Republic of the Philippines
House of Representatives
Quezon City
EIGHTEENTH CONGRESS
First Regular Session

House BILL No.3356

INTRODUCED BY REPRESENTATIVE ANN K. HOFER

EXPLANATORY NOTE

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

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

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

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

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 The outdated tax code lacks adequate provisions to address transfer pricing and other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

4. Ironically, the DOF, which is the steward of the government's fiscal health and
mandated to formulate sound fiscal policy, has very little involvement in the
formulation and grant of tax incentives to the registered business enterprises. This is
contrary to international best practice where the finance minister holds a significant role
in the decision-making process regarding the design and grant of tax incentives.

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


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

With tax incentives modernized and the tax base expanded, the corporate income tax
rate can be reduced to correct the current inequitable and unjust system that benefits a few
industries while negatively impacting the rest of the business community, which pay the regular
corporate income tax rate. The reduction of the corporate income tax rate would be a very much
welcome relief that will benefit all corporate taxpayers, whether large or small, and whether
domestic or foreign, and will enhance the competitiveness of our investment climate. In the
end, this bill aims to benefit not just the government, but more importantly, the Filipino
taxpayers who have been diligently complying with their tax obligations by making the tax
system more progressive, efficient, and simpler.

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

ANN K. HOFER
2 District, Zamboanga Sibugay


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 3356

Introduced by REP. ANN K. HOFER

AN ACT
AMENDING SECTIONS 4, 5, 20, 22, 27, 28, 34, 40, 50, 73, 112, 117, 204, 222, 237, 237-
A, 255, 256, 257, 258, 260, 261, 262, 263, 264, 265. 266, 275, 288, 290 AND ADDING
SECTIONS 6-A 282-A, 291, 292, 293, 294, 295, 296, 297, 298, 299, 300, 301, 301-A, 301-
B, 302, 303, 304, 305, 306, 307, 308, 309, 310, 311, 312, 313, AND 314 UNDER THE
NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR
OTHER PURPOSES

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

SECTION 1. Title, - This Act shall be known as the “Tax Reform for Attracting Better and High-
quality Opportunities,” or TRABAHO."

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

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

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

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

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

MA)XXX

“(B) xxx

"(C) xxx

“(D) xx; [and]

“(E) xx x[.J; AND

“(F) IN CASE THE INFORMATION OR RECORDS REQUESTED ARE NOT

FURNISHED WITHIN THE PERIOD PRESCRIBED IN THE WRITTEN NOTICE,

OR WHEN THE INFORMATION OR RECORDS SUBMITTED ARE



INCOMPLETE, THE COMMISSIONER OR HIS DULY AUTHORIZED
REPRESENTATIVE, SHALL ISSUE A SUBPOENA DUCES TECUM STATING
THEREIN THE RELEVANT FACTS, SPECIFYING THE PARTICULAR
DOCUMENTS OR RECORDS NOT MADE AVAILABLE AND THE TAXPAYER
LIABLE OB THE THIRD PARTY/OFFICE CONCERNED: PROVIDED, THAT
INFORMATION OR RECORDS DULY RECEIVED OR ALREADY WITHIN THE
CUSTODY OF THE BUREAU SHALL NOT BE COVERED BY ANY SUBPOENA
DUCES TECUM.

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

"THE SUBPOENA DUCES TECUM SHALL BE SERVED THROUGH PERSONAL,
SERVICE, BUT IF NOT PRACTICABLE, IT SHALL BE SERVED BY SUBSTITUTED
SERVICE IN ACCORDANCE WITH THE RULES — OF THE COURT.

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

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

SEC. 4. A new section shall be inserted as Section 6-A of the National Internal Revenue Code of 1997,
as amended, to read as follows:

“Sec, 6-A. Service of Letter of authority, and Assessment Notices Issued by the Bureau. - THE
NOTICE TO THE TAXPAYER HEREIN REQUIRED MAY BE SERVED BY THE
COMMISSIONER OR HIS DULY AUTHORIZED REPRESENTATIVE THROUGH
PERSONAL SERVICE AT HIS REGISTERED ADDRESS. IN CASE PERSONAL
SERVICE IS NOT PRACTICABLE, THE NOTICE SHALL BE SERVED BY
SUBSTITUTED SERVICE IN ACCORDANCE WITH THE RULES OF THE COURT."

SEC. 5. Section 20 of the National Internal Revenue Code of 1997, aa amended, is hereby further
amended to read as follows:

"SEC. 20. Submission of Report and Pertinent Information by the Commissioner. —
“(A) xxx.
“(B) Submission of Tax-related Information to the Department of Finance. ~ The
PROVISIONS OF SECTION 71, NOTWITHSTANDING, THE Commissioner shall, upon
the request of the Secretary of Finance specifically identifying THE NEEDED
INFORMATION AND JUSTIFICATION FOR SUCH REQUEST, FURNISH THE
SECRETARY PERTINENT TAXPAYER INFORMATION: PROVIDED, HOWEVER,
THAT the Secretary and the relevant officers HANDLING — SUCH SPECIFIC
INFORMATION SHALL BE COVERED BY THE PROVISIONS OF SECTION 270.
“[(B)] (C) Report to Oversight Committee. ~ The Commissioner shall, with reference to
Section 204 of this Code, submit to the Oversight Committee referred to in Section 290
hereof, through the Chairmen of the Committee on Ways and Means of the Senate and House
of Representatives, a report on the exercise of his powers pursuant to the said Section, every
six (6) months of each calendar year.”

SEC. 6. Section 22 of the National Internal Revenue Code of 1997, as amended, is hereby further
amended to read as follows:

“SEC. 22. Definitions, — x x x


(A) x00
“(B) xxx
“(C) xxx
“(D) xxx
“(E) The term ‘nonresident citizen” means:

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

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

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

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

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

“xxx”

SEC. 7. Section 27 of the National Internal Revenue Code of 1997, as amended, is hereby further
amended to read as follows:

‘C. 27. Rates of Income Tax on Domestic Corporations. —

“(A) In General. - Except as otherwise provided in this Code, {an income tax of thirty-
five percent (36%)] AN INCOME TAX HATE OF THIRTY PERCENT (30%), is
hereby imposed upon the taxable income derived during each taxable year from all
sources within and without the Philippines by every corporation, as defined in Section
22(B) of this Code and taxable under this Title as a corporation, organized in, or
existing under the laws of the Philippines: (Provided, That effective January 1, 2009,
the rate of income tax shall be thirty percent (30%).] PROVIDED, That the RATE OF
CORPORATE INCOME TAX SHALL BE TWENTY-EIGHT PERCENT (28%)
BEGINNING JANUARY 1, 2021; TWENTY- SIX PERCENT (26%) BEGINNING
JANUARY 1, 2023; TWENTY-FOUR PERCENT (24%) BEGINNING JANUARY 1,
2025; TWENTY-TWO PERCENT (22%) BEGINNING JANUARY 1, 2027; AND
TWENTY PERCENT (20%) BEGINNING JANUARY 1, 2029: PROVIDED,
FURTHER, That the President may advance the scheduled REDUCTION IN THE
CORPORATE INCOME TAX RATE WHEN ADEQUATE SAVINGS ARE
REALIZED FROM THE RATIONALIZATION OF FISCAL INCENTIVES UNDER
TITLE XIII of this Code, as certified by the Secretary of Finance.

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

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


“[Provided, further, That the President, upon the recommendation of the
Secretary of Finance, may, effective January 1, 2000, allow corporations the option to
be taxed at fifteen percent (15%) of gross income as defined herein, after the following
conditions have been satisfied:

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

“Q) A ratio of forty percent (40%) of income tax collection to total tax
revenues;

“@3) A VAT tax effort of four percent (4%) of GNP;

"[(4)A 0.9 percent (0.9%) ratio of the Consolidated Public Sector Financial
Position (CPSFP) to GNP.

“The option to be taxed based on gross income shall be available only to firms
whose ratio of cost of sales to gross sales or receipts from all sources does not exceed
fifty-five percent (55%).

“The election of the gross income tax option by the corporation shall be
irrevocable for three (3) consecutive taxable years during which the corporation is
qualified under the scheme.

“For purposes of this Section, the term “gross income’ derived from business
shall be equivalent to gross sales less sales returns, discounts and allowances and cost
of goods sold. ‘Cost of goods sold’ shall include all business expenses directly incurred
to produce the merchandise to bring them to their present location and use.

“For a trading or merchandising concern, ‘cost of goods sold! shall include the
invoice cost of the goods sold, plus import duties, freight in transporting the goods to
the place where the goods are actually sold, including insurance while the goods are in
transit.

"For a manufacturing concer, ‘cost of goods manufactured and sold! shall
include all costs of production of finished goods, such as raw materials used, direct
labor and manufacturing overhead, freight cost, insurance premiums and other costs
incurred to bring the raw materials to the factory or warehouse. ]

“[In the case of taxpayers engaged in the sale of service, ‘gross income’ means
gross receipts less sales returns, allowances and discounts.}

“(B) Proprietary Educational Institutions and Hospitals.

“XXX,

"Provided, That if the gross income from ‘unrelated trade, business or other
activity’ exceeds fifty percent (50%) of the total gross income derived by such
educational institutions or hospitals from all sources, the tax prescribed in Subsection
(A) hereof shall be imposed on the entire taxable income. For purposes of this
Subsection, the term ‘unrelated trade, business or other activity’ means any trade,
business or other activity, the conduct of which is not substantially related to the
exercise or performance by such educational institution or hospital of its primary
purpose or function. A ‘proprietary educational institution’ is any private school
maintained and administered by private individuals or groups with an issued permit to
‘operate from the Department of Education}, Culture and Sports (DECS)] (DepED), or
the Commission on Higher Education (CHED), or the Technical Education and Skills
Development Authority (TESDA), as the case may be, in accordance with existing laws
and regulations.

"(C) Government-owned or -Controlled Corporations, Agencies or
Instrumentalities. ~ The provisions of existing special or general laws to the contrary


notwithstanding, all corporations, agencies, or instrumentalities owned or controlled
by the Government, except the Government Service Insurance System (GSIS), the
Social Security System (SSS), HOME Development Mutual Fund, the Philippine
Health Insurance Corporation (PHIC), and the local water districts (LWDs) shall pay
such rate of tax upon their taxable income as are imposed by this Section upon
corporations or associations engaged in a similar business, industry, or activity.

“(D) xxx
“(E) xxx."

