existing laws of another country where the investor comes 
12 
from provides no nationality restrictions for Filipino investors or provides for reciprocal 
13 
nationality accommodations; 
14 
(7) Promulgate rules, regulations and policies on incentives which the IPAs are 
15 
mandated to implement; 
16 
(8) Gather, consolidate and monitor incentives data and information from alilPAs 
17 
and other concerned government agencies for submission to the President, the OOF 
18 
and Congress; 
19 
(9) Prepare the Investments Priorities Plan (IPP) in accordance with Title III, 
20 
Chapter I of this Code; 
21 
(10) Formulate rationalization programs for certain industries whose operation 
22 
may result in dislocation, oversupply or inefficient use of resources that impedes 
23 
economic growth. In the interest of national development and upon approval of the 
24 
President, the Board may restrict, either totally or partially, the importation or exportation 
25 
of any equipment, raw materials, intermediate goods or finished goods; 
26 
(11) Prepare an alilnual list of products and services that are not sufficiently 
27 
manufacturedfrendered locally; 
28 
(12) Assist micro. and small enterprises in the preparation of feasibility and other 
29 
pre-investment project studies; 
30 
('13) Regulate the implementation of Regional Operating Headquarters, Retail 
31 
Trade Law, Long-Term Lease and other laws as mandated; 
32 
(14) Process and approve, deny, suspend, revoke applications for registration, 
33 
imposing terms and conditions as it may deem necessary to promote the purposes of 
34 
this Code, including the f13fund and forfeiture of incentives when appropriate, restricting 
35 
availment of incentives not needed by the project as determined by the Board, requiring 
36 
performance bonds from BOI-accredited bonding companies, and payment of 
37 
application, registration, publication and other fees, when warranted; 
38 
(15) After due notice and hearing, cancel the registration or suspend the 
39 
incentives of a BOI registered enterprise andfor require refund of incentives, including 
40 
interests and monetary pElnalties; 
41 
(16) Establish a mediation center to resolve controversies andfor disputes 
42 
between BOI registered enterprises; 
43 
(17) After due hearing, decide controversies that may arise between BOI 
44 
registered enterprises or investors therein which espouse conflicting interests arising 
45 
from the implementation of this Code. The Board shall have the power to subpoena 
46 
witnesses, administer oaths, an4 compel the production of books, papers and other 
47 
evidence, and to cite for contempt any person or organization that fails to comply with 
48 
the aforestated processes: Provided, That the Board may grant immunity from 
49 
prosecution to any person whose testimony or documents or other evidence is 
50 
necessary or relevant to the case: 
51 
Provided, 
further, 
That a registered enterprise may file a motion for 
52 
reconsideration of a decision or final order within fifteen (15) days from notice thereof, 
3 
-----
--------------------~ 


- -----------------------------------
1 
with proof of service on the parties affected. No second motion for reconsideration of a 
2 
decision or final order by the same party shall be entertained; 
3 
(18) Recommend to the Commissioner of the Bureau of Immigration the 
4 
employment of foreign nationals in BOI registered enterprises and the grant of Investor's 
5 
Visa; 
6 
(19) Ascertain by inspection or verified reports, the proportion of the participation 
7 
of Philippine nationals in a BOI registered enterprise to ensure compliance with the 
8 
nationality requirements of Philippine laws to retain registration under this Code or to 
9 
verify the compliance by registered enterprises with the terms and conditions of 
10 
registration; 
11 
(20) Waive, condone or reduce fines or penalties imposed on BOI registered 
12 
enterprises; 
13 
(21) Determine the organizational structure of the BOL Appoint, discipline or 
14 
remove its personnel consistent with the provisions of civil service laws, rules and 
15 
regulations; and 
16 
22) Exercise all tllEl powers nElcessary or incidental to attain the purposes of this 
17 
Code and other laws vesting additional functions on the Board. 
18 
19 
SEC. 7. Appointment of 801 Personnel. - The Managing Governor, upon 
20 
rElcommendation of the Board, shall appoint its personnel subject to civil service laws, 
21 
rules and regulations. All positions in the BOI shall be governed by compensation, 
22 
position classification systems, and qualification standards approved by the Board 
23 
based on a comprehensive job analysis and audit of actual duties and responsibilities. 
24 
The compensation plan shall be comparable with the prevailing compensation plan of 
25 
other IPAS such as Philippine Economic Zone Authority (PEZA) and shall be subject to 
26 
periodic review by the Board without prejudice to yearly merit reviews or increases 
27 
based on productivity. The BOI shall therefore be exempt from existing laws, rules and 
28 
regulations on compensation, position classification and qualification standards. 
29 
30 
SEC. 8. The Investment Promotion Action Center (i-PAC). - There is hereby 
31 
created an i-PAC in the BOI in place of the current One Stop Action Center (OSAC) 
32 
created under Executive Order No. 136, series of 1987, entitled "Establist'ling the 
33 
Council for Investment in Trade, Industry, Tourism, Agriculture, Natural Resources, 
34 
Transportation, Communication and Services, and for Other Purposes". The i-PAC shall 
3 5 
serve as the source of investment information and as the linl< to all government 
36 
agencies (0 facilitate entry, retention, expansion and diversification of investments. 
37 
The i-PAC shall be composed of all government agencies involved in the 
38 
establishment or operation of business including, but not limited to, all IPAs, the 
39 
Securities and Exchange Commission (SEC), the Bureau of Internal Revenue (BIR), the 
40 
Bureau of Customs (BOC), the Bureau of Immigration (BI), the Department of Trade 
41 
and Indus(ry (DTI), the Department of the Interior and Local Government (DILG), the 
42 
Department of AgriculturE' (DA), the Department of Environment and Natural Resources 
43 
(DENR), the Department of Labor and Employment (DOLE), the Department of Foreign 
44 
Affairs (DFA), the Department of Energy (DOE), the Department of Public Works and 
45 
Highways (DPWH), the Department of Agrarian Reform (DAR) and such other agencies 
46 
as may be determined by the Board. The government agencies involved shall designate 
47 
representatives to the i-PAC that are clothed with authority to act and approve/deny any 
48 
matter relative to their respective agencies. 
49 
50 
SEC. 9. Powers Clnd Functions of the i-PAC. - The i-PAC shall exercise and 
51 
perform the following powers and functions: 
52 
(a) Provide advice, guidance, information and procedure on various laws, rules 
53 
and regulations governin~1 investments and the conduct of business in the Philippines. 
4 


(b) Ensure that all investment-related requirements are acted upon within ten (10) 
2 
working days. In cases of applications not acted upon within ten (10) working days, the 
3 
same shall be deemed approved: Provided, however, That deferment shall be 
4 
considered as an action. 
5 
(c) Recommend the streamlining of existing procedures to ensure that all 
6 
frontline agencies, dealing with the operation of business, perform their tasks for 
7 
identified government to business transactions. 
8 
(d) Establish an on-line investment facilitation system. 
9 
(e) Act, in coordinal:ion with appropriate government offices or agencies, such as 
10 
the Office of the Ombudsman and the Civil Service Commission (CSC), on complaints 
11 
filed by any investor or potential investor against any public official or employee or any 
12 
office, agency or instrumentality, including local government units (LGUs) and officials, 
13 
as well as any government-owned and -controlled corporation (GOCC), in connection 
14 
with any act or duty required by law to facilitate the entry of local and foreign 
15 
investments. 
16 
(f) Perform such otrler functions as may be directed by the Board. 
17 
18 
SEC. 10. J-/onoraria and Allowances. - The Board shall provide for reasonable 
19 
honoraria and allowances for the i-PAC members and its personnel 
20 
21 
TITLE II 
22 
DEFINITION OF TERMS 
23 
24 
SEC. 11. Definition of Terms. - As used herein, the following shall mean: 
25 
(a) "BOI" shall refer to the Board of Investments created under this Code. 
26 
(b) "Investments promotion agencies (tPAs)" shall include the BOI, the PEZA, the 
27 
Bases Conversion Development Authority (BCDA), the Subic Bay Metropolitan Authority 
28 
(SBMA), the Clark Development Corporation (CDC), 
the John Hay Management 
29 
Corporation (JHMC), the Poro Point Management Corporation (PPMC), the Bataan 
30 
Technology Park Inc. (BTPI), the Cagayan Economic Zone Authority (CEZA), the 
31 
Zamboanga City Special I=.conomic Zone Authority (ZCSEZA), the PHIVIDEC Industrial 
32 
Authority (PIA), the Aurma Special Economic Zone Authority (ASEZA), and all other 
33 
IPAs that may be created by law. 
34 
(c) "Registered enllerprise" shall mean any individual, partnership, corporation, 
35 
Philippine branch of a fOl"leign corporation or other entity incorporated and/or organized 
36 
and existing under Philippine laws and registered with an IPA, in accordance with Ihis 
37 
Code: Provided, however, That the term "registered enterprise" shall not include any of 
38 
the following service enterprises suet) as, but not limited to, those engaged in customs 
39 
brokerage, trucking/forwal-ding services, janitorial services, security services, insurance 
40 
and/or banking and other financial services, consumers cooperatives, credit unions, 
41 
consultancy services, restaurants or such other services, within the, economic zones, 
42 
as may be determined by the IPA Board, duly accredited and/or licensed by any of the 
43 
IPAs and whose income derived within the economic zones shall be subject to taxes 
44 
under the Nationallntern8l1 Revenue Code (NIRC) of 1997, as amended. 
45 
(d) "Investments priorities plan (IPP)" shall refer to the list of industries, services 
46 
and other economic activities, which will be eligible for incentives under this Code, 
47 
prepared and determined as priority or preferred activities in accordance with Title III, 
48 
Chapter I of this Code, 
49 
(e) "New product or service" shall refer to any product or service not locally or not 
50 
sufficiently manufacturedkendered to meet the demand. 
S1 
(f) "Gross income earned" refers to gross sales or gross receipts derived from the 
52 
registered activity less sales returns, discounts and allowances and cost of goods sold. 
5 