SEC. 8. Section 28 of the National Internal Revenue Code of 1997, as amended, is hereby further
amended to read as follows:

“SEC. 28. Rates of Income Tax on Foreign Corporations

“(A) Taxon Resident Foreign Corporations. -

“(1)_ InGeneral, — Except as otherwise provided in this Code, a corporation
organized, authorized, or existing under the laws of any foreign country, engaged in trade or
business within the Philippines, shall be subject to an income tax equivalent to [thirty-five
percent (35%)] THIRTY PERCENT (30%) of the taxable income derived in the preceding
taxable year from all sources within the Philippines: (Provided, That effective January 1, 2009,
the rate of income tax shall be thirty percent (30%).] PROVIDED, THAT THE RATE OF
CORPORATE INCOME TAX SHALL BE TWENTY-EIGHT PERCENT (28%)
BEGINNING JANUARY 1, 2021; TWENTY-SIX PERCENT (26%) BEGINNING
JANUARY 1, 2023; TWENTY-FOUR PERCENT (24%) BEGINNING January 1, 2026;
twenty-two percent (22%) BEGINNING JANUARY 1, 2027; AND TWENTY PERCENT
(20%) BEGINNING JANUARY 1, 2029: PROVIDED, further, That the President may
advance the SCHEDULED REDUCTION IN THE CORPORATE INCOME TAX RATE
WHEN ADEQUATE SAVINGS ARE REALIZED FROM THE RATIONALIZATION OF
FISCAL INCENTIVES UNDER Title XIII of this Code, as certified by the Secretary of
Finance.

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

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

"[Provided, however, That a resident foreign corporation shall be granted the option to
be taxed at fifteen percent (15%) on gross income under the same conditions, as provided in
Section 27(A).]

"(2) xxx
(3) xxx

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


toa final tax at the rate of ten percent (10%).

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

“{(5)] (4) Tax on Branch Profits Remittances. - Any profit remitted by a branch to its
head office shall be subject to a tax of fifteen percent (15%) which shall be based on the total
profits applied or earmarked for remittance without any deduction for the tax component
thereof ((except those activities which are registered with the Philippine Economic Zone
Authority)] xxx “1(6)] (5) Regional or Area Headquarters and Regional Operating
Headquarters of Multinational Companies. ~

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

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

"Provided, That regional operating HEADQUARTERS SHALL BE SUBJECT TO
THE REGULAR CORPORATE INCOME TAX TWO (2) YEARS FROM THE
EFFECTIVITY OF THIS ACT.

“1(7)1 (6) Tax on Certain Incomes Received by a Resident Foreign Corporation. ~
“(@) Interest from Deposits and Yield or any other Monetary Benefit from
Deposit Substitutes, Trust Funds and Similar Arrangements and Royalties. — Interest
from any currency bank deposit and yield or any other monetary benefit from deposit
substitutes and from trust funds and similar arrangements and royalties derived from
sources within the Philippines shall be subject to a final income tax at the rate of twenty
percent (20%) of such interest: Provided, however, That interest income derived by a
resident foreign corporation from a depository bank under the expanded foreign
currency deposit system shall be subject to a final income tax at the rate of [seven and
one-half percent (7>/s%)] FIFTEEN PERCENT (15%) of such interest income.

“(b) Income Derived under the Expanded Foreign Currency Deposit System.

xxx

“(©) Capital Gains from Sale of Shares of Stock Not Traded in the Stock
Exchange. — 4 final tax at the rate[8 prescribed below] OF FIFTEEN PERCENT
(15%) is hereby imposed upon the net capital gains realized during the taxable year
from the sale, baiter, exchange or other disposition of shares of stock in a domestic
corporation except shares sold or disposed of through the stock exchange:

“{Not over P100,000..... 5%
"On any amount in excess of P100.000..... 10%]

“(d) \ntercorporate Dividends. — xxx
"(B) Tax on Nonresident Foreign Corporation. ~

“(1) In General. - Except as otherwise provided in this Code, a foreign
corporation not engaged in trade or business in the Philippines shall pay a tax equal to
[thirty-five percent (35%)] THIRTY PERCENT (30%) of the gross income received
during each taxable year from all sources within the Philippines, such as interests,
dividends, rents, royalties, salaries, premiums (except reinsurance premiums),
annuities, emoluments or other fixed or determinable annual, periodic or casual gains,
profits and income, and capital gains, except capital gains subjectto tax under
subparagraph 5(c): [Provided, That effective January 1, 2009, the rate of income tax
shall be thirty percent (30%).] PROVIDED, That the rate of corporate income tax shall



be TWENTY-EIGHT PERCENT (28%) BEGINNING JANUARY 1, 2021;
TWENTY-SIX PERCENT (26%) BEGINNING JANUARY 1, 2023; TWENTY-
FOUR PERCENT (24%) BEGINNING January 1, 2025; twenty-two percent (22%)
BEGINNING JANUARY 1, 2027; AND TWENTY PERCENT (20%) BEGINNING
JANUARY 1, 2029: PROVIDED, further, That the President may advance the
SCHEDULED REDUCTION IN THE CORPORATE INCOME TAX RATE WHEN
ADEQUATE SAVINGS ARE REALIZED FROM THE RATIONALIZATION OF
FISCAL INCENTIVES under Title XIII in of this Code, as certified by the Secretary
of Finance,

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

(3) xxx

(4) xxx

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

“(a) Interest on Foreign Loans, — x x x

“(b) Intercorporate Dividends. — A final withholding tax at the rate of fifteen
percent (15%) is hereby imposed on the amount of cash and/or property dividends
received from a domestic corporation, which shall be collected and paid as provided in
Section 57(A) of this Code, subject to the condition that the country in which the
nonresident foreign corporation is domiciled, shall allow a credit against the tax due
from the nonresident foreign corporation taxes deemed to have been paid in the
Philippines equivalent to [twenty percent (20%)J FIFTEEN PERCENT (15%), which
represents the difference between the regular income tax (of thirty-five percent (35%)]
and the fifteen percent (15%) tax on dividends as provided in this subparagraph:
Provided, That [effective January 1, 2009] EFFECTIVE JANUARY 1, 2019, the credit
against the tax due shall be equivalent to [fifteen percent (15%), which represents] the
difference between the regular income tax RATE [of thirty percent (30%)] and the
fifteen percent (15%) tax on dividends;

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

“Not over P100.000 nn seven S%

“On any amount in excess of P100,000 .... 10%]"

SEC. 9. Section 34 of the National Internal Revenue Code of 1997, as amended, is hereby further
amended to read as follows:

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

“(A) Expenses. ~

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

“XXX

““(B) Interest. —

"(1) In General. - The amount of interest paid or incurred within a taxable year on
indebtedness in connection with the taxpayer’s profession, trade or business shall be
allowed as deduction from gross income: Provided, however, That the taxpayer's
otherwise allowable deduction for interest expense shall be reduced by [forty-two
percent (42%)] THIRTY-THREF. PERCENT (33%) of the interest income subjected
to final tax{: Provided, That effective January 1, 2009, the percentage shall be thirty-


three percent (33%).]: Provided, further, That the following PERCENTAGES SHALL
APPLY IF THE CORPORATE INCOME TAX RATE AS PROVIDED IN
SECTIONS 27(A) AND 28(A)(1) IS ADJUSTED AS FOLLOWS:

“IF RATE IS TWENTY-EIGHT PERCENT (28%), INTEREST EXPENSE
REDUCTION RATE IS TWENTY-NINE PERCENT (29%);

“IF RATE IS TWENTY-SIX PERCENT (26%), INTEREST EXPENSE
REDUCTION RATE IS TWENTY-THREE PERCENT (23%);

“IF RATE IS TWENTY-FOUR PERCENT (24%), INTEREST EXPENSE
REDUCTION RATE IS SIXTEEN PERCENT (16%);

“IF RATE IS TWENTY-TWO PERCENT (22%), INTEREST EXPENSE
REDUCTION RATE IS NINE PERCENT (9%);

“IF RATE IS TWENTY PERCENT (20%), INTEREST EXPENSE
REDUCTION RATE IS ZERO PERCENT (0%).

“Provided, finally, That if the interest INCOME TAX I$ ADJUSTED IN THE.
FUTURE, THE INTEREST EXPENSE REDUCTION RATE SHALL BE
ADJUSTED ACCORDINGLY BASED ON THE PRESCRIBED STANDARD
FORMULA AS DEFINED IN THE RULES AND REGULATIONS TO BE
PROMULGATED BY THE SECRETARY OF FINANCE, UPON THE
RECOMMENDATION OF THE COMMISSIONER.

(2) XXX

“(C) Taxes. —x xx

“(D) Losses, - x x x

“(E) Bad Debts, — xxx

“(F) Depreciation, -xxx

“(G) Depletion of Oil and Gas Wells and Mines. -xxx

“(H) Charitable and Other Contributions, -xxx

“(I) Research and Development. — xxx

“(J) Pension Trusts, -xxx

“(K) Additional Requirements for Deductibility of Certain Payments, -xxx
“(L) Optional Standard Deduction (OSD). - In lieu of the deductions allowed
under the preceding Subsections, an individual subject to tax under Section 24,
other than a nonresident alien, [may elect a standard deduction in an amount
not exceeding forty percent (40%) of his gross sales or gross receipts, as the
case maybe. In the case of a] AND A corporation CLASSIFIED AS A MICRO,
SMALL AND MEDIUM-SIZED ENTERPRISE AS DETERMINED BY
THE DEPARTMENT OF Trade and Industry and subject to tax under Sections
21(A) and 28(A\(1), [it] may elect a standard deduction in an amount not
exceeding forty percent (40%) of its gross income as defined in Section 32 of
this Code. Unless the taxpayer signifies in his return his intention to elect the
optional standard deduction, he shall be considered as having availed himself
of the deductions allowed in the preceding Subsections. Such election when
made in the return shall be irrevocable for the taxable year for which the return
is made: Provided, That an individual who is entitled to and claimed for the
optional standard deduction shall not be required to submit with his tax return
such financial statements otherwise required under this Code: (Provided,
further, That a general professional partnership and the partner comprising
such partnership may avail of the optional standard deduction only once, either
by the general professional partnership or the partners comprising the
partnership:] Provided, [finally,] FURTHER, That exceptwhen the
‘Commissioner otherwise permits, the said individual shall keep such records
pertaining to his gross sales or gross receipts, or the said corporation shall keep
such records pertaining to his gross income as defined in Section 32 of this
Code during the taxable year, as may be required by the rules and regulations
promulgated by the Secretary of Finance, upon recommendation of the
Commissioner.