I 
(g) "Tax credit" shall mean any credits against taxes and/or duties equal to those 
2 
actually paid or would have been paid. Tax credit certificate shall be issued by the 
3 
Secretary of Finance or his representative, or the concerned IPA, if so delegated by the 
4 
Secretary of Finance. The tax credit certificate issued pursuant to this Code shall not be 
5 
transferable to another reoistered enterprise under this Code. In case the industry is in a 
6 
state of distress, as declared by the Board, the tax credit certificate held by enterprises 
7 
of such distressed industry shall be freely transferable. The tax credit shall be valid only 
8 
for a period of five (5) years from Ule date of issuance. 
9 
The tax credit certificate shall be used to pay taxes, duties, charges and fees due 
10 
to the national government, except withholding tax 
11 
(h) "Export sales of goods" shall mean the sales revenues paid for in freely 
12 
convertible foreign currency, determinedfrorn invoices, bills of lading, inward letters of 
13 
credit, landing certificates, or other commercial documents, of the following: 
14 
(1) the sale and actual shipment of goods from the Philippines to a foreign 
15 
country by a registE~red enterprise; 
16 
(2) sales of goods to an export enterprise registered in accordance with 
17 
this Code; to diplomatic missions and to agencies or institutions allowed to import 
18 
said goods tax and duty-free; to international shipping or international air 
19 
transport operations; and to foreign military aircraft or seacraft; 
20 
(3) sales to a nonresident buyer for delivery to a resident local export 
21 
enterprise of capital equipment, raw materials, production supplies, packaging 
22 
materials and other production requirements needed for the registered activity of 
23 
the export enterprise; or 
24 
(4) sales of goods to a nonresident buyer, except automobiles and non-
25 
essential goods, manufactured or processed in the Philippines, for delivery to a 
26 
resident in the Phillippines: Provided, That they are paid for in acceptable foreign 
27 
currency. 
28 
Provided, That in the case of paragraph (2) above, only sales to an export 
29 
enterprise of capital equipment, raw materials, production supplies, packaging 
30 
materials and othel' production requirements needed for the registered activity of 
31 
the export enterprise; and sales to international sea or air transport operations of 
32 
goods, equipment, spare parts and supplies, except fuel, to be used in the 
33 
aircraft or seacraft and capital equipment needed for the shipping or air transport 
34 
operations, shall bEl entitled to incentives for export enterprises under this Code. 
35 
Sales of locally manufactured or assembled goods for household and 
36 
personal use under the Internal Export Program and similar· programs of the 
37 
government shall be deemed as "export sales". 
38 
(i) "Export sales of services" shall mean the sales revenues or receipts, 
39 
determined from contracts, invoices, vouchers, official receipts, or other commercial 
40 
documents of the followin!l 
41 
(1) services renden9d for clients abroad by registered enterprises; 
42 
(2) services rendered for an export enterprise registered in accordance with this 
43 
Code; to diplomatic missions and to other agencies or institutions with tax and duty-free 
44 
privileges; 
45 
(3) services rendered to international airlines or shipping lines, or foreign military 
46 
aircraft or seacraft, or information and communication technology enterprises, even if 
47 
rendered locally. 
48 
Provided, That in the case of paragraph (2) above, only services for an export 
49 
enterprise performed by subcontractors and! or contractors in the manufacture or 
50 
processing of goods; other services necessary for the registered activity of an export 
51 
enterprise; and in the case of paragraph (3), only services for the overhaul, repair and 
52 
maintenance for international shipping or air transport operations, and foreign military 
53 
aircraft or seacraft, shall be entitled to incentives for export enterprises under this Code. 
6 


2 
The foregoing notwithstanding, services rendered locally by registered 
3 
enterprises that are paid for in freely convertible foreign currency shall be 
4 
considered as "export sales". 
5 
(j) I\n "export enterprise" shall mean a registered enterprise which is a 
6 
manufacturer, processor or service provider and whose export sale of its products 
7 
or services exceeds seventy percent (70%) of its total annual production of the 
8 
preceding taxable year. The export requirement herein provided may be reduced, 
9 
but shall not be less than fifty (50%), in meritorious cases under such conditions as 
10 
the board may determine. 
11 
An export trader that buys and sells for its own account products of micro and 
12 
small enterprises and earns one hundred percent (100%) of its annual sales from 
13 
exports of the same shalilbe deemed to be an export enterprise. 
14 
(k) A "domestic enterprise" shall mean a registered enterprise, which produces 
15 
goods for sale or renders services exclusively to the domestic market or does not 
16 
comply with the minimum export requirement of an export enterprise. 
17 
(I) "Service enterprise" is an enterprise engaged or proposing to engage in 
18 
rendering technical, professional or other services listed in the IPP. Service enterprise 
19 
that earns more than seventy percent (70%) of its revenues paid for in foreign currency 
20 
generated from nonresident clients shall be entitled to the incentives provided to an 
21 
"export" enterprise. 
22 
(m) "Source documents" shall refer to input materials and documents reasonably 
23 
needed by information technology (IT) and IT-enabled industries such as, but not limited 
24 
to, books, directories, ma!Jazines, newspapers, brochures, pamphlets, rnedical records· 
25 
Of files, legal records or files, instruction materials, drawings, blueprints or outlines. 
26 
(n) "Processing" shall mean converting raw malerials into marketable form 
27 
through physical, mechalnical, chemical, electrical, biochemical, biological or other 
28 
means, or by a special treatment or a series of actions, such as slaughtering, milling, 
29 
pasteurizing, dlying or desiccating, quick freezing, that results in a change in the nature 
30 
or state of the products. Processing shall include assembly provided that a distinct or 
31 
new product is formed. Mere packing or packaging shall riot constitute processing. 
32 
(0) "Industrial Estate (IE)" shall refer to a tract of land subdivided and developed 
33 
according to a comprehensive plan under a unified continuous management and with 
34 
proviSions for basic infras.tructure and utilities, with or without pre-built standard factory 
35 
buildings and community facilities for the use of a community of industries. It includes 
36 
government industrial estates sllch as the PHIVIDEC Industrial Authority. 
37 
(p) "ECOZONES" or "Special economic zones (SEZ)" shall refer to selected 
38 
areas with highly developed or which have the potential to be developed into agro-
39 
industrial, industrial, supply chain city, information technology, tourist/recreational, 
40 
commercial, banking, investment and financial centers, retirement and medical zones 
41 
whose metes and bounds are fixed or delimited by presidential proclamations. An 
42 
ecozone may contain any or all of the following: industrial estates (lEs), export 
43 
processing zones (EPZs), supply chain cities, ICT parks and centers, free trade zones 
44 
and tourism estates: Provided, however, That areas where mining operations are 
45 
undertaken shall not be dHclared as ecozones. 
46 
(q) "Ecozone developer" shall refer to a business entity duly registered with the 
47 
PEZA to develop, operate and maintain an ecozone that will put up the required 
48 
infrastructure facilities and utilities, to include among others, light and power system, 
49 
water supply and distribution system, sewerage and drainage system, pollution control 
50 
devices, communication facilities, paved road network, administration building, standard 
51 
factory buildings, and other facilities as may be required by enterprises registered with 
52 
the PEZA. 
7 


(r) "Export Processing Zone (EPZ)" or "Export Zone" shall refer to a specialized 
2 
industrial estate located physically and/or administratively outside the customs territory 
3 
and predominantly oriented to export production. 
4 
(s) "Freeport" is an isolated and policed area adjacent to a port of entry as 
5 
defined by Section 3519 of the Tariff and Customs Code, which shall be operated and 
6 
managed as a separate customs territory to ensure free flow or movement of goods, 
7 
except those expressly prohibited by law, within, into and exported out in the freeport 
8 
zone wllere imported goods may be unloaded for immediate transshipment or stored, 
9 
repacked, sorted, mixed or otherwise manipulated without being subject to taxes and 
10 
duties. 
11 
(t) "Tourism estate" is a tract of land with defined boundaries, suitable for 
12 
development into an intefJrated resort complex to render tourism services for both local 
13 
and foreign tourists, travelers and investors, with prescribed carrying capacities, of 
14 
tourist facilities and activities such as, but not limited to, sport, gaming and recreation 
15 
centers, accommodations including hotels, apartelles, tourist inns/villas, pension 
16 
houses, convention and cultural facilities, food and beverage outlets, commercial 
17 
establishments and other special interest and attraction activities/establishments, and 
18 
provided with roads, watf9r supply facilities, power distribution facilities, drainage and 
19 
sewage systems, and otl1er necessary infrastructures and facilities. A tourism estate 
20 
shall be under unified and continuous management, and can either be a component of 
21 
an ecozone or the whole Hcozone itself. 
22 
(u) "ICT pari," or "information and communications technology (ICT) park" shall 
23 
refer to an area which has been developed into an integrated development complex 
24 
capable of providing infrastructure and other support facilities required by ICT 
25 
enterprises, as well as amenities required by professionals and workers involved in ICT 
26 
enterprises, or easy access to such amenities. 
27 
(v) "ICT center" shall refer to a building which has been developed by public or 
28 
private corporate entities to provide infrastructure and other support facilities required by 
29 
ICT enterprises, as well. as amenities required by professionals and workers involved in 
30 
ICT enterprises, or easy access to such amenities. 
31 
(w) "Capital equipment" refers to maChinery, equipment, and components 
32 
thereof, spare parts, accessories, tools, devices, apparatus, fixtures, fittings and 
33 
accompaniments which are directly and/or reasonably needed in the registered activity 
34 
of the enterprise and t~lose required for pollution abatement and control, cleaner 
35 
production and water reduction/ conservation. 
36 
(x) "Supply chain city" shall refer to a self-contained zone that includes 
37 
manufacturing facility with hub operations in an economic zone, The manufacturing 
38 
facility covers whole or partial operations, and the hub operations include Business 
39 
Process Outsourcing (SPO) in support of the manufacturing activity of the registered 
40 
enterprise, The I3PO activities cover finance and accounting, high end processes such 
41 
as marketing, client or buyer- manufacturer relationship, procurement of materials, 
42 
logistics management, and other related activities of a borderless global manufacturing 
43 
set-up. 
44 
(y) "Less Oevelopl3d Area (LOA)" shall refer to an area that is included in tile list 
45 
prepared by the 1301, after consultation with appropriate government agencies. Such 
46 
listing shall take into consideration the following criteria: low per capita gross domestic 
47 
product, low level of investments, high rate of unemployment and/or underemployment 
48 
and low level of infrastructure development including its accessibility to developed urban 
49 
centers. 
50 
5 l 
52 
53 
8 


TITLE III 
2 
IINVESTMENTS WITH INCENTIVES 
3 
4 
CHAPTER I 
5 
QUALIFIED ACTIVITIES 
6 
7 
SEC. 12. Investments Priorities Plan (IPP). - The BOI, upon consultation with the 
8 
Office of the President, concerned IPAs and appropriate government agencies and the 
9 
private sector, shall formulate the IPP to be submitted to the President for his/her 
10 
approval. In the listing of the activity in the IPP, the following shall be complied willy 
II 
(a) The activity shall be covered by the current Medium Term Philippine 
12 
Development Plan (MTPDP) and Medium Term Philippine Investment Plan (MTPIP) or 
13 
its equivalent; 
14 
(b) The activity shall satisfy the following conditions: 
IS 
(1) Substantial amount of investments; 
16 
(2) Considerable generation of employment; 
17 
(3) Use of modern or new technology; or 
18 
(4) Installation of adequate environmental protection systems: 
19 
Provided, That items b( 1) and b( 4) above shall be present in all activities, and 
20 
the threshold amount of investments and employment generation required for a specific 
21 
activity shall be subject to a periodic review every three (3) years taking into 
22 
consideration international standards and other indicators. 
23 
(c) The activity must comply with the specific qualification requirements and/or 
24 
conditions for a particular sector or industry as set by the Board and other limitations the 
25 
Board may determine. 
26 
27 
SEC. 13. Amendments. - Subject to publication requirements and the criteria for 
28 
investment priority determination, the Board may, at any time, include additional areas 
29 
in the IPP, alter any of the terms of the declaration of an investment area, and 
30 
temporarily or permanently suspend activities on the IPP if it considers that such activity 
31 
is no longer a priority. In no case, however, shall any amendment of the IPP impair the 
32 
incentives conferred on a registered enterprise. The Board shall not accept applications 
33 
in an area of investment prior to the approval of the same as a preferred area. or after 
34 
approval of its deletion as a preferred area of investment in the IPP. 
35 
36 
SEC. 14. Publication. - Upon approval of the IPP, in whole or in part, or upon 
37 
approval of an amendment thereof, the IPP or the amendment, specifying and declaring 
38 
the areas of investment shall be published in at least one (1) newspaper of general 
39 
circulation and all such areas shall be open for application until publication of an 
40 
amendment or deletion thereof. 
41 
42 
SEC. 15. Strategic Projects. - The President, upon recommendation of the 
43 
Board, may allow registration of a strategic project that may not be listed in the IPP, but 
44 
will locate in the country as a result of stiff competition with other countries. 
45 
46 
A strategic project is a project that exhibits high social economic returns and 
47 
requires large investments that will significantly contribute to the country's economic 
48 
development. In the exercise of this authority, any three (3) of the following criteria shall 
49 
be taken into account: (1) large capital investments; (2) generate sizeable employment; 
50 
(3) use of new and internationally accepted high level of technology; and (4) creation of 
51 
value-added. 
52 
9 


1 
Notwittlstanding the preceding paragraphs of this section or any law to the 
2 
contrary, a project which shall lead to significant improvements in productivity and 
3 
value added and that will (a) produce or manufacture new, emerging and 
4 
tectlnologically advanced product, or (b) involve breakthrough process innovation, 
5 
or (c) involve new and innovative service, shall also be deemed as "strategic 
6 
project." 
7 
8 
9 
CHAPTER" 
10 
INCENTIVES TO REGISTERED ENTERPRISES 
11 
12 
SEC. 16. Performance-Based Incentives. - This Act shall provide two (2) types of 
13 
performance-based incentives to qualified enterprises, as herein classified: (1) the direct 
14 
taxes incentives such as, Net Operating Loss Carryover (NOLCO), a accelerated 
15 
depreciation and double deduction for training expenses and double deduction for 
16 
research and development; and (2) the indirect taxes incentives, such as zero percent 
17 
(0%) rate of value-addedl tax (VAT) on sales, exemption from taxes and/or customs 
18 
duties on importation of eapital equipment, raw materials and source documents and 
19 
wharfage dues and export tax. 
20 
21 
Qualified enterprises which avail of the Income Tax Holiday (ITH), or Reduced 
22 
Income Tax, or the five percent (5%) tax rate on Gross Income Earned (GIE), as the 
23 
case may be, shall be precluded from availing of the performance-based direct taxes 
24 
incentives. 
25 
26 
SEC. 17. Incentives to Registered Export Enterprises. - All IPAs may administer 
27 
the following incentives to their respective registered export enterprises to the extent of 
28 
their registered activity: 
29 
(a) Income Tax Holiday (ITH). -- Activities of an export enterprise shall be entitled 
30 
to six (6) years off "from IIhe date of start of its commercial operations. The BIR shall 
31 
require a registered expmt enterprise availing of ITH to secure a certificate of eligibility 
32 
from the appropriate IP A before filing an official copy of its income lax return (lTR). 
33 
Thereafter, the registered export enterprise shall file its claim with the appropriate IP A 
34 
for validation. Failure to SE~cure certification and/or to file the ITH availment for validation 
35 
by the appropriate IPA sl~all cause the forfeiture of the ITH availment for the taxable 
36 
period. 
37 
(b) Reduced Income Tax. - After entitlement to ITH, a registered export 
38 
enterprise, regardless of location, may be entitled to a preferential tax rate of fifteen 
39 
percent (15%) of taxable income as defined under Section 31 of the NIRC of 1997, as 
40 
amended. 
41 
(c) Five percent (Ei%)Tax Rate on Gross Income Earned (GIE). Instead of the 
42 
above Reduced Income Tax rate, a registered export enterprise located inside or 
43 
outside the ecozone, indlustrial estate or freeport zone may opt and apply with the 
44 
concerned IPA for the fivl3 percent (5%) tax of the GIE in lieu of all national and local 
45 
taxes, including but not lil'Ylited to, VAT on their registered activity, VAT on importation 
46 
directly related to their registered activity, documentary stamp taxes (DST) and excise 
47 
taxes, except real property tax on land owned by private developers. The allocation of 
48 
the five percent (5%) GIIE pertaining to the LGU foregOing taxes hereunder shall be 
49 
governed by the charter or governing law of the IRA. Once the registered export 
50 
enterprise has made the choice, such choice shall be irrevocable for the duration of its 
5 j 
registration. 
52 
A registered export enterprise enjoying the five percent (5%) tax on GIE may 
53 
generate income from domestic sales up to thirty percent (30%) of its total income from 
10 
~-------


1 
all sources: Provided, That should a registered export enterprise's income from 
2 
domestic sales exceed thirty percent (30%) of its total income from all sources, the 
3 
entire income shall be subject to the regular income tax. If the thirty percent (30%) 
4 
threshold is not exceeded, the domestic sales of a registered export enterprise shall 
5 
continue to enjoy the five percent (5%) tax on GIE. 
6 
(d) Net Operating Loss Carryover (NOLCO). - The net operating loss of the 
7 
registered activity during the first five (5) years from start of commercial operation which 
8 
had not been previously offset as deduction from gross income shall be carried over as 
9 
a deduction from gross income for the next five (5) consecutive taxable years 
10 
immediately following the year of such loss: Provided, however, Tilat the NOLCO shall 
[ 1 
be the actual loss without the benefit of the incentives provided herein. 
12 
The BIR shall require a registered export enterprise availing of the NOLCO to 
13 
secure a certificate of eliQlibility from the appropriate IPA before filing an official copy of 
14 
its ITR with the appropriate IP A for validation of the NOLCO claim. 
15 
Failure to secure a certification and/or to file the NOLCO availment for validation 
16 
by the SOl or appropriate IPA shall Gause the forfeiture of (he availment for the taxable 
17 
period. 
18 
(e) Accelerated DElpreciation. - Accelerated depreciation of plant, machinery and 
19 
equipment that are rea~ionably needed and actually used for tile production and 
20 
transport of goods and services may be depreciated using a rate not exceeding twice 
21 
the rate which would have been used had the annual allowance been computed in 
22 
accordance with the rules and regulations prescribed by the Secretary of Finance and 
23 
the provisions of the NIRC of 1997, as amended. 
24 
(f) Double Deduction for Training Expenses or Training Expenses Credit. -
25 
Expenses incurred for local training given to employees and training expenses of 
26 
potential employees for the development of skills identified as necessary by the 
27 
appropriate government agencies, upon approval by the concerned IP A, shall entitle 
28 
the registered export enterprise to a special deduction from the taxable income 
29 
equivalent to one hundred percent (100%) of the total expenses over and above the 
30 
allowable ordinary and necessary business deductions for said expenses under the 
31 
NIRC of 1997, as amended. 
32 
The same benefit of double deduction shall likewise extend to expenses paid or 
33 
incurred by the registered export enterprise in its training projects in collaboration with 
34 
schools and universities accredited by the Department of Education (DepEd) or 
35 
Commission on Higher Education (CHED). 
36 
The training expenses incurred shall be deductible from taxable income on the 
37 
taxable year the said training expenses were incurred. 
38 
The concerned IP A shall issue the corresponding certificate of entitlement for 
39 
this incentive upon filing of an application for training expenses credit, otherwise, the 
40 
training expense credit shall be deemed waived. 
41 
(g) Double Deduction for Research and Development or Research and 
42 
Development Credit. - Expenses incurred for research and development conducted in 
43 
the Philippines relating to the business shall entitle the registered export enterprise to a 
44 
special deduction from ta)(able income equivalent to one hundred percent (100%) of the 
45 
total expenses over and above the allowable ordinary and business deductions for said 
46 
expenses under the NIRC of '1997, as amended. 
47 
The expenses for research and development shall be deductible from taxable 
48 
income on the taxable year the said research and development expenses were 
49 
incurred. 
50 
The concernedlP,Il, shall issue the corresponding certificate of entitlement for this 
51 
incentive upon filing of an application for research and development expenses credit; 
52 
otherwise, the research and development, expenses credit shall be deemed waived. 
II 


I 
(h) Capital Equipment Incentives. - (1) Importations of capital equipment, 
2 
including consignment thl~reof, by registered export enterprises regardless of location 
3 
and whether enjoying the ITH or reduced income tax or the five percent (5%) tax on GIE 
4 
shall be exempted to the extent of one hundred percent (100%) of the taxes and 
5 
customs duties: Provided, That the following conditions are complied with: 
6 
(i) The capital equipment is directly and/or reasonably needed and will be 
7 
used exclusively in the registered activity of the export enterprise unless prior 
8 
approval of the IP A is secured for the part time utilization of said equipment in a 
9 
non-registered activity to maximize usage thereof or the proportionate taxes and 
10 
duties are paid on a specific equipment and machinery being permanently used 
II 
for non-registered activities; they are not manufactured domestically in sufficient 
J 2 
quantity, of comparable quality and at reasonable prices; and 
13 
(ii) The approval of the IP A was obtained by the registered export 
14 
enterprise for the importation of sllch machinery, equipment and spare parts. 
15 
Approval of the IP A must be secllred before any sale, transfer or disposition of 
16 
the imported capital equipment is made: Provided, That if such sale, transfer or 
17 
disposition is made within the first five (5) years from date of importation, any of 
J 8 
the following conditions must be present: 
19 
(aa) If made to another enterprise enjoying tax and duty exemption 
20 
on imported capital equipment; 
21 
(bb) If made to another enterprise, upon payment of any taxes and 
22 
duties due on the net book value of the capital equipment to be sold; 
23 
(cc) Exportation of the capital equipment, machinery, spare parts 
24 
or source documents or those required for pollution abatement and 
25 
control; or 
26 
(dd) For reasons of proven technical obsolescence. 
27 
When the aforementioned sale, transfer or disposition is made under any of the 
28 
conditions provided for in the foregoing paragraphs other than paragraph (ii), the 
29 
registered export enterprise shall not pay the taxes and duties waived from such items: 
30 
Provided, further, That if the registered export enterprise sells, transfers or disposes the 
31 
aforementioned imported items without prior approval within five (5) years from date of 
32 
importation, the registered export enterprise and the vendee, transferee or assignee 
33 
shall be solidarily liable to pay twice the amount of the tax and duty exemption given it: 
34 
Provided, finally, That even if the sale, transfer or disposition of the capital equipment is 
35 
approved after five (5) years from date of importation, the registered export enterprise is 
36 
still liable to pay the taxes and duties based on the net book value of the capital 
37 
equipment, if it has violated any of its registration terms and conditions. Otherwise, it 
38 
shall no longer be subject to the payment of the taxes and duties waived thereon. 
39 
(2) The sale by 81 domestic manufacturer to a registered export enterprise of 
40 
machinery and capital equipment and raw materials, supplies, parts and semi-finished 
41 
products, used in tile fabrication of machinery and capital equipment used in the 
42 
registered activity of the latter shall be subject to a zero-percent (0%) VAT rate. 
43 
The registered export enterprise availing of the incentives provided under the 
44 
immediately preceding two (2) paragraphs shall be subject to the following: (i) that said 
45 
capital equipment will bE! used exclusively by the registered export enterprise in its 
46 
registered activity; (ii) that the capital equipment where the raw materials, supplies, 
47 
parts and semi·-finislled products were used would have qualified for tax and duty-free 
48 
importation; and (iii) that the approval of the concerned IP A is obtained by the 
49 
registered export enterplrise, If the registered export enterprise sells, transfers or 
50 
disposes of the capital equipment, the provision in the preceding paragraphs for such 
51 
disposition shall apply. 
12 