“Notwithstanding the provisions of the preceding Subsections, the Secretary
of Finance, upon recommendation of the Commissioner, after a public hearing,
shall have been held for this purpose, may prescribe by rules and regulations,
limitations or ceilings for any of the itemized deductions under Subsections
(A) to (J) of this Section: Provided, That for purposes of determining such
ceilings or limitations, the Secretary of Finance shall consider the following
factors: (1) adequacy of the prescribed limits on the actual expenditure
requirements of each particular industry: and (2) effects of inflation on
expenditure levels: Provided, further. That no ceilings shall further be imposed
on items of expense already subject to ceilings under present faw."

SEC. 10. Section 40(C)(2) of the National Internal Revenue Code of 1997, as amended, is hereby
further amended to read as follows:

“SEC. 40, Determination of Amount and Recognition of Gain or Loss. —

(A) xxx

“(B) xxx

“(C) Exchange of Property. -

“(1) xxx

"(2) Exception. — No gain or loss shall be recognized TO A CORPORATION OR ON ITS
STOCK OR SECURITIES IF SUCH CORPORATION IS A PARTY TO A
REORGANIZATION AND EXCHANGES PROPERTY, [if] in pursuance of a plan of [merger
or consolidation) REORGANIZATION SOLELY FOR STOCK OR SECURITIES IN
ANOTHER CORPORATION THAT IS A PARTY TO THE REORGANIZATION. A
REORGANIZATION IS DEFINED AS:

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

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

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

"(d) A RECAPITALIZATION; OR
“(e) A REINCORPORATION.

“No gain or loss shall also be recognized if property is transferred to a corporation by a person
in exchange for stock or unit of participation in such a corporation of which as a result of such
exchange said person, alone or together with others, not exceeding four (4) persons, [gains
control of said corporation} AND, IMMEDIATELY AFTER, SUCH PERSON OR PERSONS


ARE IN CONTROL: Provided, That stocks issued for services shall not be considered as issued
in return for property.

"In ALL OF THE ABOVE INSTANCES, THE TRANSACTION OR ARRANGEMENT
MUST BE UNDERTAKEN FOR A LEGITIMATE OR BONA FIDE BUSINESS PURPOSE
AND NOT SOLELY FOR THE PURPOSE OF AVOIDING OR ESCAPING THE BURDEN
OF TAXATION.

“THE PROVISION OF SECTION 60 OF THIS CODE SHALL BE APPLIED AND
ENFORCED IN CASES WHERE THE TRANSACTION OR ARRANGEMENT ENTERED.
INTO IS FOUND TO BE NOT FOR LEGITIMATE OR BONA FIDE BUSINESS PURPOSE.

“Sale or exchanges of property used for business for shares of stock covered UNDER THIS
Subsection shall not be subject to value-added TAX (VAT).

XXX,

SEC. 11. Section 60 of the National Internal Revenue Code of 1997, as amended, is hereby further
amended to read as follows:

"SEC. 50, [Allocation of Income and Deductions. — In the case of two or more organizations,
trades or businesses (whether or not incorporated and whether or not organized in the
Philippines) owned or controlled directly or indirectly by the same interests, the Commissioner
is authorized to distribute, apportion or allocate gross income or deductions between or among
such organization, trade or business, if he determines that such distribution, apportionment or
allocation is necessary in order to prevent evasion of taxes or clearly to reflect the income of
any such organization, trade or business.] AUTHORITY OF THE COMMISSIONER TO
Distribute, Apportion, Allocate, and Impute Income and Deductions to Disregard and
Counteract Tax Avoidance Arrangements. — In CASE OF TWO (2) OR MORE
ORGANIZATIONS, TRADES OR BUSINESSES, WHETHER OR NOT ORGANIZED IN
the Philippines, owned or controlled directly OR INDIRECTLY BY THE SAME INTERESTS,
THE Commissioner is authorized to distribute, APPORTION, allocate, or impute income or
deductions between or among such ORGANIZATIONS, TRADES OR BUSINESSES, IF THE
Commissioner determines that such distribution, apportionment, allocation, or IMPUTATION
IS NECESSARY IN ORDER TO PREVENT AVOIDANCE OF TAXES OR TO CLEARLY
REFLECT THE INCOME OF ANY SUCH ORGANIZATION, TRADE, OR BUSINESS.

“IN CASES WHEN A TRANSACTION OR ARRANGEMENT, WHETHER ENTERED
INTO BY THE PERSON AFFECTED BY THE TRANSACTION OR ARRANGEMENT OB
BY ANOTHER PERSON, THAT DIRECTLY OR INDIRECTLY HAS TAX AVOIDANCE
AS ITS PURPOSE OR EFFECT, WHETHER OR NOT ANY OTHER PURPOSE OR
EFFECT IS ATTRIBUTABLE TO ORDINARY BUSINESS OR FAMILY DEALINGS, IF
THE TAX AVOIDANCE PURPOSE OR EFFECT IS NOT MERELY INCIDENTAL, THE
COMMISSIONER IS AUTHORIZED TO DISREGARD AND CONSIDER SUCH
TRANSACTION OR ARRANGEMENT AS VOID FOR INCOME TAX PURPOSES, AND
MAY ADJUST THE TAXABLE INCOME OP A PERSON AFFECTED BY THE
ARRANGEMENT IN A WAY THE COMMISSIONER THINKS APPROPRIATE, IN
ORDER TO COUNTERACT A TAX ADVANTAGE OBTAINED BY THE PERSON FROM.
OR UNDER THE ARRANGEMENT.

“FOR PURPOSES OF THIS SECTION, THE TERM *TAX AVOIDANCE! INCLUDES: (A)
DIRECTLY OR INDIRECTLY ALTERING THE INCIDENCE OF ANY INCOME TAX; (B)
DIRECTLY OR INDIRECTLY RELIEVING A PERSON FROM LIABILITY TO PAY
INCOME TAX OR FROM A POTENTIAL OR PROSPECTIVE LIABILITY TO FUTURE,
INCOME TAX; OR (C) DIRECTLY OR INDIRECTLY AVOIDING, POSTPONING, OR
REDUCING ANY LIABILITY TO INCOME TAX, OR ANY POTENTIAL OR
PROSPECTIVE LIABILITY TO FUTURE INCOME TAX. THERE IS TAX AVOIDANCE
IN THE AFOREMENTIONED INSTANCES, WHERE THE TRANSACTION OR


ARRANGEMENT IS MOTIVATED BY OBTAINING TAX BENEFIT OR ADVANTAGE
WITH NO COMMERCIAL REALITY OR ECONOMIC EFFECT AND THE USE OF THE
PROVISIONS OF TAX LAWS ON SUCH TRANSACTION OR ARRANGEMENT WOULD
NOT HAVE BEEN THE INTENTION OF THE LAW.”

SEC. 12. Section 73 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

"SEC. 73. Distribution of Dividends or Assets by Corporations. —

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

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

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

“(©)_Liquidating Dividends. — Liquidating DIVIDENDS ARE DIVIDENDS
REPRESENTING THE REMAINING GAINS REALISED OR LOSS SUSTAINED BY THE
STOCKHOLDER IN A COMPLETE LIQUIDATION OR DISSOLUTION BY A
CORPORATION AND SHALL BE CONSIDERED AS TAXABLE INCOME OR A
DEDUCTIBLE LOSS, AS THE CASE MAY BE.

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

“[(D)] (B) Net Income of a Partnership Deemed Constructively Received by Partners. - The
taxable income declared by a partnership fora taxable year which is subject to tax under Section
21(A) of this Code after deducting the corporate income tax imposed therein, shall be deemed
to have been actually or constructively received by the partners in the same taxable year and
shall be taxed to them in their individual capacity, whether actually distributed or not.”

SEC. 13. Section 112(A) and 112(B) of the National Intemal Revenue Code of 1997, as amended, is
hereby further amended to read as follows:

"SEC. 112. Refunds for Tax Credits] of Input Tax. —
“(A) Zero-Rated or Effectively Zero-Rated Sales. — Any VAT-registered person, whose sales
are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable
quarter when the sales were made, apply for {the issuance of a tax credit certificate or] refund
of creditable input tax due or paid attributable to such sales, except transitional input tax, to the
extent that such input tax has not been applied against output tax: Provided, however, That in
the case of zero-rated sales under Section 106(A}(2XaX(1), (2) and {(b) and] Section 108 (B)(1)
and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted
for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP):
Provided, further. That where the taxpayer is engaged in zero-rated or effectively zero-rated
sale and also in taxable or exempt sale of goods or properties or services, and the amount of
creditable input tax due or paid cannot be directly and entirely attributed to any one of the
transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided,
finally, That for a person making sales that are zero-rated under Section 108(B)6), the input


taxes shall be allocated ratably between his zero-rated and non-zero-rated sales,

“(B) Cancellation of VAT Registration. - 4 person whose registration ha9 been cancelled due
to retirement from or cessation of business, or due to changes in or cessation of status under
Section 106(C) of this Code may, within two (2) years from the date of cancellation, apply for
[the issuance of a tax credit certificate for any unused input tax which may be used in payment
of his other internal revenue taxes] REFUND.

SEC. 14, Section 117 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

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

SEC. 15. Section 204 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

“SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit
Taxes. ~ The Commissioner may —

“(A) Compromise the payment of any internal revenue tax, when:

“(1) A reasonable doubt as to the validity of the claim against the taxpayer exists; or

“(2) The financial position of the taxpayer demonstrates a clear inability to pay the assessed
tax.

“The compromise settlement of any tax liability shall be subject to the following minimum
amounts:

“For cases of financial incapacity, a minimum compromise rate equivalent to ten percent (10%)
of the basic assessed tax; and "For other cases, a minimum compromise rate equivalent to forty
percent (40%) of the basic assessed tax.

“Where the basic tax involved exceeds [One] Ten million pesos {(P1.000.000)] (P 10,000,000)
or where the settlement offered is less than the prescribed minimum rates, the compromise shall
be subject to the approval of the Evaluation Board which shall be composed of the
Commissioner and the four (4) Deputy Commissioners.

SEC. 16. Section 222 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

“SEC. 222, Exceptions as to Period of Limitation of Assessment and Collection of Taxes. ~
“(a) xxx

“(b) If before the expiration of the time prescribed in Section 203 for the assessment of the tax,
{both the Commissioner and] the taxpayer [have agreed} APPLIES WITH THE
COMMISSIONER in writing to its assessment after such time, the tax may be assessed within
the period [agreed upon] SPECIFIED IN THE APPLICATION WHICH SHALL NOT
EXCEED SIX (6) MONTHS AT ANY ONE TIME. The FOREGOING period [so agreed upon]
may be extended by subsequent written [agreement] APPLICATION made before the
expiration of the period previously [agreed upon] APPLIED FOR.