(i) Raw Material Incentives. - 'Importations of raw materials to exclusively used 
2 
by a registered export enterprise in the manufacture, processing or production of its 
3 
export products shall be exempted from the payment of customs duties and taxes. 
4 
(j) Tax and Duty-Free Importation of Source Documents. The importation of 
5 
source documents by leT-registered export enterprises shall be eligible for tax and duty-
6 
free importation. 
7 
(k) Zero Percent (0%) Rate of VAT on the Sale by a Domestic Enterprise to a 
8 
Registered Export Enterprise. - The provisions of law to the contrary notwithstanding, 
9 
the sale by a domestic enterprise of goods and/or services to a registered export 
10 
enterprise, regardless of tile latter's location and whether enjoying the ITH, the Reduced 
II 
Income Tax or the five percent (5%) tax on GTE shall be subject to zero percent (0%) 
12 
VAT rate: Provided, That such goods and/or services are required by registered export 
13 
enterprise's activity. 
14 
(I) Exemption from Wharfage Dues and Export Tax. - The provisions 25 of law to 
15 
the contrary notwithstanding, exports by a registered export enterprise shall be 
16 
exempted from wharfage dues and export taxes. 
17 
(m) Access to Bonded Manufacturing Warehouse. 
.. 
Registered export 
18 
enterprises located outside ecozones or freeports shall have access to the utilization of 
19 
bonded warehousing system required by the project subject to such guidelines as may 
20 
be issued by the Board. 
21 
(n) Employment .of Foreign Nationals. - Subject to the provisions of Section 29 of 
22 
Commonwealth Act No. €j·13, as amended, a registered export enterprise may employ 
23 
foreign nationals in manauerial, technical or advisory positions. 
24 
Foreign nationals under employment contract within the purview of this incentive, 
25 
their spouses and unmarried children under twenty-one (21) years of age, who are not 
26 
excluded by Section 29 of Commonwealth Act No. 613, as amended, shall be permitted 
27 
to enter and reside in the Philippines during the period of employment of such foreign 
28 
nationals. 
29 
30 
SEC. 18. Tax Treatment/Other Incentives for Registered Enterprises in Ecozones 
31 
and Freeport Zones. - In addition to the applicable incentives provided under the 
32 
preceding section on export incentives, registered enterprises locating in the Special 
33 
Economic Zones and Freeport Zones shall be entitled to the following incentives: 
34 
(a) Tax Treatment of Merchandise in Ecozones or Freeports. - (1) Except as 
35 
otherwise provided in this Code, foreign and domestic merchandise, raw materials, 
36 
supplies, articles, equipment, machineries, spare parts and wares of every description, 
37 
except those prohibited Iby law, brought into the ecozones or free ports to be sold, 
38 
stored, broken up, repacked, assembled, installed, sorted, cleaned, graded, or 
39 
otherwise processed, manufactured, mixed with foreign or domestic merchandise 
40 
whether directly or indirectly related in such activity, shall not be subject to customs and 
41 
internal revenue laws andl regulations nor to local tax ordinances, the provisions of law 
42 
to the contrary notwithstanding. 
43 
(2) Merchandise purchased' by a registered enterprise located in the ecozones or 
44 
freeports from the customs territory, and subsequently brought into the ecozones or 
45 
freeports, shall be considered as export sales and exportation thereof shall be entitled 
46 
to the benefits allowed by law for such transaction. 
47 
(3) Merchandise sent from the' ecozones or freeports to the customs territory 
48 
shall, whether or not combined with or made part of other articles likewise of local origin 
49 
or manufactured in the Philippines while in the ecozones or freeports, be subject to 
50 
internal revenue and customs laws of the Philippines as domestic goods sold, 
51 
transferred or disposed of for local consumption. If the finished goods have imported 
52 
components, the duties shall be based on the value of said imported materials, except 
53 
when the final product is Eixempt. 
13 


1 
(4) Qualified merchandise or articles manufactured by register ecozone or 
2 
freeport locators, which are made available for sale in the domestic market shall be 
3 
imposed the applicable ASEAN Common Effective Preferential Tariff (CEPT) rate, if 
4 
qualified, or applicable tariff rates under bilateral or regional trade agreements, if 
5 
qualified, or Most Favoured Nation (MFN) rate on imported raw materials and MFN 
6 
rates on non-qualified I:aw materials used in the manufacture of the qualified 
7 
merchandise or articles. In case of bilateral agreements, the applicable rate shall be the 
8 
agreed rate. 
9 
(5) Domestic merchandise on which ali internal revenue taxes have been paid, if 
10 
subject thereto, and foreion merchandise previously imported on which duty or tax has 
11 
been paid, or which have been admitted free of duty and tax, may be taken into the 
12 
ecozones or freeports from the customs territory of the Philippines and be brought back 
13 
thereto free of quotas, duty or tax. 
14 
(6) Subject to such regulations respecting identity and safeguarding of the 
15 
revenue as the concerned IP A may deem necessary when the identity of an article 
16 
entered into the ecozones or freeports under the immediately preceding paragraph has 
17 
been lost, such article when removed from the ecozones or freeports and taken to the 
18 
customs territory shall be treated as foreign merchandise entering the country for the 
19 
first time, under the provisions of the Tariff and Customs Code of the Philippines, as 
20 
amended. 
2! 
(7) Articles produced or manufactured in the ecozones or freeports and exported 
22 
therefrom shall, on subsequent importation into the customs territory, be subject to the 
23 
import laws applicable to like articles manufactured in a foreign country. 
24 
(8) Articles regulated by law for sale to the domestic market shall only be allowed 
25 
to be used or consumed within the ecozones or freeports. 
26 
(9) Unless the contrary is shown, merchandise taken out of the ecozones or 
27 
freeports shall be considered, for tax purposes, to have been sent to customs territory. 
28 
Special Economic Zones declared by presidential proclamations or created by law may 
29 
avail of the incentives provided herein as conferred by the appropriate IPA subject to 
30 
such terms and conditions as may be provided by law, 
31 
(b) Tax Treatment of Services in the Ecozones or Freeports. - (1) Sale of service 
32 
by an entity from the customs territory to a registered ecozone or freeport enterprise or 
33 
by a registered ecozone or freeport enterprise to another ecozone or freeport enterprise 
34 
shall be treated as indirect export, and hence, shall not be subjected to internal revenue 
35 
taxes for such transaction. (2) Sale or service by a registered ecozone or freeport 
36 
enterprise to the customs territory shall be subject to the applicable internal revenue 
37 
laws and regulations. 
38 
39 
SEC. 19. Incentives for Registered Domestic Enterprises. - Registered domestic 
40 
enterprises shall be qualified to the following incentives to the extent of their registered 
41 
activity: 
42 
(a) Income Tax Holiday (ITH). - Activities of a registered domestic enterprise 
43 
shall be entitled to four (4) years of ITH from the date of start of its commercial 
44 
operations. 
45 
The BIR shall require a registered domestic enterprise availing of ITH to secure a 
46 
certificate of eligibility from the appropriate IP A before filing an official copy of its 
47 
income tax return (ITR). Thereafter, the registered domestic enterprise shall file its claim 
48 
with the appropriate IP A for validation. Failure to secure a certification andlor to file the 
49 
ITH availment for validation by the appropriate IP A shall cause the forfeiture of the ITH 
50 
availment for the taxable period. 
5! 
(b) Net Operating Loss Carryover (NOLCO). - The net operating loss of the 
52 
registered activity during the first five (5) years from start of commercial operation which 
53 
had not been previously offset as deduction from gross income shall be carried over as 
14 


1 
a deduction from gross income for the next five (5) consecutive taxable years 
2 
innnediately following the year of such loss: Provided, however,' That the NOLCO shall 
3 
be the actual loss without the benefit of the incentives provided herein. 
4 
The BII'< shall require a registered domestic enterprise availing of the NOLCO to 
5 
secure a certificate of eliglibility from'the appropriate IPA before filing an official copy of 
6 
its ITR with the appropriat'9 IP A for validation of the NOLCO claim. 
7 
Failure to secure a certification andlor to file the NOLCO availment for validation 
8 
by the BOlar appropriate IPA shall cause the forfeiture of the availment for the taxable 
9 
period. 
10 
(c) Accelerated Depreciation. - Accelerated depreciation of plant, machinery and 
11 
equipment that are reasonably needed and actually used for the production and 
12 
transport of goods aM sElrvices may be depreciated using a rate not exceeding twice 
J 3 
the rate which would have been used had the annual allowance been computed in 
J4 
accordance with the rules and regulations prescribed by the Secretary of Finance and 
IS 
the provisions of the NII'<C of 1997, as amended. 
16 
(d) Double Deduction for Training Expenses or Training Expenses Credit. -
17 
Expenses incurred for local training given to employees and training expenses of 
18 
potential employees for the development of skills identified as necessary by the 
19 
appropriate government agencies, upon approval by the concerned IPA, shall entitle the 
20 
registered domestic enterprise to a special deduction from the taxable income 
21 
equivalent to one hundred percent (100%) of the total expenses over and above the 
22 
allowable ordinary and necessary business deductions for said expenses under the 
23 
NIRC of 1997, as amended. 
24 
The same benefit of double deduction shall likewise extend to expenses paid or 
25 
incurred by the registered domestic enterprise in its training projects in collaboration 
26 
with schools and universities accredited by the Department of Education (DepEd) or the 
27 
Commission on Higher Education (CHED). 
28 
The training expenses incurred shall be deductible from taxable income on the 
29 
taxable year the said training expenses were incurred. The concerned IPA shall issue 
30 
the corresponding certificate of entitlement for this incentive upon filing of an application 
31 
for training expenses credit, otherwise, the training expense credit shall be deemed 
32 
waived. 
33 
(e) Double Deduction for I'<esearch and Development or Research and 
34 
Development Credit. - Expenses incurred for research and development conducted in 
35 
the Philippines relating to the business shall entitle the registered domestic enterprise to 
36 
a special deduction from taxable income equivalent to one hundred percent (100%) of 
37 
the total expenses over and above the allowable ordinary and business deductions for 
38 
said expenses under the IIIIHC of 1997, as amended. 
39 
The expenses for research and development shall be deductible from taxable 
40 
income on the taxable year the said research and development expenses were 
41 
incurred. 
42 
The concerned IPA shall issue tile corresponding certificate of entitlement for this 
43 
incentive upon filing of an application for research and development expenses credit; 
44 
otherwise, the research and development expenses credit shall be deemed waived. 
45 
(f) VAT and Duty Iincentives on Importations of Capital Equipment and/or Raw 
46 
Material. - Importations of capital equipment and/or raw materials by registered 
47 
domestic enterprises shall be subject to a VAT and customs duty refund mechanism. 
48 
In order to facilitatel the immediate processing, clearance and release of VAT and 
49 
customs duty refunds as provided in this Act, a trust liability account (TLA) is hereby 
50 
authorized to be established in the Bureau of the Treasury (BTr). All VAT and customs 
51 
duty payments pertaining to the importation of registered domestic enterprises of capital 
52 
equipment or raw materials shall be deposited in the TLA for the purpose of funding 
53 
valid V AT and customs duty refund claims. The claims for VAT and customs duty 
15 


J 
refunds shall be made by the registered domestic enterprise to the DOF which, in turn 
2 
shall process, approve and release the V A T and customs duty refund. 
3 
The VAT and customs duty paid on imported capital equipment may be refunded: 
4 
Provided, That the capital equipment is being used by the registered domestic 
5 
enterprise pursuant to its registered activity. The amount of VAT and customs duty 
6 
refund on a particular shipment of raw materials shall be equivalent to the proportion of 
7 
raw materials used in the production to the total raw materials imported multiplied by the 
8 
amount of VAT and customs duty paid on such importation. No claim for refund shall be 
9 
allowed on VAT and cus'lloms duty paid on raw materials which are not or no longer 
10 
intended to be used in the registered activity. 
11 
The registered domestic enterprise shall file a claim for V AT and customs duty 
12 
refund within two (2) years after the payment was made. All amounts paid but no longer 
13 
allowed for refund shall immediately accrue to the general fund of the national 
14 
government. 
15 
All applications for VAT and customs duty refund shall be processed and acted 
16 
upon within thirty (30) days after submission of complete documents. The refund shall 
17 
be in a form of cash or manager's/cashier's check payable to the registered domestic 
18 
enterprise. 
19 
In case of dispute under the V AT and customs duty refund mechanism provided 
20 
in this section, the pertinent proviSions of the NIRC of 1997, as amended, and the Tariff 
21 
and Customs Code of the Philippines, as amended, shall apply. 
22 
The registered domestic enterprise availing of the above incentives shall be 
23 
subject to the following: (1) that said capital equipment will be used exclusively by the 
24 
registered domestic enterprise in its registered activity; (2) that the capital equipment 
25 
where the raw materials, supplies, parts and semi-finished products were used would 
26 
have qualified for tax and duty-free importation; and (3) that the approval of the 
27 
concerned IPA is obtained by the registered domestic enterprise. If the registered 
28 
domestic enterprise seils, transfers or disposes of the capital equipment, the provision 
29 
of subsection (h) of Section 17 of this Act shall apply. 
30 
(g) Preferential Access to Financing and Acceptable Form of Collaterals. -
31 
Registered SMEs shall be accorded access to financing from government financial 
32 
institutions at preferential rates below the market rates. 
33 
Further, capital goods acquired from loans secured from government financial 
34 
institutions. shall be an acceptable form of collateral for the same loan. 
35 
(h) Assistance in the Preparation of Project Study. - Registered SMEs may be 
36 
provided assistance in thEi preparation of project study for purposes of registration under 
37 
this Code. 
38 
39 
SEC. 20. Incentives for Domestic "Strategic" Enterprises. -
AlllPAs may 
40 
administer the following incentives to registered domestic enterprises engaged in 
41 
strategic· projects, as deflined under Section 15 of this Act, whenever applicable, to the 
42 
extent of their registered activity: 
43 
(a) Income Tax Holiday (ITH). - A registered domestic "strategiC" enterprise shall 
44 
be entitled to an ITH equivalent to six (6) years from the date of start of its commercial 
45 
operations. 
46 
The BIR shall require a registered domestic "strategic" enterprise availing of the 
47 
ITH to secure a certificate of eligibility from the appropriate IPA before filing an official 
48 
copy of its income tax return (ITR). Thereafter, the registered domestic "strategic" 
49 
enterprise shall file its claim with the appropriate IP A for validation. 
50 
Failure to secure a certification and/or file the ITH availment for validation by the 
51 
appropriate IPA shall cause the forfeiture of the ITH availment for the taxable period. 
16 


1 
(b) Reduced Income Tax. - A registered domestic "strategic" enterprise may be 
2 
entitled to a preferential tax rate of fifteen percent (15%) of taxable income as defined 
3 
under Section 31 of the NIIRC of 1997, as amended, for a period of eight (8) years. 
4 
If the domestic "strategic" enterprise registers within the first six (6) years from 
5 
the effectivity of this Act, it may opt to avail of the ITH prior to the reduced income tax: 
6 
Provided, That the ITH together with the reduced income tax shall be availed of for a 
7 
period of eight (8) years. 
8 
(c) Net Operating Loss Carryover (NOLCO). - The net operating loss of the 
9 
registered activity during the first five (5) years from start of commercial operation which 
10 
had not been previously offset as deduction from gross income may be carried over as 
II 
a deduction from gross income for the next eight (8) consecutive taxable years 
12 
immediately following the year of such loss: Provided, That the NOLCO shall be the 
13 
actual loss without the benefit of the incentives provided herein. 
14 
The BIR shall require a registered domestic "strategic" enterprise availing of the 
15 
NOLCO to secure a certificate of eligibility from the appropriate IPA before filing an 
16 
official copy of its ITR with the appropriate IPA for validation of the NOLCO claim. 
17 
Failure to secure a certification and/or 10 file the NOLCO availmenl for validation 
18 
by tile 801 or appropriate IPA shall cause the forfeiture of the availment for the taxable 
19 
period. 
20 
(d) Accelerated Depreciation. - Accelerated depreciation of plant, machinery and 
21 
equipment that are reasonably needed and actually used for the production and 
22 
transport of goods and services may be depreciated using a rate not exceeding twice 
23 
the rate which would have been used had the annual allowance been computed in 
24 
accordanc,s with the provisions of the NIRC of 1997, as amended and the rules and 
25 
regulations prescribed by the Secretary of Finance. 
26 
(e) Double Deduction for Training Expenses. - Expenses incurred for local 
27 
training given to employees and training expenses of potential employees for the 
28 
development of skills identified as necessary by the appropriate government agencies, 
29 
upon approval by the concerned IPA, may entitle the registered domestic "strategic" 
30 
enterprise to a special d(~duction from the taxable income equivalent to one hundred 
31 
percent (100%) of the total expenses over and above the allowable ordi nary and 
32 
necessary business deductions for said expenses under the NIRC of 1997, as 
33 
amended. The same benefit of double deduction shall likewise extend to expenses paid 
34 
or incurred by the registered domestic "strategic" enterprise in its training projects in 
35 
collaboration with schools and universities accredited by the Department of Education 
36 
(DepEd) or the Commission on Higher Education (CHEO). 
37 
The training expenses incurred shall ·be deductible from taxable income on the 
38 
taxable year the said training expenses were incurred. 
39 
The concerned IPA shall issue the corresponding certificate of entitlement for this 
40 
incentive upon filing of an application, otherwise, the training incentive shall be deemed 
41 
waived. 
42 
(f) Double Deduction for Research and Development - Expenses incurred for 
43 
research and development conducted in the Philippines relating to the business may 
44 
entitle the registered domestic "strategic" enterprise to a special deduction from taxable 
45 
income equivalent to one hundred percent (100%) of the total expenses over and above 
46 
the allowable ordinary and business deductions for said expenses under the NIRC of 
47 
1997, as amended. The expenses for research and development shall be deductible 
48 
from taxable income on tile taxable year the said research and development expenses 
49 
were incurred. 
50 
The concerned IPA shall issue the corresponding certificate of entitlement for this 
51 
incentive upon filing of an application, otherwise, the research and development 
52 
incentive shall be deemed waived. 
17 


(g) VAT and Duty Incentives on Impoliations of Capital Equipment and/or Raw 
2 
Material - Importations of capital equipment and/or raw materials by registered 
3 
domestic "strategic" enterprises shall be subject to a VAT and customs duty refund 
4 
mechanism. 
5 
6 
In order to facilitate the immediate processing, clearance and release of VAT and 
7 
customs duty refunds as provided in this Act, a trust liability account (TlA) is hereby 
8 
authorized to be established in the Bureau of the Treasury (BTr). All VAT and customs 
9 
duty payments pertaining to the importation of registered domestic "strategic" 
10 
enterprises of capital equipment or raw materials shall be deposited in the TLA for the 
j I 
purpose of funding valid VAT and customs duly refund claims. The claims for VAT and 
12 
customs duty refunds sllall be made by the registered domestic "strategic" enterprise to 
13 
the DOF which, in turn, shall process, approve and release the V AT and customs duty 
14 
refund. 
15 
The VAT and customs duty paid on imported capital equipment may be refunded: 
16 
Provided, That the capital equipment is being used by the registered domestic 
17 
"strategic" enterprise pursuant to its registered activity. 
18 
The amount of VAT and customs duty refund on a particular shipment of raw 
19 
materials shall be equivaJ,9nt to the proportion of raw materials used in ttle production to 
20 
the total raw materials imported multiplied by the amount of VAT and customs duty paid 
21 
on such importation. No claim for refund shall be allowed on VAT and customs duty 
22 
paid on raw materials which are not or no longer intended to be used in the registered 
2.3 
activity. 
24 
The registered domestic "strategic" enterprise shall file a claim for VAT and 
25 
customs duty refund within two (2) years after the payment was made. All amounts paid 
26 
but no longer allowed fOI' refund shall immediately accrue to the general fund of the 
27 
national government. 
28 
All applications for V AT and customs duty refund shall be processed and acted 
29 
upon within thirty (30) days after submission of complete documents. The refund shall 
30 
be in a form of cash or rnanager's/cashier's check payable to the registered domestic 
31 
"strategic" enterprise. 
32 
33 
In case of dispute under the V AT and customs duty refund mechanism provided 
34 
in this section, the pertinent provisions of the NIRC of 1997, as amended, and the Tariff 
35 
and Customs Code of the Philippines, as amended, shall apply. 
36 
The registered domestic "strategic" enterprise availing of the above incentives 
37 
shall be subject to the following: (1) that said capital equipment will be used exclusively 
38 
by the registered domestic "strategic" enterprise in its registered activity; (2) that the 
39 
capital equipment where the raw materials, supplies, parts and semi-finished products 
40 
were used would have qualified for tax and duty-free importation; and (3) that the 
41 
approval of the concerned IPA is obtained by the registered domestic "strategic" 
42 
enterprise. If the registered domestic "strategic" enterprise sells, transfers or disposes of 
43 
the capital equipment, the provision of subsection (h) of Section 17 of this Act shall 
44 
apply. 
45 
(h) Employment of Foreign Nationals. - Subject to the provisions of Section 29 of 
46 
Commonwealth Act No. 613, as amended, a registered domestic "strategic" enterprise 
47 
may employ foreign nationals in managerial, technical or advisory positions. 
48 
Foreign nationals under employment contract within the purview of this incentive, 
49 
their spouses and unman·ied children under twenty-one (21) years of age, who are not 
50 
excluded by Section 29 of Commonwealth Act No. 613, as amended, shall be permitted 
51 
to enter and reside in thH Philippines during the period of employment of such foreign 
52 
nationals. 
53 
18 


1 
SEC. 2'1. Incentives for Registered Domestic Enterprises in the Thirty Poorest 
2 
Provinces or Less Developed Areas (LDAs). - Registered domestic enterprises located 
3 
in the thirty (30) poorest provinces as determined by the appropriate agency or in LDAs 
4 
as defined hereof are entitled to a twenty (20)-year cumulative availment of the following 
5 
incentives: 
6 
(a) Income Tax Holiday (lTH). - Activities of a registered domestic enterprise 
7 
located in the thirty (30) poorest provinces or LDAs shall be entitled to six (6) years of 
81TH from the date of start of its commercial operations. 
9 
(b) Reduced Income Tax After Entitlement to ITH or NOLCO. - A registered 
10 
domestic enterprise located in the 30 poorest provinces or LDAs shall be entitled to 
11 
twelve (12) years of a preferential tax rate of fifteen percent (15%) of taxable income as 
12 
defined under Section 3'1 of the NIRC of 19f~7, as amended. 
13 
(c) Net Operating Loss Carryover (NOLCO). - The net operating loss of the 
14 
registered activity during the first five (5) years from start of commercial operation which 
15 
had not been previously offset as deduction from gross income shall be carried over as 
16 
a deduction from gross income for the next five (5) consecutive taxable years 
17 
immediately following the year of such loss: Provided, however, That the NOLCO shall 
18 
be the actual loss without the benefit of the incentives provided herein. 
19 
The BIR shall require a registered domestic enterprise availing of the NOLeO to 
20 
secure a certificate of eli~Jibility from the appropriate IPA before filing an official copy of 
2] 
its ITR with the appropriate IP A for validation of the NOLCO claim. 
22 
Failure to secure a certification and/or to file the NOLCO availment for validation 
23 
by the 801 or appropriate IP A shall cause the forfeiture of the availment for the taxable 
24 
period. 
25 
(d) Accelerated Depreciation. -- Accelerated depreciation of plant, machinery and 
26 
equipment that are reasonably needed and actually used for the production and 
27 
transport of goods and services may be depreciated using a rate not exceeding twice 
28 
the rate which would have been used had the annual allowance been computed in 
29 
accordance with the rules and regulations prescribed by the Secretary of Finance and 
30 
the provisions of the NIRC of 1997, as amended. 
31 
(e) Double Deduction for Training Expenses or Training Expenses Credit. -
32 
Expenses incurred for local training given to employees and training expenses of 
33 
potential employees for the development of skills identified as necessary by the 
34 
appropriate government agencies, upon approval by the concerned IP A, shall entitle 
35 
the registered domestic enterprise to a special deduction from the taxable income 
36 
equivalent to one hundrEid percent (100%) of the total expenses over and above the 
37 
allowable ordinary and necessary business deductions for said expenses under the 
38 
NIHC of 1997, as amended. 
39 
The same benefit of double deduction shall likewise extend to expenses paid or 
40 
incurred by the registered domestic enterprise in its training projects in collaboration 
41 
with schools and universil:ies accredited by the Department of Education (DepEd) or the 
42 
Commission on Higher Education (CHED). 
43 
The training expenses incurred shall be deductible from taxable income on the 
44 
taxable year the said training expenses were incurred. The concerned IP A shall issue 
45 
the corresponding certificate of entitlement for this incentive upon filing of an application 
46 
for training expenses credit, Otherwise, the training expense credit shall be deemed 
47 
waived. 
48 
(f) Double Deduction for Research and Development or Research and 
49 
Development Credit. - Expenses incurred for research and development conducted in 
50 
the Philippines relating to the business shall entitle the registered domestic enterprise to 
51 
a special deduction from taxable income equivalent to one hundred percent (100%) of 
52 
the total expenses over and above the allowable ordinary and business deductions for 
53 
said expenses under the INIRC of 1997, as amended. 
19 