“xxx.”

SEC. 17. Section 237 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:


"SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. —
“(A) Issuance. ~ xxx

“Within Eve (5) years from the effectivity of this Act and upon the establishment of a system
capable of storing and processing the required data, the Bureau shall require taxpayers engaged
in the export of goods and services, taxpayers engaged in e-commerce, and taxpayers under the
jurisdiction of the Large Taxpayers Service to issue AND TRANSMIT electronic receipts or sales
‘or commercial invoices (in lieu of manual receipts or sales or commercial invoices] THRU
DESIGNATED ELECTRONIC CHANNELS WITH A PUBLIC CERTIFICATION SYSTEM
ACCREDITED BY THE BUREAU, subject to the rules and regulations to be issued by the
Secretary of Finance upon recommendation of the Commissioner [and after a] following a public
hearing [shall have been] held for this purpose: Provided, That taxpayers not covered by the
mandate of this provision may issue electronic receipts of sales or commercial invoices in lieu of
manual receipts or sales or commercial invoices: PROVIDED, FURTHER, SUBJECT TO THE
RULES AND REGULATIONS TO BE ISSUED BY THE SECRETARY OP FINANCE, THE
COMMISSIONER MAY REQUIRE ANY TAXPAYER TO COMPLY WITH THE
PROVISIONS OF THIS SECTION.

“A PUBLIC CERTIFICATION SYSTEM SHALL REFER TO A DIGITAL PERSONAL
AUTHENTICATION PROGRAM WITH ABILITY TO VERIFY THE IDENTITY OF
ISSUING TAXPAYER AND ATTEST TO THE AUTHENTICITY OF THE INFORMATION
IN THE ELECTRONIC RECEIPTS OR SALES OR COMMERCIAL INVOICES. THIS MAY
INCLUDE THE USE OF DIGITAL SIGNATURE ISSUED BY CERTIFICATION
AUTHORITY AS ACCREDITED BY THE BUREAU OF INTERNAL REVENUE. A
DESIGNATED ELECTRONIC CHANNEL SHALL REFER TO ANY MEDIUM OR PORTAL
IDENTIFIED by the Bureau with an ability to receive the TRANSACTION DATA OF THE
ELECTRONIC RECEIPTS OF SALES OR COMMERCIAL INVOICES FOR ASSIGNMENT
OF AN APPROVED ELECTRONIC TAX TRANSACTION NUMBER.

“AN APPROVED TAX TRANSACTION NUMBER SHALL REFER TO THE UNIQUE
ASSIGNED SERVICE NUMBERS AND/OR LETTERS LINKED TO A VALIDATED SALES
TRANSACTION REPORTED THROUGH THE DESIGNATED ELECTRONIC CHANNEL.

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

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

SEC. 18, Section 237-A of the National Internal Revenue Code of 1997, as amended, is hereby
amended to read as follows:

“SEC. 237-A. Electronic Sales Reporting System. - Within five (5) years from the effectivity
of this Act and upon the establishment of a system capable of storing and processing the
required data, the Bureau shall require taxpayers engaged in the export of goods and services,
and taxpayers engaged in e-commerce and taxpayers under the jurisdiction of the Large
‘Taxpayers Service to USE A SYSTEM CAPABLE OF ISSUING ELECTRONIC RECEIPTS
OR SALES OR COMMERCIAL INVOICES, COLLECT TRANSACTION RECORDS, AND
TRANSMIT THE SAME THROUGH THE DESIGNATED ELECTRONIC CHANNELS OF
‘THE BUREAU IN THE STANDARD FORMAT REQUIRED [electronically report their sales
data to the Bureau through the use of electronic point of sales systems, ] subject to the rules and


regulations to be issued by the Secretary of Finance upon recommendation of the Commissioner
of Internal Revenue: Provided, That the POINT OF SALE (POS) machines, VALUE-ADDED
NETWORK (VAN) TERMINALS, fiscal devices, and fiscal memory devices WITH
CAPACITY TO MAKE SUCH TRANSMISSION shall be at the expense of the taxpayers:
PROVIDED, FURTHER, SUBJECT TO THE RULES AND REGULATIONS TO BE ISSUED
BY the Secretary of Finance, the Commissioner MAY REQUIRE ANY TAXPAYER TO.
COMPLY WITH THE provisions of this Section.

“IN YEAR ONE (1) TO YEAR FOUR (4) OF THE IMPLEMENTATION PERIOD, A
TAXPAYER WHO ADOPTS THE REQUIRED SYSTEM SHALL BE GRANTED A TAX
CREDIT OF 0.1% OF THE PURCHASE VALUE, NET OP VALUE-ADDED TAX, FOR
EVERY ELECTRONIC RECEIPT OR SALE OR COMMERCIAL INVOICE
TRANSMITTED THROUGH THE DESIGNATED ELECTRONIC CHANNELS OF the
Bureau and issued an electronic tax TRANSACTION NUMBER.

“In support of the electronic sales REPORTING SYSTEM, THE BUREAU OF INTERNAL,
Revenue may grant tax incentives for ELECTRONICALLY TRACEABLE PAYMENTS
(ETP) IN THE FORM OF ALLOWABLE DEDUCTIBLE EXPENSE OF UP TO TEN
PERCENT (10%) OF THE ETP MADE BY THE TAXPAYER. AN ANNUAL LIMIT ON
THE ALLOWED ETP DEDUCTIBLE EXPENSE PER TAXPAYER MAY BE SET BY the
‘Commissioner with the approval of the Secretary of Finance.

“Electronically traceable payments refer to credit card, debit card, or other methods of payment
with a system to verify or link the payment to the identity of payor.

“The Bureau may likewise establish a receipt and invoice lottery program for ELECTRONIC
RECEIPTS OR SALES OR COMMERCIAL INVOICES TRANSMITTED THROUGH THE.
DESIGNATED ELECTRONIC CHANNELS OF THE BUREAU AND ISSUED AN
ELECTRONIC TAX TRANSACTION NUMBER.

“The data processing of sales and purchase data shall comply with the provisions of Republic
Act No. 10173, otherwise known as the “Data Privacy Act’ and Section 270 of the NIRC, as
amended, on unlawful divulgence of taxpayer information and such other laws relating to the
confidentiality of information.

The Bureau shall also establish policies, risk management approaches, actions, trainings, and
technologies to protect the cyber environment, organization, and data in compliance with
Republic Act No. 10176 or the ‘Cybercrime Prevention Act of 2012."

SEC. 19. Section 256 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

“SEC. 265. Failure to File Return, Supply Correct and Accurate Information, Pay Tax Withhold
and Remit Tax and Refund Excess Taxes Withheld on Compensation. - Any person required
under this Code or by rules and regulations promulgated thereunder to pay any tax, make a
return, keep any record, or supply correct and accurate information, who willfully fails to pay
such tax, make such return, keep such record, or supply correct and accurate information, or
withhold or remit taxes withheld, or refund excess taxes withheld on compensation, at the time
or times required by law or rules and regulations shall, in addition to other penalties provided
by law, upon conviction thereof, be punished by a fine of not less than [Ten thousand pesos
(P10,000)] ONE HUNDRED THOUSAND PESOS (P100,000) BUT NOT MORE THAN
ONE MILLION TWO HUNDRED THOUSAND PESOS (PI,200,000) and suffer
imprisonment of not less than one (1) year but not more than ten (10) years.

“Any person who attempts to make it appear for any reason that he or another has in fact filed
a return or statement, or actually files a return or statement and subsequently withdraws the
same return or statement after securing the official receiving seal or stamp of receipt of internal
revenue office wherein the same was actually filed shall, upon conviction therefore, be


punished by a fine of not less than [Ten thousand pesos (P10.000) but not more than Twenty
thousand pesos (P20.000)] ONE HUNDRED THOUSAND PESOS (Pi00,000) BUT NOT
MORE THAN ONE MILLION TWO HUNDRED THOUSAND PESOS (PI,200,000) and
suffer imprisonment of not less than one (1) year but not more than three (3) years.”

SEC. 20. Section 266 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

‘Sec. 266. Penal Liability of Corporations. — Any corporation, association or general co-
partnership liable for any of the acts or omissions penalized under this Code, in addition to the
penalties imposed herein upon the responsible corporate officers, partners, or employees shall,
upon conviction for each act or omission, be punished by a line of not less than [Fifty thousand
pesos (P50.000) but not more than One hundred thousand pesos (P100.000)] TWO HUNDRED
THOUSAND PESOS (P200.000) BUT NOT MORE THAN TWO MILLION FOUR
HUNDRED THOUSAND PESOS (P2,400,000)."

SEC. 21. Section 267 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

“SEC. 257. Penal Liability for Making False Entries, Records or Reports, or Using Falsified or
Fake Accountable Forms. —
“(A) Any financial officer or independent Certified Public Accountant engaged to examine and
audit books of accounts of taxpayers under Section 232(A) and any person under his direction
who:
“(1) Willfully falsifies any report or statement bearing on any examination or audit, or renders a
report, including exhibits, statements, schedules or verified by him personally or under his
supervision or by a member of his firm or by a member of his staff in accordance with sound
auditing practices; or
“(2) Centifies financial statements of a business enterprise containing an essential misstatement
of facts or omission in respect of the transactions, taxable income, deduction and exemption of
his client; or
“(B) Any person who:
"(1) Not being an independent Certified Public Accountant according to Section 232(B) or a
financial officer, examines and audits books of accounts of taxpayers; or
“(2) Offers to sign and certify financial statements without audit; or
“@3) Offers any taxpayer the use of accounting bookkeeping records for internal revenue purposes
not in conformity with the requirements prescribed in this Code or rules and regulations
promulgated thereunder; or
“(4) Knowingly makes any false entry or enters any false or fictitious name in the books of
accounts or record mentioned in the preceding paragraphs; or
(5) Keeps two (2) or more sets of such records or books of accounts; or
“(@) In any way commits an act or omission, in violation of the provisions of this Section; or
“(7) Fails to keep the books of accounts or records mentioned m Section 232 in a native language,
English

SEC. 22. Section 268 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

“SEC. 268. Unlawful Pursuit of Business. — Any person who carries on any business for which
an annual registration fee is imposed without paying the tax as required by law shall, upon
conviction for each act or omission, be punished by a fine of not less than (Five thousand pesos
(P5.000) but not more than Twenty thousand pesos (P20.000)] FIFTY THOUSAND PESOS
(P50.000) BUT NOT MORE THAN THREE HUNDRED THOUSAND PESOS (P300.000)
and suffer imprisonment of not less than six (6) months but not more than two (2) years:
Provided, That in the case of a person engaged in the business of distilling, rectifying,
repacking, compounding or manufacturing any article subject to excise tax, he shall, upon
conviction for each act or omission, be punished by a fine of not less than [Thirty thousand
pesos (P30,000) but not more than Fifty thousand pesos (P60.000)] THREE HUNDRED



THOUSAND PESOS (P300.000) BUT NOT MORE THAN SEVEN HUNDRED
THOUSAND PESOS (P700,000) and suffer imprisonment of not less than two (2) years but
not more than four (4) years.”