2 
The expenses for research and development shall be deductible from taxable 
3 
income on the taxable year the said research and development expenses were 
4 
incurred. 
5 
The concerned IPA shall issue the corresponding certificate of entitlement for this 
6 
incentive upon filing of an application for research and development expenses credit; 
7 
otherwise, the research and development expenses credit shall be deemed waived. 
8 
(g) VAT and Duty Incentives on Importations of Capital Equipment and/or Raw 
9 
Material. - Importations of capital equipment and/or raw materials by registered 
10 
domestic enterprises located in the thirty (30) poorest provinces' or LDAs shall be 
11 
subject to a VAT and customs duty refund mechanism. In order to facilitate the 
12 
immediate processing, clearance and release of VAT and customs duty refunds as 
13 
provided in this Act, a tru~;t liability account (TLA) is hereby authorized to be established 
14 
in the Bureau of the Treasury (BTr). All VAT and customs duty payments pertaining to 
15 
the importation of registered domestic enterprises located in the thirty (30) poorest 
16 
provinces or LDAs of capital equipment or raw materials shall be deposited in the TLA 
17 
for the purpose of fundin(;1 valid V AT and customs duty refund claims. The claims for V 
18 
AT and customs duty refunds shall be made by the registered domestic enterprise to 
19 
the DOF which, in turn, sllall process, approve and release tile VA T and customs duty 
20 
refund. 
21 
The VAT and customs duty paid on imported capital equipment may be refunded: 
22 
Provided, That the capiltal equipment is being used by the registered domestic 
23 
enterprise pursuant to its registered activity. 
24 
The amount of VAT and customs duty refund on a particular shipment of raw 
25 
materials shall be equival'Elrlt to the proportion of raw materials used in the production to 
26 
the total raw materials imported multiplied by the amount of VAT and customs duty paid 
27 
on such importation. No claim for refund shall be allowed on VAT and customs duty 
28 
paid on raw materials which are not or no longer intended to be used in the registered 
29 
activity. 
30 
Registered domesltic enterprises located in the thirty (30) poorest provinces or 
31 
LDAs shall file a claim for V AT and customs duty refund within two (2) years after the 
32 
payment was made. All amounts paid but no longer allowed for refund shall immediately 
33 
accrue to the general fund of the national government. 
34 
All applications for VAT and customs duty refund shall be processed and acted 
35 
upon within thirty (30) days after submission of complete documents. The refund shall 
36 
be in a form of cash or rnanager's/cashier's check payable to the registered domestic 
37 
enterprise. 
38 
In case of dispute under the VA T and customs duty refund mechanism provided 
39 
in this section, the pertinent provisions of the NIRC of 1997, as amended, and the Tariff 
40 
and Customs Code of the Philippines, as amended, shall apply. 
41 
Registered domesllic enterprises located in the thirty (30) poorest provinces or 
42 
LDAs availing of the above incentives shall be subject to the following: (I) that said 
43 
capital equiprnent will be used exclusively by the registered domestic enterprise in its 
44 
registered activity; (2) that the capital equipment where the raw materials, supplies, 
45 
parts and semi-finished products were used would have qualified for tax and duty··free 
46 
importation; and (3) that the approval of the concerned IPA is obtained by tile registered 
47 
domestic enterprise. If the registered domestic enterprise sells, transfers or disposes of 
48 
the capital equipment, the provision of subsection (h) of Section 17 of this Act shall 
49 
apply. 
50 
51 
SEC. 22. Incentives for Private Ecozone Developers. -
Private ecozone 
52 
developers rnay avail of the incentives provided herein as conferred by the PEZA. 
53 
20 


1 
SEC. 23. Incentives for Registered Enterprises in Supply Chain Cities. -
2 
Registered enterprises located in the supply chain cities shall be granted incentives 
3 
provided under Sections 1? and 18 hereof. A registered enterprise under the supply 
4 
chain city engaged in manufacturing may subcontract a portion of its manufacturing 
5 
processes to its affiliated entities outside the Philippines. Moreover, a registered 
6 
enterprise may book sales in the Philippines which sales include others undertaken 
7 
partially outside the Philippines by its affiliated entities. 
8 
9 
SEC.24 Phase-Dilt of ITJ-Ilncentive. - Upon recommendation of the NEDA Board, 
10 
the granting of the ITH incentive to a registered domestic enterprise shall be terminated 
11 
by a joint resolution passed by the Senate and the House of Representatives: Provided, 
12 
That export, agriculture, infrastructure and shipping activities, projects located in the 
13 
thirty (30) poorest provine-as or LDAs and strategic projects as defined under Section 15 
14 
hereof, shall not be coverE~d by the phase-out of the ITH. 
15 
16 
SEC. 25. Non-fiscal Incentives. - Registered enterprises shall be entitled to the 
17 
following non-fiscal incentives: 
18 
(a) Time-bound Processing of Requirement for Doing Business. - All application 
19 
for permits, licenses, authorization and other requirements necessary for doing 
20 
business including application for renewals thereof shall be acted upon by the 
21 
government agency concerned within ten (10) working days from official acceptance 
22 
thereof, otherwise, the same shall be considered automatically approved. For this 
23 
purpose, all government agencies shall be mandated to post in their respective offices, 
24 
the procedural process, documentation requirements and the imposable fees to be paid 
25 
to facilitate the processingl of the application. 
26 
(b) Simplification of Customs and Internal Revenue Procedures. - Customs 
27 
procedures for the importation of equipment, spare parts, raw materials and supplies, 
28 
exports of processed proclucts by registered enterprises shall be simplified by the BOC. 
29 
The BIR shall simplify internal revenue procedures for the availment of incentives 
30 
provided herein for registered enterprises. 
31 
(c) Reduction and Harmonization of Documentary Requirements Submitted to 
32 
Government Agencies. - The Board shall formulate guidelines for the reduction and 
33 
harmonization of related dlocumentary requirements submitted to government agencies. 
34 
35 
SEC. 26. Entitlement to Investor's Visa by a Foreign National. -
A foreign 
36 
national who invests an amount of at least US$150,000, either in cash and/or 
37 
equipment, in a registered enterprise shall be entitled to an Investor's Visa: Provided, 
38 
That: 
39 
(a) He is at least ei!ghteen (18) years of age; 
40 
(b) He has not been convicted of a crime involving moral turpitude; 
41 
(c) He is not afflicted with any loathsome, dangerous or contagious disease; and 
42 
(d) He has not been institutionalized for any mental disorder or disability: 
43 
Provided, further, That as a holder of the Investor's Visa, an alien shall be entitled 
44 
to reside in the Philippines while his investment subsists. For this purpose, he should 
45 
submit an annual report, in the form duly prescribed for the purpose, to prove that he 
46 
has maintained his invElstments in the country. Should said alien withdraw his 
47 
investments from the Philippines, then the Investor's Visa issued to him shall 
48 
automatically expire. 
49 
The minimum amount for investment provided for under this Code shall be made 
50 
applicable to visas granted to investors by the BOI, the PEZA, the SBMA, the CDC, the 
51 
ruMC, the PPMC, the BTPI, the CEZA, the ZCSEZA, the PIA, the ASEZA, and other 
52 
IPAs that may be created under the law. 
21 


1 
The investment amount heretofore stated shall be subject to a periodic review 
2 
every three (3) years by the BOI. 
3 
4 
SEC. 27. Governing Incentive Provision for IPAs. - All existing and future IPAs 
5 
vested with the power to confer and administer incentives sllall offer incentives provided 
6 
in this Code: Provided, That the incentives granted under this Code to a registered 
7 
enterprise shall be applicable to the extent of tile registered activity or project. 
8 
9 
SEC. 28. Relationship of IPAs and the 801 and Other Government Agencies. - IP 
10 
As shall maintain their functions as provided for in their respective Charters except to 
11 
the extent that these havH been modified by the provisions of this Code. For purposes 
12 
of efficient database on investment statistics and other investment data and information, 
13 
all IP As are required to submit to the BOI all investment data and information and such 
14 
other related data semi-annually or as may be required. 
15 
16 
CHAPTEH III 
17 
HEGISTHATION OF ENTERPHISES 
18 
19 
SEC. 29. Qualifications of a Registered Enterprise. - To qualify for registration 
20 
and be entitled to avail of .incentives, an applicant must satisfy the following conditions: 
21 
(a) He is a citizen of the Philippines. In case the applicant is a natural person, or 
22 
in case of a corporation or partnership or any other association, regardless of 
23 
nationality, it must be or(lanized and/or registered and existing under Philippine laws 
24 
and that it must comply with all the qualifications provided under this Code: Provided, 
25 
however, That for purposes of this Code and any law to the contrary notwithstanding, a 
26 
natural-born ASEAN citizen or a corporation effectively controlled by ASEAN citizens, or 
27 
a corporation organized in any ASEAN country shall be considered as a Philippine 
28 
investor: Provided. furlhGr, That the investment is made in an activity where the 
29 
Constitution does not speGifically require Filipino partiCipation; 
30 
(b) The activity it will engage in is not within the activities reserved by the 
31 
Constitution to Philippine citizens or corporations owned and controlled by Philippine 
32 
citizens; 
33 
(c) It will engage in an activity included in the IPP or in an export activity or in an 
34 
activity located in supply chain cities, thirty (30) poorest provinces or LDAs or in an 
35 
activity considered as "strategic project". 
36 
(d) It will infuse new investments. For this purpose "new investments" shall mean 
37 
a new enterprise infusing new investments and undertaking new activity. However, an 
38 
enterprise with an existin(l operation may be qualified for registration if it will undertake 
39 
new activity. Further, an existing enterprise undertaking the same activity that shall 
40 
infuse additional investments of at least fifty percent (50%) of its present actual 
41 
investments shall be deemed to be "new investments" but only to the extent of such 
42 
additional investments. Furthermore, government assets that will be privatized shall be 
43 
deemed "new investments"; and 
44 
(e) If the applicant is engaged or proposes to engage in undertakings or activities 
45 
other than the registered projects, it shall install an accounting system adequate to 
46 
identify the investments, revenues, costs, and profits or losses of each registered 
47 
project undertaken by the enterprise separately from the aggregate investment, 
48 
revenues, costs and profits or losses of the whole enterprise, or to establish a separate 
49 
corporation for each registered project if the IPAs should so require to facilitate proper 
50 
implementation of this Code. 
5! 
52 
53 
22 


CHAPTER IV 
2 
BASIC RIGHTS AND GUARANTEES OF REGISTERED ENTERPRISES 
3 
4 
SEC. 30. Protection of Investments. - All investors and registered enterprises are 
5 
entitled to the basic rights and guarantees provided in the Constitution. Among other 
6 
rights recognized by the Government of the Philippines are the following: 
7 
(a) Repatriation of Investments. - In the case of foreign investments, the right to 
8 
repatriate tile entire proceeds of the liquidation of the investment in the currency in 
9 
which the investment was originally made and at the exchange rate prevailing at the 
10 
time of repatriation, subject to the provisions of Section 74 of Republic Act No. 265, 
11 
otherwise known as the "Central Bank Act", as amended. 
12 
For investments made pursuant to Executive Order No. 32, series of 1986, 
13 
entitled "Directing the Establishment of a Program for the Conversion of Philippine 
14 
External Debt into Equity Investments", and its implementing rules and regulations, the 
15 
repatriation of investments shall be as provided therein. 
16 
(b) Remittance of Earnings. - In the case of foreign investments, the right to remit 
17 
earnings from the investment in the currency in which the investment was originally 
18 
made and at the exchange rate prevailing at the time of remittance, subject to the 
19 
provisions of Section 74 of Republic Act No. 265, as amended 
20 
For investments made pursuant to Executive Order No. 32, series of 1986, and 
21 
its implementing rules and regulations, the remittance of earnings shall be as provided 
22 
therein. 
23 
(c) Foreign Loans and Contracts. - The right to remit at the prevailing rate at the 
24 
time of remittance such sums as may be necessary to meet the payments of interest 
25 
and principal on foreign loans and foreign obligations arising from technological 
26 
assistance contracts at the exchange rale prevailing at the time of remittance, subject to 
27 
the provisions of Section 14 of Republic Act No. 265, as amended. 
28 
(d) Freedom from Expropriation. -, There shall be no expropriation by the 
29 
government of the prop1erty represented by investments or of the property of the 
30 
enterprise except for public use, public interest, lawful purpose, or in the interest of 
31 
national welfare or defense and upon payment of just compensation. 
32 
In such cases, foreign investors or enterprises shall have the right to remit sums 
33 
received as compensation for the expropriated property in the currency in which the 
34 
investment was originally made and at the exchange rate at the time of remittance, 
35 
subject to the provisions of Section 74 of Republic Act No. 265, as amended. 
36 
(e) Requisition of Investment. - There shall be no requisition of the property 
37 
represented by the investment or of the property of enterprises, except in the event of 
38 
war or national emergencv and only for Ihe duration thereof. 
39 
Just compensation shall be determined and paid either at the time of reqUisition 
40 
or immediately after cessation of the state of war or national emergency. Payments 
41 
received as compensation for the requisitioned property may be remitted in the currency 
42 
in which the investment was originally made and at the exchange rate prevailing at the 
43 
time of remittance, subject to the provisions of Section 74 of Republic Act No. 265, as 
44 
amended. 
45 
46 
CHAPTER V 
47 
ADMINISTRATION OF INCENTIVES 
48 
49 
SEC. 31. Application for Registration. - Applications shall be filed with an IPA or 
50 
any other government office authorized by Ihe BOI to accept applications, recorded in a 
51 
registration book and the date appearing therein and stamped on the application shall 
52 
be considered the date of official acceptance. All applications and their supporting 
53 
documents filed under this Code shall be confidential and shall not be disclosed to any 
23 


--------------------------
1 
person except with the consent of the applicant or upon an order of a court of 
2 
competent jurisdiction. 
3 
4 
SEC. 32. No Double Registration of Enterprises. - Export or domestic enterprises 
5 
shall not be allowed to register their export or domestic activity in more than one (1) IP 
6 
A. In the event tllat an enterprise shall transfer to another IPA, only the remaining 
7 
unutilized incentives shall be granted to the enterprise or the transferee, vendee or 
8 
assignee. 
9 
10 
SEC. 33. Criteria for Evaluation of Application. - The following criteria sllall be 
11 
considered in the evaluation of applications for registration under a preferred area: 
12 
(a) Impact of the project on the overall economy; 
13 
(b) Overall viability of the project; 
14 
(c) The extent of employment generation; 
15 
(d) The extent to which technological advances are applied and adopted to local 
16 
conditions; and 
17 
( e) Such other criteria as the Board may determine. 
18 
19 
SEC. 34. Environmental Protection and Corporate Social Responsibility. - Every 
20 
registered enterprise shall prepare a Program for Environmental Protection and 
21 
Corporate Social Responsibility (CSR) covering the period for its entitlement to fiscal 
22 
incentives. Such Program shall be undertaken on a per registration basis and sllall be 
23 
submitted as an accompanying document to the application for registration to be 
24 
submitted to tile appropriate IPA. 
25 
The environmental program shall include activities such as, but not limited to, 
26 
requiring registered firms to plant trees. 
27 
For the CSR activities, the registered enterprise shall align such activities with 
28 
the priority programs and projects of the National Anti-Poverty Commission and other 
29 
special laws sucll as Republic Act No. 7942 or the Philippine Mining Act of 1995, as 
30 
amended and DOE EnerglY Regulation 1-94. 
31 
The amount spent for the CSR activities shall be reflected in the Notes to the 
32 
Audited Financial Statemonts. 
33 
34 
SEC. 35. Approval and Rogistration Procedures. - The IPA is authorized to adopt 
35 
rules and regulations to facilitate action on applications filed with it; prescribe criteria for 
36 
the evaluation of applications; devise standard forms for tile use of applicants and 
37 
delegate to the regional offices of the DTI ttle authority to receive and process 
38 
applications for enterprises located in their respective regions. 
39 
Applications filed slhall be considered automatically approved if not acted upon by 
40 
the IPA within ten (10) working days from official acceptance thereof. Deferment by the 
41 
IPA shall be considered as an official action: 
42 
Provided, however; That the IPA may defer action to a specific application not 
43 
more than twice: Provideei, finally, That the IPA shall act upon the application within ten 
44 
(10) working days from compliance with the cause of the last deferment. 
45 
46 
SEC. 36. Certificate of Registration. - A registered enterprise under this Code 
47 
shall be issued a Certificate of Registration under the seal of the IPA and the Signature 
48 
of its Chairman and/or such other official or officer of the IPA as it may empower and 
49 
designate for the purpose. The certificate sllall be in such form and style as the IPA may 
50 
determine and shall state, among other matters: 
51 
(a) The name of the registered enterprise; 
52 
(b) The activity in which the registered enterprise is proposing to engage; and 
24 


1 
(c) The terms and conditions to be observed by the registered enterprise by 
2 
virtue of the registration. 
3 
4 
SEC. 37. Validity of Registration. - The registration shall be valid for a period of 
5 
twenty (20) years from the date of start of commercial operation except on certain 
6 
industries as may be determined by the Board and those export··oriented activities that 
7 
are registered with the (PAS. 
8 
9 
SEC. 38. Extension of Period of Availment of Incentives. - The availment period 
10 
of the incentives provided herein may be extended by the concerned IPA in the event 
II 
that the registered enterprise has suffered operational force majeure or losses that have 
12 
impaired the viability of the registered activity. 
13 
14 
SEC. 39. Administration and Implementation of Incentives. - The BOI, the PEZA 
15 
and· the other IPAs shall be responsible for the administration and implementation of 
16 
incentives granted to their respective registered enterprises. 
17 
18 
TITLE IV 
19 
FINAL PHOVISIONS 
20 
21 
SEC. 40. Vested r?ight. - Any provision of law to the contrary notwithstanding, 
22 
incentives granted to existing registered enterprises pursuant to contracts or 
23 
agreements entered into with government instrumentalities/corporations shall continue 
24 
to be legally binding in accordance with the terms and conditions stated in their 
25 
respective contracts or agreements, as provided under existing laws. 
26 
27 
SEC. 41. Authority to Retain Funds. - Hegistered enterprises availing of fiscal 
28 
incentives, except those located in the thirty (30) poorest provinces or LDAs, shall be 
29 
assessed with a maximum fee of one percent (1 %) of the amount of incentives granted. 
30 
Said amount shall automatically accrue to the Board of Investments to be allotted for 
31 
investment promotions aGtivities and other special projects to achieve the objectives of 
32 
this Code, subject to the usual accounting and auditing rules and procedures. 
33 
34 
SEC. 42. Protection of the Environment. - The IP As, in coordination with the 
35 
appropriate agencies, shall take appropriate steps to enact the proper measures for the 
36 
protection of the environment, and shall coordinate with the Environmental Management 
37 
Bureau of the Department of Environment and Natural Resources (EMB-DENR) to 
38 
avoid undue delay in the issuance of the required Environmental Compliance Certificate 
39 
(ECC): Provided, howev,9r, That applications for environmental clearances, permits, 
40 
and/or licenses of registered enterprises shall be acted upon by the appropriate 
41 
government agency within thirty (30) days from date of official acceptance. In the event 
42 
that the appropriate government agency failed to act within the aforementioned date, 
43 
the application for the said environmental requirement shall be deemed complied with 
44 
for purposes of operation of the registered activity. 
45 
46 
SEC. 43. Appeals. - All orders or decisions of the BOI or the IPA in cases 
47 
involving the provisions of this Code shall immediately be executory. No appeal from the 
48 
order or decision of the BOI or the IP A by the party adversely affected shall stay such 
49 
order or decision, unless a supersedeas bond equivalent to the amount stated in the 
50 
order or decision is posted by the appellant. 
51 
All appeals involving cases decided by the 801 or the IPA, except as provided in 
52 
the next succeeding paragraph, shall be filed with the Court of Appeals within fifteen 
53 
(15) days from receipt of notice of the order or decision or of the denial of the appellant's 
25 