SEC. 23. Section 260 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

“SBC. 260. Unlawful Possession of Cigarette Paper in Bobbins or Bolls, Etc. - It shall be
unlawful for any person to have in his possession cigarette paper in bobbins or rolls, cigarette
tipping paper or cigarette filter tips, without the corresponding authority therefor issued by the
Commissioner. Any person, importer, manufacturer of cigar and cigarettes, who has been found
guilty under this Section, shall, upon conviction for each act or omission, be punished by a fine
of not less than [Twenty thousand pesos (P20.000) but not more than One hundred thousand
pesos (P100,000)] One million five hundred thousand pesos (P1,600,000) BUT NOT MORE
‘THAN FIFTEEN MILLION PESOS (P15,000,000) and suffer imprisonment for a term of not
loss than six (6) years and one (1) day but not more than twelve (12) years.”

SEC. 24. Section 261 of the National Internal Revenue Code 1997, as amended, is hereby amended to
read as follows:

“SEC. 26]. Unlawful Use of Denatured Alcohol. - Any person who for the purpose of
manufacturing any beverage, uses denatured alcohol or alcohol specially denatured to be used
for motive power or withdrawn under bond for industrial uses or alcohol knowingly
misrepresented to be denatured to be unfit for oral intake or who knowingly sells or offers for
sale any beverage made in whole or in part from such alcohol or who uses such alcohol for the
manufacture of liquid medicinal preparations taken internally, or knowingly sells or offers for
sale stich preparations containing as an ingredient such alcohol, shall upon conviction for each
act or omission be punished by a fine of not less than [Twenty thousand pesos _(P20.000)
but not more than One hundred thousand pesos (P100.000)] ONE MILLION FIVE HUNDRED
THOUSAND PESOS (PI,500,000) BUT NOT MORE THAN FIFTEEN MILLION PESOS
(P15,000,000) and suffer imprisonment for a term of not less than six (6) years and one (1) day
but not more than twelve (12) years.

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

SEC. 25. Section 262 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

“SEC. 262. Shipment or Removal of Liquor or Tobacco Products under False Name or Brand
or as an Imitation of any Existing or Otherwise Known Product Name or Brand. - Any person
who ships, transports or removes spirituous, compounded or fermented liquors, wines or any
manufactured products of tobacco under any other than the proper name or brand known to the
trade as designating the kind and quality of the contents of the cask, bottle or package containing
the same or as an imitation of any existing or otherwise known product name or brand or causes
such act to be done, shall, upon conviction for each act or omission, be punished by a fine of
not less than [Twenty thousand pesos (P20,000) but not more than One hundred thousand pesos
(P100.000)] One MILLION FIVE HUNDRED THOUSAND PESOS (PI,600,000) BUT NOT
MORE THAN FIFTEEN MILLION PESOS (P 16,000,000) and suffer imprisonment of not less
than six (6) years and one (1) day but not more than twelve (12) years.”

SEC. 26. Section 263 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

"SEC. 263. Unlawful Possession or Removal of Articles Subject to Excise Tax Without
Payment of the Tax. - Any person who owns and/or is found in possession of imported articles
subject to excise tax. The tax on which has not been paid in accordance with law, or any person


who owns and/or is found in possession of imported tax-exempt articles other than those to
whom they are legally issued shall be punished by:

“(a) A fine of not leas than [One thousand pesos (PI,000)] Twenty-five thousand pesos
(P25.000) [nor] BUT NOT more than [Two thousand pesos (P2,000)] Seventy-ftve thousand
pesos (P75.000) and suffer imprisonment of not less than {sixty (60) days but not more than
‘one hundred (100) days] THIRTY (30) DAYS BUT NOT MORE THAN SIX (6) MONTHS if
the appraised value, to be determined in the manner prescribed in the [Tariff and Customs Code]
CUSTOMS Modemization and Tariff Act, including duties and taxes, of the articles does not
exceed [One thousand pesos (PI,000)] TWO HUNDRED FIFTY THOUSAND PESOS
(260.000);

“(b) A fine of not less than [Ten thousand pesos (P 10,000)] Seventy-five thousand pesos
(P75.000) but not more than [Twenty thousand pesos (P20.000)] One HUNDRED FIFTY
THOUSAND PESOS (P150,000) and suffer imprisonment of not less than [two (2) years but
not more than four (4) years] SIX (6) MONTHS AND ONE (1) DAY BUT NOT MORE THAN
ONE (1) YEAR if the appraised value, to be determined in the manner prescribed in the [Tariff
and Customs Code ] CUSTOMS MODERNIZATION AND TARIFF ACT, including duties
and taxes, of the articles exceeds [One thousand pesos (P1,000)] TWO HUNDRED FIFTY
THOUSAND PESOS (P250,000) but does not exceed [Fifty thousand pesos (P50,000)] Five
hundred thousand pesos (P500,000):

“(©) A fine of not less than [Thirty thousand pesos (P30.000)] ONE HUNDRED FIFTY
THOUSAND PESOS (P150,000) but not more than [Sixty thousand pesos (P60.000)] THREE
HUNDRED THOUSAND PESOS (P300,000) and suffer imprisonment of not less than [four
(4) years but not more than six (6) years] ONE (1) YEAR AND ONE (1) DAY BUT NOT
MORE THAN THREE (3) YEARS, if the appraised value, to be determined in the manner
prescribed in the (Tariff and Customs Code] Customs modernization and Tariff Act, including
duties and taxes, of the articles is more than [Fifty thousand pesos (P50.000) but does not
exceed One hundred fifty thousand pesos (P160.000)] FIVE HUNDRED THOUSAND PESOS
(P600.000) BUT DOES NOT EXCEED ONE MILLION PESOS (P1,000,000); for}

"(@) A fine of not less than [Fifty thousand pesos (P50.000)] THREE HUNDRED THOUSAND
PESOS (P300.000) but not more than {One hundred thousand pesos (P100.000)] ONE
MILLION FIVE HUNDRED THOUSAND PESOS (P 1,500,000) and suffer imprisonment of
{not less than ten (10) years but not more than twelve (12) years] THREE (3) years AND ONE.
(1) DAY BUT NOT MORE THAN SIX (6) YEARS, if the appraised value, to be determined
in the manner prescribed in the [Tariff and Customs Code] CUSTOMS MODERNIZATION
AND TARIFF ACT, including duties and taxes, of the articles exceeds [One hundred fifty
thousand pesos (PI 60,000)] IS MORE THAN ONE MILLION PESOS (1,000,000) BUT NOT
MORE THAN FIVE MILLION PESOS (P5,000,000)[.];

“(e) A FINE OF NOT LESS THAN ONE MILLION FIVE HUNDRED THOUSAND PESOS
(P1,500,000) BUT NOT MORE THAN FIFTEEN MILLION PESOS (P15.000.000), AND
SUFFER IMPRISONMENT OF NOT LESS THAN SIX (6) YEARS AND ONE (1) DAY
BUT NOT MORE THAN TWELVE (12) YEARS, IF THE APPRAISED VALUE, TO BE
DETERMINED IN THE MANNER PRESCRIBED IN THE Customs Modernization and
Tariff Act, INCLUDING DUTIES AND TAXES, OF THE ARTICLES IS MORE THAN
FIVE MILLION PESOS (P5.000.000) BUT NOT MORE THAN FIFTY MILLION PESOS
(P50.000.000);

“(f) A FINE OF NOT LESS THAN FIFTEEN MILLION PESOS (P15.000.000) BUT NOT
MORE THAN Fifty million pesos (P50.000,000), and suffer IMPRISONMENT OF NOT
LESS THAN TWELVE (12) YEARS AND ONE (1) DAY BUT NOT MORE THAN
TWENTY (20) YEARS, IF THE APPRAISED VALUE, TO BE DETERMINED IN THE
MANNER PRESCRIBED IN THE CUSTOMS Modernization and Tariff Act, including duties
AND TAXES, OF THE ARTICLES IS MORE THAN FIFTY MILLION PESOS
(P50,000,000) BUT NOT MORE THAN TWO HUNDRED MILLION PESOS


(P200.000.000); OR

“(g) IF THE APPRAISED VALUE OF THE GOODS UNLAWFULLY IMPORTED TO BE
DETERMINED IN THE MANNER PRESCRIBED IN THE CUSTOMS MODERNIZATION
AND TARIFF ACT, INCLUDING DUTIES AND TAXES, EXCEEDS TWO HUNDRED
MILLION PESOS (P200.000.000) OR IP THE AGGREGATE AMOUNT OF THE
APPRAISED VALUE OF THE GOODS WHICH ARE THE SUBJECT OF UNLAWFUL,
IMPORTATION COMMITTED IN MORE THAN ONE INSTANCE, INCLUDING DUTIES
AND TAXES, EXCEEDS TWO HUNDRED MILLION PESOS (P200,000,000), THE SAME,
SHALL BE PUNISHABLE WITH A PENALTY OF TWENTY (20) YEARS AND ONE (1)
DAY BUT NOT MORE THAN THIRTY (30) YEARS AND A FINE OF NOT LESS THAN
FIFTY MILLION PESOS (P50,000,000).

“Any person who is found in possession of locally manufactured articles subject to excise tax,
the tax on which has not been paid in accordance with law, or any person who is found in
possession of such articles which are exempt from excise tax other than those to whom the same
is lawfully issued shall be punished with a fine of not less than ten (10) times the amount of
excise tax due on the articles found but not less than [Five hundred pesos (P500)} TWENTY-
FIVE THOUSAND PESOS (P25.000) and suffer imprisonment of not less than two (2) years
but not more than four (4) years.

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

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

SEC. 27. Section 264 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

“SEC. 264. Failure or Refusal to Issue Receipts or Sales or Commercial Invoices, Violations
Related to the Printing of such Receipts or Invoices and Other Violations. —

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

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

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

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

“@3) Printing of unnumbered receipts or sales or commercial invoices, not bearing the name,
business style, Taxpayer Identification Number, and business address of the person or entity.”

SEC. 28. Section 265 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:


“SEC. 265, Offenses Relating to Stamps. — Any person who commits any of the acts enumerated
hereunder shall, upon conviction thereof, be punished by a fine of not less than [Twenty
thousand pesos (P20,000)] Seven hundred thousand pesos (P700,000) but not more than [Fifty
thousand pesos (PS0,000)] One million two hundred thousand PESOS (PI,200,000) and suffer
imprisonment of not less than four (4) years but not more than eight (8) years:

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

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

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

“(d) Selling or offering for sale any box or package containing articles subject to excise tax
with false, spurious or counterfeit stamps or labels or selling from any such fraudulent box,
package or container as aforementioned; or

"(&) Giving away or accepting from another, or selling, buying or using containers on which
the stamps are not completely destroyed.”

SEC. 29, Section 266 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

“SEC. 266. Failure to Obey Summons. ~ Any person who, being duly summoned to appear to
testify, or to appear and produce books of accounts, records, memoranda or other papers, or to
furnish information as required under the pertinent provisions of this Code, neglects to appear
or to produce such books of accounts, records, memoranda or other papers, or to furnish such
information, shall, upon conviction, be punished by a fine of not less than [Five thousand pesos
(P5.000)] One hundred thousand pesos (pioo.o00) but not more than [Ten thousand pesos
(P10.000)] THREE HUNDRED THOUSAND PESOS (P300.000) and suffer imprisonment of
not less than one (1) year but not more than two (2) years.”

SEC. 30. Section 275 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

“SEC. 275. Violation of Other Provisions of this Code or Rules and Regulations in General. —
Any person who violates any provision of this Code or any rule or regulation promulgated by
the Department of Finance, for which no specific penalty is provided by law, shall, upon
conviction for each act or omission, be punished by a fine of not more than [One thousand pesos
(P1,000)] TEN THOUSAND PESOS (P10.000) or suffer imprisonment of not more than [six
(6) months] TWO (2) YEARS, or both."

Sec. 31. A new section is hereby inserted after Section 282 of the National Internal Revenue Code of
1997, as amended, to read as follows:

“Sec. 282-A. Violation of the Provisions of this Code Amounting to Economic Sabotage. - Any
violation of Section 254 of this Code that UNDERMINES, WEAKENS OR RENDERS INTO.
DISREPUTE THE ECONOMIC SYSTEM OR VIABILITY OF THE COUNTRY OR TENDS
TO BRING OUT SUCH EFFECTS, IN LIEU OF THE PENALTY SET IN THE PRECEDING
PROVISIONS, SHALL CONSTITUTE ECONOMIC SABOTAGE, AND, UPON
CONVICTION FOR EACH ACT OR OMISSION, BE PUNISHED BY A FINE OF NOT
LESS THAN FIFTY MILLION PESOS (P60,000,000) AND IMPRISONMENT OF TWELVE
(12) YEARS AND ONE (1) DAY BUT NOT MORE THAN TWENTY (20) YEARS."

SEC. 32. Section 288 of the National Internal Revenue Code of 1997, as amended, is hereby amended
to read as follows:

“SEC. 288. Disposi
(A) XXX
“(B) XXX

mn of Incremental Revenue. -


“(©) XXX

“(D) XXX
“(E) XXX
“(F) XXX

“(g) Student Vouchers. — Incremental REVENUE FROM TAX PAYMENTS OF
EDUCATIONAL INSTITUTIONS THAT FAIL TO MEET THE ESTABUSHED
PERFORMANCE CRITERIA SHALL FUND A STUDENT VOUCHER PROGRAM TO BE
IMPLEMENTED UNDER THE Commission on Higher Education (CHED) or the Department
of Education (DepEd).

“(h) Universal Healthcare. ~ Incremental REVENUE FROM TAX PAYMENTS OF
HOSPITALS THAT FAIL TO MEET THE ESTABLISHED PERFORMANCE CRITERIA
SHALL FUND THE UNIVERSAL HEALTHCARE PROGRAM TO BE IMPLEMENTED
UNDER THE Department of Health (DOH).

"(1) Housing Vouchers. — Incremental REVENUES FROM TAX PAYMENTS OF REAL
ESTATE DEVELOPERS SHALL FUND A HOUSING VOUCHER PROGRAM TO BE
IMPLEMENTED UNDER THE NATIONAL Housing Authority."

SEC. 33. Section 290 of the National Internal Revenue Code of 1997, as amended, is hereby further
amended to read as follows:

“SEC. 290. Congressional Oversight Committee. ~
“eee

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

“(D)xXxx;

“Q) xxx;

“(xXx [and]

“(4) xxx; AND

(3) Review the performance of functions OF the investment promotion agencies and the Fiscal
Incentives Review Board, particularly IN THE GRANT OF INCENTIVES TO REGISTERED
ENTERPRISES AND IN THE REVIEW AND EVALUATION OF GRANTED INCENTIVES,
RESPECTIVELY, AS WELL AS IN THE FORMULATION OF THE STRATEGIC
INVESTMENT PRIORITY PLAN.

“xxx”

SEC. 34. A new title is hereby inserted beginning Section 291, Title XIII of the National Internal
Revenue Code of 1997, as amended, to read as follows:

Title XI
‘HAPTER I
“General Provisions on Tax Incentives

“Sec 291. Scope and Coverage. - This Title SHALL COVER ALL EXISTING INVESTMENT
PROMOTION Agencies (IPAS) as defined in this Code or RELATED LAWS, AND ALL OTHER
IPAS AND OTHER SIMILAR AUTHORITIES THAT MAY BE CREATED BY LAW.

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

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

“SALES RECEIPTS AND/OR OTHER INCOME DERIVED FROM NON-REGISTERED
ACTIVITY OR PROJECT SHALL BE SUBJECT TO APPROPRIATE TAXES UNDER THIS


CODE.

“Unless otherwise provided in this Code, DIRECT EXPORTS ARE SUBJECT TO VALUE-
ADDED TAX (VAT) ZERO-RATING AND DOMESTIC SALES ARE SUBJECT TO THE
REGULAR VALUE-ADDED TAX RATE.

"Sec. 293. Definitions. - When used in this Title:

"(a The term ‘capital equipment* refers to machinery, equipment, major components thereof,
{fittings and accompaniments which are DIRECTLY AND REASONABLY NEEDED IN THE
REGISTERED ACTIVITY OF THE REGISTERED ENTERPRISE

“(b) The term ‘export sales of goods’ shall MEAN THE SALES OF AN EXPORT ENTERPRISE
PAID FOR IN FREELY CONVERTIBLE FOREIGN CURRENCY INWARDLY REMITTED TO
THE PHILIPPINES, FROM THE FOLLOWING:

“(1) THE SALE AND ACTUAL SHIPMENT OF GOODS from the Philippines to a
foreign country by AN EXPORT ENTERPRISE INCLUDING OURSOURCED
SERVICES USED TO PRODUCE FINAL EXPORT GOODS;

“(2) Sales to diplomatic missions and INSTITUTIONS COVERED BY
INTERNATIONAL TREATY;

“(3) Sales of an export enterprise to an INTERNATIONAL SEA OR AIR TRANSPORT
operations of goods, equipment, spare parts, AND SUPPLIES, EXCEPT FUEL,
FORMING PART OF DIRECT COSTS AND TO BE USED IN THE AIRCRAFT OR
‘SEACRAFT, AND CAPITAL EQUIPMENT NEEDED FOR THE SHIPPING OR AIR
TRANSPORT OPERATIONS.

“(c) The term “Export sales of services’ SHALL MEAN THE SALES OF AN EXPORT
ENTERPRISE, PAID FOR IN FREELY CONVERTIBLE FOREIGN CURRENCY INWARDLY
REMITTED TO THE PHILIPPINES, FOR THE FOLLOWING:

“() Services rendered to non-resident FOREIGN CLIENTS BY EXPORT
ENTERPRISES;

“(@2) SERVICES RENDERED TO DIPLOMATIC MISSIONS AND INSTITUTIONS
COVERED BY INTERNATIONAL TREATY;

“(3) Services for the overhaul, repair, and MAINTENANCE OF INTERNATIONAL
SHIPPING, OR AIR TRANSPORT OPERATIONS.

(d) The term ‘Investment Promotion AGENCIES’ (IPAS) SHALL REFER TO GOVERNMENT
ENTITIES CREATED BY LAW, EXECUTIVE ORDER, DECREE OR OTHER ISSUANCE, IN
CHARGE OF PROMOTING INVESTMENTS, ADMINISTERING TAX AND NON-TAX
INCENTIVES, AND/OR OVERSEEING THE OPERATIONS FOR THE DIFFERENT
ECONOMIC ZONES AND FREEPORTS IN ACCORDANCE WITH THEIR RESPECTIVE
CHARTERS.

These include the Board of Investments (BOI), Regional Board of Investments autonomous
Region in Muslim Mindanao (RBOI-ARMM), Philippine Economic Zone Authority (PEZA),
Bases Conversion and Development Authority (BCDA), Subic Bay Metropolitan Authority
(SBMA), Clark Development Corporation (CDC), John Hay Management Corporation
(JHMC), Poro Point Management Corporation (PPMC), Cagayan economic Zone Authority
(CEZA), Zamboanga City Special Economic Zone Authority (ZCSEZA), Phividec Industrial
Authority (PIA), Aurora Pacific Economic Zone and Freeport authority (APECO), Authority
of the Freeport Area of Bataan (AFAB), tourism Infrastructure and Enterprise Zone Authority
(TIEZA), AND ALL OTHER SIMILAR AUTHORITIES EXISTING OR THAT MAY BE
CREATED BY LAW IN THE FUTURE.

“(e) The TERM ‘REGISTERED ENTERPRISE’ SHALL MEAN ANY INDIVIDUAL,
PARTNERSHIP, CORPORATION, PHILIPPINE BRANCH OF A FOREIGN CORPORATION,


OR OTHER ENTITY ORGANIZED AND EXISTING UNDER PHILIPPINE LAWS AND
REGISTERED WITH AN INVESTMENT PROMOTION AGENCY (IPA) AS DEFINED
UNDER REPUBLIC ACT NO. 10708, OR THE TLMTA Law: Provided, however. That the term
“REGISTERED ENTERPRISE’ SHALL NOT INCLUDE ANY OF THE FOLLOWING
SERVICE ENTERPRISES SUCH AS, BUT NOT LIMITED TO, THOSE ENGAGED IN
CUSTOMS BROKERAGE, TRUCKING OR FORWARDING SERVICES, JANITORIAL
SERVICES, SECURITY SERVICES, INSURANCE, BANKING, AND OTHER FINANCIAL
SERVICES, CONSUMERS’ COOPERATIVES, CREDIT UNIONS, CONSULTANCY
SERVICES, RETAIL BUSINESS, RESTAURANTS, OR SUCH OTHER SIMILAR SERVICES,
AS MAY BE DETERMINED BY THE IPA BOARD, IRRESPECTIVE OF LOCATION,
WHETHER INSIDE OR OUTSIDE THE ZONES, DULY ACCREDITED AND/OR LICENSED
BY ANY OF THE I PAS AND WHOSE INCOME DELIVERED WITHIN THE ECONOMIC
ZONES SHALL BE SUBJECT TO TAXES UNDER THE NATIONAL INTERNAL Revenue Code
of 1997, as amended.