motion for new trial or reconsideration. Within the same period, the aggrieved party may 
2 
file a motion for reinvestigation or reconsideration. Only orie (1) motion for 
3 
reconsideration shall bEl allowed, subject to the posting of the aforementioned 
4 
supersedeas bond which shall be limited to cash and/or surety bond from a BOI-
5 
accredited bonding company. 
6 
In cases involving Ilhe denial of an application for registration, the party adversely 
7 
affected by such denial may appeal the same to the Office of the President within thirty 
8 
(30) days from receipt of notice of the order denying the application for registration. 
9 
Where an appeal has bElen filed, said order or decision shall be final and executory 
10 
ninety (90) days after the perfection of the appeal, unless reversed. 
II 
12 
SEC. 44. Suspension- and Forfeiture of Incentives of Registered Enterprises, 
13 
Refund and Penalties. - When there is probable cause to believe that the registered 
14 
enterprise has violated itls registration terms and conditions, the 801 or the IP A may 
15 
suspend its availment of incentives, until proven otherwise. The BOlar the IPA may 
16 
impose fines and penalties and/or forfeit the incentives granted to its registered 
17 
enterprises whenever there are violations of the registration terms and conditions by the 
18 
laiter, without prejudice to tile cancellation of the registration of said enterprise. 
19 
In case of cancellation of the Certificate of Registration granted under this Code, 
20 
the BOI or the IPA may, in appropriate cases, require the refund of incentives availed of 
21 
and impose corresponding fines and penalties. Any enterprise which violates any 
22 
provision of this Code, its implementing rules and regulations, the terms and conditions 
23 
of its registration, or of any lawful directive of the BOI or the IPA, shall be subject to a 
24 
fine not to exceed Onl3 million pesos (P1,000,000.00), wittlout prejudice to the 
25 
disapproval of its application for registration or cancellation of its registration: Provided, 
26 
That any willful commission of fraudulent misrepresentation in its application for 
27 
registration or submission of reports or gross violation of this 
Code and its 
28 
implementing rules and r€!gulations, a fine of at least One million pesos (P1 ,000,000.00) 
29 
but not to exceed Ten lTIilllion pesos (Pi 0,000,000) shall be imposed, in addition to other 
30 
penalties that may be imposed by the 801 or the IPA. 
3l 
The IPAs shall prepare a schedule of fines and penalties to be imposed on erring 
32 
registered enterprises depending on the violation incurred, which lTIay be reduced in 
33 
exceptional cases. 
34 
Responsible officElrs of such enterprises, including duly appointed external 
35 
consultants-agents who knowingly commit, aid or abet the commission of any of the 
36 
acts mentioned above, shlall be subject to a fine of not less than One hundred thousand 
37 
pesos (P100,000.00) but not more than Three Ilundred thousand pesos (P300,000.00) 
38 
without prejudice to disqualification from appearing or doing business with the 801 or 
39 
any IPA. 
40 
Government officers and employees who participate directly or indirectly in the 
41 
commission of the foregoing acts shall likewise be liable to a fine of not less than One 
42 
hundred thousand pesos (Pi00,000.00) but not more than Three hundred thousand 
43 
pesos (P300,000.00), in addition to any criminal and administrative penalties imposable 
44 
under the Civil Service Law, Revised. Penal Code, Republic Act No. 3019, otherwise 
45 
known as the "Anti-Graft .And Corrupt Practices Act", Republic Act No. 6713, otherwise 
46 
known as the "Code Of Conduct And Ethical Standards For Public Officials", and other 
47 
applicable laws. 
48 
If the offender is a foreign national, in addition to the imposable fines and 
49 
penalties above, the foregoing acts shall be grounds for his summary deportation. 
50 
51 
SEC. 45. Disposition of Savings from the implementation of this Act. - The total 
52 
amount of savings to be generated from the implementation of this Act shall be 
26 


1 
allocated annually and used exclusively for the provision of scholarships under the 
2 
CHEO. 
3 
Such allocations shall be segregated as separate trust funds by the National 
4 
Treasury and shall be over and above the annual appropriations for similar purposes. 
S 
The earmarking provided under this provision shall be observed for ten (10) 
6 
years starting from the effectivity of this Act. 
7 
8 
SEC. 46. Implementing Rules and Regulations (lRR). - The OTI, the OOF, the 
9 
NEDA, the OBM, the 1301, the PEZA, other IPAs and other concerned government 
10 
agencies, shall promulgate rules and regulations to implement the intent and provisions 
11 
of this Code within one hundred twenty (120) days from the effectivity of this Code. 
12 
Such rules and regulations shall take effect fifteen ('15) days following its publication in a 
13 
newspaper of general circulation in the Philippines. 
14 
15 
SEC. 47. Transitorv Provision. - The incentives under Section 1'1 of this Act shall 
16 
be applicable to existing BOI-registered export enterprises, particularly the tax and duty-
17 
free importation of equipment and raw materials by the said BOI-registered export 
18 
enterprises. Until the IRR of this Act take effect, the present rules and regulations under 
19 
the old investments laws shall apply to the extent that they are not inconsistent with the 
20 
provisions of this Act. 
21 
22 
SEC. 48. Separability Clause. - The provisions of this Code are hereby declared 
23 
to be separable and, in the event any of such provisions is declared unconstitutional, 
24 
the other provisions which are not affected thereby, shall remain in force and effect. 
25 
26 
SEC. 49. Repealing Clause. - The following provisions are hereby repealed: 
27 
(a) Books I, V and VI of Executive Order No. 226, series of 1987, otherwise 
28 
known as "The Omnibus Investments Code of 1987"; 
29 
(b) Section 24 of Hepublic Act No. 7916, otherwise known as "An Act Providing 
30 
for the Legal Framework and Mechanisms for the Creation, Operation, Administration 
31 
and Coordination of Special Economic Zones in the Philippines, Creating for the 
32 
Purpose the Philippine Economic Zone Authority (PEZA), and for other Purposes 
33 
(Special Economic Zone Act of 1995)"; 
34 
(c) Section 17(1), (2), (3), (4), (5), (6), (7), (8) and Section 18 (a), (b) and (c) of 
35 
Presidential Decree No. 66, otherwise known as "Creating the Export Processing Zone 
36 
Authority and Revising RElpublic Act No. 5490"; 
37 
(d) Fourth paragraph of Presidential Decree No. 529 (restored by FIRB 
38 
Resolution 
19-87), 
otherwise 
known 
as 
"Granting 
to 
Petroleum 
Exploration 
39 
Concessionaires under the PetroleulTl Act of 1949 Exemption from Customs Duty and 
40 
Compensating Tax on Importations of Machinery and 
Equipment, Spare Parts and 
41 
Materials Required for Their Exploration Operations"; 
42 
(e) Sections 8, 9 and the second sentence of the first paragraph and second 
43 
paragraph of Section 10 of Presidential Decree No. 538, otherwise known as "Creating 
44 
and Establishing the PHIVIDEC Industrial Authority and Making Its Subsidiary Agency 
45 
of the Philippine Veterans Investment Development Corporation Defining Its Powers, 
46 
Functions and Responsibilities, and for Other Purposes"; 
47 
(f) Section 36(e) and (f) (1) and (2) of Presidential Decree No. 705, otherwise 
48 
known as the "Revised Forestry Code"; 
49 
(g) Section 16 (c) and (d) and Section '17 of Republic Act No. 7844, otherwise 
50 
known as "An Act to Develop Exports as a Key Towards the Achievement of the 
51 
National Goals Towards the Year 2000 (Export Development Act of 1994)"; 
52 
(h) Chapter XVI, Sections 90, 92, 93(a) 2 and (b) of Republic Act No. 7492, 
53 
otherwise known as the "Philippine Mining 3 Act of 1995"; 
27 


I 
(i) Section 9 of Republic Act No. 8479, otherwise known as the "Downstream Oil 
2 
Deregulation Act of 1998"; 
3 
(j)Chapter II, Article II, Section 35(b), (c) and (d) of Republic Act No. 8550, 
4 
otherwise known as "The Philippine Fisheries Code of 1998"; 
5 
(k) Section 5 of Proclamation No. 216, otherwise known as "Creating and 
6 
Designating the Area Covered by the Former Wallace Air Station and Contiguous Areas 
7 
in Para Point as the Pam Point Special Economic and Freeport Zone and Transferring 
8 
Lands to the Bases Conversion Development Authority pursuant to Republic Act No. 
9 
7227"; 
10 
(I) Section 6 of Proclamation No. 984, otherwise known as "Creating and 
11 
Designating the Municipality of Morong, Province of Bataan, including the Area of 
12 
Philippine Refugee Processing Center Complex (PRPCC) as the Morang Special 
13 
Economic Zone pursuant to Republic Act No. 7227 and transferring the land comprising 
14 
the PRPCC to the Bases Conversion Development Authority (BCDA)"; 
15 
(m) Section I and Section 2(a) and (b) and Section 6 of Executive Order No. 528, 
16 
series of 2006, Amendingl Executive Order No. 31, series of 2004, "Reducing the Rates 
17 
of Duty on Capital Equipment, Spare Parts and Accessories Imported by BOI-registered 
18 
new and Expanding Enterprises"; 
19 
(n) Section 4(e) of Republic Act No. 7903, otherwise known as "Zamboanga City 
20 
SpeCial Economic Zone Alct of 1995"; and 
21 
(0) Section 1 of E.xecutive Order No. 619, otherwise known as "Creating and 
22 
Designating Special Economic Zones Pursuant to Republic Act No. 7916, as Amended 
23 
by Republic Act No. 8784, in Relation to Republic Act No. 7227, as Amended by 
24 
Republic Act No. 9400, Inside the Clark Freeport Zone". 
25 
All other laws, acts, decrees, orders and issuances or provisions thereof 
26 
inconsistent with any of the provisions of this Act are hereby repealed or modified 
27 
accordingly. 
28 
29 
SEC. 50. Survivor Clause. - (a) The provIsions of this Act to the contrary 
30 
notwithstanding, the following laws, decrees and orders shall continue to have full force 
31 
and effect: 
32 
(1) Book VI, Article 78 of Executive Order No. 226, series of 1987, otherwise 
33 
known as "The Omnibus Iinvestments Code of 1987"; 
34 
(2) Section '18(f) of Presidential Decree No, 66, otherwise known as "Creating the 
35 
Export Processing Zone Authority and Revising Republic Act No. 5490"; 
36 
(3) Section 23 of Republic Act No. 7916, otherwise known as "An Act Providing 
37 
for the Legal Framework and Mechanisms for the Creation, Operation, Administration 
38 
and Coordination of Special Economic Zones in the Philippines, Creating for the 
39 
Purpose the Philippine Economic Zone Authority (PEZA), and for other Purposes 
40 
(Special Economic Zone Act of 1995)"; and 
41 
(4) Section 'I of Republic Act No, 9281 entitled, "An Act to Strengthen Agriculture 
42 
and Fisheries ModernizHtion in the Philippines by Extending the Effectivity of Tax 
43 
Incentives and its Mandated Funding Support, Amending for this Purpose Sections 109 
44 
and 112 of Republic Act No. 8435"; 
45 
(b) The provisions of this Act and Republic Act No. 9337 to the contrary 
46 
notwithstanding, the following laws, decrees Hnd orders shall continue to have full force 
47 
and effect: 
48 
(1) Section 10(1) 1:0 (6) of Republic Act No. 7156, otherwise known as "An Act 
49 
Granting Incentives to Mini-Hydro Electric Power Developers and for other Purposes 
50 
(Mini-Hydroelectric Incentive Act)"; 
51 
(2) Sections 10, 1H(a), (b) and (c) and Section 17(a) to (e) of Presidential Decree 
52 
No. 972, as amended by Presidential Decree No. 1174, otherwise known as 
28 


"Promulgating an Act to Promote an Accelerated Exploration, 
Development, 
2 
Exploitation, Production and Utilization of Coal"; 
3 
(3) Section 12 of Presidential Decree No. 87, otherwise known as "An Act to 
4 
Promote the Discovery and Production of Indigenous Petroleum, and Appropriating 
5 
Funds Therefor"; 
6 
(4) Section 4(a) and (d) of Presidential Decree No. 1442, as restored by FIRE 
7 
Resolution 19-87, otherwise known as "An Act to Promote the Exploration and 
8 
Development of Geothermal Resources"; and 
9 
(5) Chapter II, Section 4(A), (8), (C) and (D); and Chapter VIII, Section 19(A), 
10 
(8) and (C) of Republic J\ct No. 9295, Entitled "An Act Promoting the Development of 
11 
Philippine Domestic Shipping, Shipbuilding, Ship repair and Ship Breaking, Ordaining 
12 
Reforms in Government Policies Towards Shipping in the Philippines and for other 
13 
Purposes"; 
14 
Provided, That grantees or operators under their respective laws, decrees and 
15 
orders shall have the option to avail of the incentives provided under this Act. 
16 
17 
SEC. 51. Effectivity. - This Act shall take effect fifteen (15) days following its 
18 
publication in the Official Gazette or in a newspaper of general circulation, whichever is 
19 
earlier. 
20 
21 
Approved, 
29