“@ The term ‘special economic zone’ or ‘ECOZONE' shall refer to a selected area, which
SHALL BE OPERATED AND MANAGED AS A SEPARATE CUSTOMS TERRITORY THAT IS
HIGHLY DEVELOPED OR HAS THE POTENTIAL TO BE DEVELOPED INTO AN AGRO-
INDUSTRIAL, INDUSTRIAL, INFORMATION TECHNOLOGY, OR
TOURIST/RECREATIONAL, WHOSE METES AND BOUNDS ARE FIXED OR DELIMITED
BY PRESIDENTIAL PROCLAMATIONS AND WITHIN A SPECIFIC GEOGRAPHICAL
AREA: PROVIDED, THAT FOR THE ECOZONE TO QUALIFY AS A SEPARATE CUSTOMS:
TERRITORY, IT SHALL HAVE A PERMANENT CUSTOMS CONTROL OR CUSTOMS
OFFICE AT ITS PERIMETER. AN ECOZONE MAY CONTAIN ANY OR ALL OF THE
FOLLOWING: INDUSTRIAL ESTATES (1ES), EXPORT PROCESSING ZONES (EPZS), ICT
PARKS AND CENTERS, AND FREE TRADE ZONES: PROVIDED, HOWEVER, THAT
AREAS WHERE MINING EXTRACTIONS ARE UNDERTAKEN SHALL NOT BE DECLARED
AS ECOZONES: PROVIDED, FURTHER, THAT VERTICAL ECONOMIC ZONES, SUCH AS
BUT NOT LIMITED TO, BUILDINGS, SELECTED FLOORS WITHIN BUILDINGS, AND
SELECTED AREAS ON A FLOOR, SHOULD COMPLY WITH THE MINIMUM
CONTIGUOUS LAND AREA AS DETERMINED BY THE FISCAL Incentives Review Board
(FIRB).

"(g) THE TERM ‘FREEPORT ZONES’ REFERS TO AN ISOLATED AND POLICED AREA
ADJACENT TO A PORT OF ENTRY, WHICH SHALL BE OPERATED AND MANAGED AS
A SEPARATE CUSTOMS TERRITORY TO ENSURE FREE FLOW OR MOVEMENT OF
GOODS, EXCEPT THOSE EXPRESSLY PROHIBITED BY LAW, WITHIN, INTO, AND
EXPORTED OUT OF THE FREEPORT ZONE WHERE IMPORTED GOODS MAY BE
UNLOADED FOR IMMEDIATE TRANSSHIPMENT OR STORED, REPACKED, SORTED,
MIXED, OR OTHERWISE MANIPULATED WITHOUT BEING SUBJECT TO IMPORT
DUTIES. HOWEVER, MOVEMENT OF THESE IMPORTED GOODS FROM THE FREE-
TRADE AREA TO A NON-FREE TRADE AREA IN THE COUNTRY SHALL BE SUBJECT TO
ALL APPLICABLE INTERNAL REVENUE TAXES AND DUTIES: PROVIDED, THAT FOR
THE FREEPORT ZONE TO QUALIFY AS A SEPARATE CUSTOMS TERRITORY, IT SHALL
HAVE A PERMANENT CUSTOMS CONTROL OR CUSTOMS OFFICE AT ITS PERIMETER.

“Chapter Il
“Tax and Duty Incentives

“Sec. 294. Incentives. - Registered PROJECTS OR ACTIVITIES UNDER THE STRATEGIC
INVESTMENT PRIORITY PLAN SHALL BE QUALIFIED TO ANY OF THE FOLLOWING
INCENTIVES:

“(a) Income Tax Incentives
“(I) Income Tax Holiday (ITH). - The ITH SHALL BE GRANTED FOR A PERIOD NOT

EXCEEDING THREE (3) YEARS: PROVIDED, THAT AFTER THE EXPIRATION OF THE
ITH, THE FOLLOWING INCENTIVES MAY BE APPUED FOR A PERIOD NOT


EXCEEDING FIVE (5) YEARS, WHICH INCLUDES THE PERIOD OF ITH AVAILMENT,
EXCEPT THOSE PROVIDED UNDER SECTIONS 294(7) and (9), 295, 296, AND 297.

"(2) REDUCED CORPORATE INCOME TAX. ~ A REDUCED TAX RATE OF EIGHTEEN
PERCENT (18%) OF THE TAXABLE INCOME AS DEFINED UNDER SECTION 31 of this
Code: Provided, That the rate of CORPORATE INCOME TAX SHALL BE SEVENTEEN
PERCENT (17%) BEGINNING JANUARY 1, 2021; SIXTEEN PERCENT (16%)
BEGINNING JANUARY 1, 2023; FIFTEEN PERCENT (15%) BEGINNING JANUARY 1,
2025; FOURTEEN PERCENT (14%) BEGINNING JANUARY 1, 2027; AND THIRTEEN
PERCENT (13%) BEGINNING JANUARY 1, 2029: PROVIDED, FURTHER, THAT IN THE
CASE OF REGISTERED ENTERPRISES WITHIN ECONOMIC ZONES AND FRBEPORTS,
THE TAX SHALL BE DIRECTLY REMITTED AS FOLLOWS: “Fifteen percent (15%) to the
‘National Government in 2019 and 2020; fourteen percent (14%) to the National Government in
2021 AND 2022; THIRTEEN PERCENT (13%) TO THE NATIONAL GOVERNMENT IN
2023 AND 2024; TWELVE PERCENT (12%) TO THE NATIONAL GOVERNMENT IN 2025
AND 2026; EL EN PERCENT (11%) TO THE NATIONAL Government in 2027 and 2028;
and ten percent (10%) to the National Government in 2029 and THEREAFTER; "One point five
percent (1.5%) to the TREASURER'S OFFICE OF THE PROVINCE WHERE THE
ENTERPRISE IS LOCATED, IN LIEU OF THE LOCAL BUSINESS TAX;
"ONE POINT FIVE PERCENT (1.5%) TO THE TREASURER'S OFFICE OF THE
MUNICIPALITY OR COMPONENT CITY WHERE THE ENTERPRISE IS LOCATED, IN
LIEU OF TE LOCAL BUSINESS TAX;
“Provided, That if the enterprise is under THE JURISDICTION OF A HIGHLY URBANIZED
CITY (HUC) OR INDEPENDENT COMPONENT CITY (ICC), THE THREE PERCENT (3%)
SHARE OF THE LGU SHALL BE DIRECTLY REMITTED TO THE TREASURER’S
OFFICE OF THE HUC OR ICC.

“(3) Depreciation allowance of the assets ACQUIRED FOR THE ENTITY’S PRODUCTION
OF GOODS AND SERVICES (QUALIFIED CAPITAL EXPENDITURE) - Ten PERCENT
(10%) FOR BUILDINGS; AND TWENTY PERCENT (20%) FOR MACHINERIES AND
EQUIPMENT: Provided, That depreciation may be computed USING ACCELERATED
DEPRECIATION METHOD ON A RATE NOT EXCEEDING TWICE THE RATE WHICH
WOULD HAVE BEEN USED HAD THE ANNUAL ALLOWANCE BEEN COMPUTED IN
ACCORDANCE WITH THE RULES AND REGULATIONS PRESCRIBED BY THE
SECRETARY of Finance and the provisions of the National Internal Revenue Code of 1997, as
amended: Provided, further. That the assets are acquired DIRECTLY FOR THE REGISTERED
ENTERPRISE'S PRODUCTION OF GOODS AND SERVICES OTHER THAN
ADMINISTRATIVE AND OTHER SUPPORT SERVICES.

“(4) UP TO FIFTY PERCENT (60%) ADDITIONAL DEDUCTION ON THE LABOR
EXPENSE IN THE TAXABLE YEAR AS A CONSEQUENCE OF AN INCREASE IN
DIRECT LOCAL EMPLOYMENT: PROVIDED, THAT THIS DOES NOT INCLUDE
INDIRECT LABOR, SALARIES AND WAGES, AND OTHER PERSONNEL COSTS
INCURRED FOR ADMINISTRATIVE AND OTHER SUPPORT SERVICES.

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

"(6) UP TO ONE HUNDRED PERCENT (100%) ADDITIONAL DEDUCTION ON
TRAININGS INCURRED: Provided, That it is given to the employees ENGAGED DIRECTLY
IN THE ENTITY’S PRODUCTION OF GOODS AND SERVICES: PROVIDED, FURTHER,
THAT THE CONCERNED I PA HAS ISSUED A CORRESPONDING CERTIFICATE OF
ENTITLEMENT UPON APPLICATION, AND A CERTIFICATE OF APPROVAL AFTER A
REVIEW OF DOCUMENTATION OF TRAININGS SUBMITTED BY THE ENTERPRISE.
AT THE END OF THE TAXABLE YEAR, OTHERWISE, THIS INCENTIVE SHALL BE
DEEMED WAIVED.


"(7) Up to one hundred percent (100%) DEDUCTION ON INFRASTRUCTURE
DEVELOPMENT. - Registered enterprises establishing their ACTIVITY IN AN AREA THAT
THE STRATEGIC Investment Priority Plan (SIP) designates as necessary for countrywide
development OR IN AN AREA FOUND TO BE DEFICIENT IN INFRASTRUCTURE,
PUBLIC UTILITIES, AND OTHER FACILITIES, SUCH AS IRRIGATION, DRAINAGE, OR
OTHER SIMILAR WATERWORKS INFRASTRUCTURE MAY DEDUCT FROM THE
GROSS INCOME AN AMOUNT EQUIVALENT TO UP TO ONE HUNDRED PERCENT
(100%) OF NECESSARY AND MAJOR INFRASTRUCTURE WORKS IT MAY HAVE
UNDERTAKEN WITH THE PRIOR APPROVAL AND RECOMMENDATION OF THE I PA
CONCERNED: PROVIDED, THAT THE INFRASTRUCTURE SHALL BE OPEN FOR USE
BY THE GENERAL PUBLIC: Provided, further, That the title to all such INFRASTRUCTURE,
WORKS SHALL UPON COMPLETION, BE TRANSFERRED TO THE PHILIPPINE
GOVERNMENT: Provided, finally, That any amount not DEDUCTED FOR A PARTICULAR
YEAR MAY BE CARRIED OVER FOR DEDUCTION FOR SUBSEQUENT YEARS NOT
EXCEEDING FIVE (5) YEARS FROM COMMERCIAL OPERATION.

(8) Deduction for reinvestment allowance TO MANUFACTURING INDUSTRY. - WHEN A
MANUFACTURING REGISTERED ENTERPRISE REINVESTS ITS UNDISTRIBUTED
PROFIT OR SURPLUS IN ANY OF THE ACTIVITIES LISTED IN THE SIPP, THE
AMOUNT SO REINVESTED TO A MAXIMUM OF FIFTY PERCENT (60%) SHALL BE
ALLOWED AS A DEDUCTION FROM ITS TAXABLE INCOME WITHIN A PERIOD OF
FIVE (6) YEARS FROM THE TIME OF SUCH REINVESTMENT: Provided, That prior
approval and RECOMMENDATION BY THE I PA CONCERNED OF SUCH
REINVESTMENT WAS OBTAINED BY THE REGISTERED ENTERPRISE PLANNING
SUCH REINVESTMENT.

“(9) Enhanced Net Operating Loss Carry-over (NOLCO). - The net operating loss OF THE
REGISTERED ACTIVITY DURING THE FIRST THREE (3) YEARS FROM THE START OF
COMMERCIAL OPERATION WHICH HAD NOT BEEN PREVIOUSLY OFFSET AS
DEDUCTION FROM GROSS INCOME MAY BE CARRIED OVER AS DEDUCTION FROM
GROSS INCOME WITHIN THE NEXT FIVE (6) CONSECUTIVE TAXABLE YEARS
IMMEDIATELY FOLLOWING THE YEAR OF SUCH LOSS.

“(10) UP TO FIFTY PERCENT (50%) ADDITIONAL DEDUCTION ON THE INCREMENT
OF THE DOMESTIC INPUT EXPENSE INCURRED IN THE TAXABLE YEAR: Provided,
‘That it is directly related to and ACTUALLY USED IN THE REGISTERED EXPORT
ACTIVITY OF THE REGISTERED ENTITY. "Provided, That in lieu of the ITH under Section
294(A(1) or the reduced tax rate of EIGHTEEN PERCENT (18%) UNDER SECTION
294(A)(2), THE TAX INCENTIVES UNDER SECTION 294(A)(3), (4), (5), (6), (7), (8) (9s
AND (10) MAY BE GRANTED ON AN INDUSTRY-SPECIFIC BASIS AS DETERMINED
BY THE BOI in the Strategic Investment Priority Plan. The BOI SHALL PRESCRIBED THE
LEVEL OF ADDITIONAL DEDUCTION FOR SELECTED INDUSTRIES. “Provided, further,
‘That in no such case SHALL AN INCOME TAX INCENTIVE BE EXTENDED BEYOND THE
INITIAL GRANT OF FIVE (5) YEARS, EXCEPT THOSE PROVIDED UNDER SECTION
294(A\7) AND (9), Sections 295, 296, and 297. "(b) Exemption from customs duty on
IMPORTATION OF CAPITAL EQUIPMENT AND RAW MATERIALS DIRECTLY AND
EXCLUSIVELY USED IN THE REGISTERED ACTIVITY BY REGISTERED
ENTERPRISES: Provided, That the five (5) years limit in this Subsection shall not apply to
freeport zones as DEFINED UNDER THIS TITLE. “Provided, further, That expansion of
REGISTERED ACTIVITIES MAY BE GRANTED DUTY EXEMPTION ON CAPITAL
EQUIPMENT ONLY, SUBJECT TO THE FOLLOWING CONDITIONS:

“() The activity is still covered by the Strategic Investment Priority Plan (SIPP) or is AN
INNOVATION PROJECT AS DEFINED IN THE Strategic Investment Priority Plan;

“(2) Customs duty exemption will only APPLY ON THE INCREMENTAL PORTION OF THE
ACTIVITY; AND

“(3) The customs duty exemption extension SHALL NOT EXCEED FIVE (5) YEARS.


“(C) VALUE-ADDED TAX (VAT)
“(1) Registered enterprises whose export sales meet the ninety percent (90%) threshold AND
ARE LOCATED WITHIN AN ECOZONE, FREEPORT, OR THOSE UTILIZING CUSTOMS,
BONDED MANUFACTURING WAREHOUSE: VAT EXEMPTION ON IMPORTATION
AND VAT ZERO-RATING ON DOMESTIC PURCHASES OF CAPITAL EQUIPMENT AND
RAW MATERIALS USED IN THE MANUFACTURING AND PROCESSING OF
PRODUCTS AND IMPORTATION OF SOURCE DOCUMENTS SHALL APPLY.

“(2) Registered enterprises whose export SALES ARE BELOW THE NINETY PERCENT
(90%) THRESHOLD AND ARE LOCATED WITHIN AN ECOZONE, FREEPORT, OR
THOSE UTILIZING CUSTOMS BONDED MANUFACTURING WAREHOUSE: VAT
EXEMPTION ON IMPORTATION AND VAT ZERO-RATING ON DOMESTIC
PURCHASES OF CAPITAL EQUIPMENT AND RAW MATERIALS USED IN THE
MANUFACTURING AND PROCESSING OF PRODUCTS AND IMPORTATION OF
SOURCE DOCUMENTS: PROVIDED, THAT THEY COMPLY WITH THE ELECTRONIC
RECEIPTS OR INVOICING UNDER Sections 237 and 237-a of this Code. “(3) Registered
enterprises whose export sales are below ninety percent (90%) or are LOCATED OUTSIDE AN
ECOZONE OR FREEPORT REGARDLESS OF EXPORT SALES THRESHOLD: THE
VALUE-ADDED TAX PROVISION IN TITLE IV OF THIS Code and Section 307 of this Act
shall apply.

“For this purpose, ‘processing’ shall refer TO the conversion of raw materials into marketable
form through physical, mechanical, CHEMICAL, ELECTRICAL, BIOCHEMICAL,
BIOLOGICAL, OR OTHER MEANS, OR BY A SPECIAL TREATMENT OR A SERIES OF
ACTIONS, SUCH AS SLAUGHTERING, MILLING, PASTEURIZING, DRYING, OR
DESICCATING, QUICK FREEZING, THAT RESULTS IN A CHANGE IN THE NATURE
OR STATE OF A PRODUCT. MERE PACKING OR PACKAGING SHALL NOT
CONSTITUTE PROCESSING. ' “Source documents’ refer to input MATERIALS AND
DOCUMENTS REASONABLY NEEDED BY LT. AND I-T.-ENABLED INDUSTRIES SUCH
AS, BUT NOT LIMITED TO, BOOKS, DIRECTORIES, MAGAZINES, NEWSPAPERS,
BROCHURES, PAMPHLETS, MEDICAL RECORDS/FILES, LEGAL RECORDS/FILES,
INSTRUCTION MATERIALS, AND DRAWINGS/BLUEPRINTS/OUTLINES.

“Sec. 295. Incentives for Agribusiness. - Agribusiness projects or activities of REGISTERED
ENTERPRISES LOCATED OUTSIDE METRO Manila and other urban areas as identified in
the Strategic Investment Priority Plan shall be ENTITLED TO ADDITIONAL TWO (2) YEARS
OF INCENTIVE under Section 294, of which one (1) year may be AN ADDITIONAL YEAR
OF INCOME TAX HOLIDAY

"Sec. 296. Projects or Activities Located in Less Developed Areas or Those Recovering From
armed Conflict or a Major Disaster. - PROJECTS OR ACTIVITIES OF REGISTERED
ENTERPRISES LOCATING IN LESS DEVELOPED AREAS AS IDENTIFIED IN THE
STRATEGIC INVESTMENT Priority Plan, or those recovering from armed CONFLICT
AND/OR A MAJOR DISASTER AS DETERMINED BY THE OFFICE OF THE PRESIDENT
SHALL BE ENTITLED TO ADDITIONAL TWO (2) YEARS OP INCENTIVE under Section
294, of which one (1) year may be AN ADDITIONAL YEAR OF INCOME TAX HOUDAY.

“Sec. 297. Relocation Pro-jects or Activities. - Prior to the eFfectivity of this Act, registered
projects or activities RELOCATING FROM METRO MANILA AND SELECTED
URBANIZED AREAS ADJACENT TO METRO MANILA TO OTHER AREAS OF THE
COUNTRY SHALL BE ENTITLED TO ADDITIONAL TWO (2) YEARS OF INCENTIVE
under Section 294, of which one (1) year may be AN ADDITIONAL YEAR OF INCOME TAX
HOLIDAY.

“Chapter Ill
“The Fiscal Incentives Review Board

“Sec. 298, Expanded Functions of the fiscai. Incentives Review Board. - The functions and powers
of the Fiscal Incentives Review Board or FIRB created under Presidential Decree (PD) No. 776,


as amended BY PD No. 1931 AND PD No. 1955, OFFICE OF THE President Memorandum
Order No. 23, series of 1986 and Executive Order No. 93, series of 1986, SHALL BE
EXPANDED AS FOLLOWS:

“(A) To exercise oversight functions over IPAS
“(B) TO REQUIRE THE IPAS TO SUBMIT THE FOLLOWING:
"(1) List oF registered enterprises ANNUALLY WITH CORRESPONDING FIRM-LEVEL
DATA AS MANDATED UNDER THE TAX INCENTIVES MANAGEMENT AND
TRANSPARENCY ACT OR TIMTA LAW;
“(@) APPROVED AMOUNT OF INVESTMENTS AND EMPLOYMENT GENERATION
AND OTHER BENEFITS ON A FIRM-LEVEL BASIS ANNUALLY; AND
“(3) APPROVED AMOUNT OF TAX INCENTIVES, BOTH INCOME AND NON-INCOME
TAX BASED INCENTIVES, ON A FIRM-LEVEL BASIS ANNUALLY.
“(C) FOR PROJECTS OR ACTIVITIES THAT POSE RISK TO THE ENVIRONMENT,
HEALTH, AND ECONOMIC STABILITY AND PROJECTS OR ACTIVITIES THE
APPROVAL OF WHICH ENCOUNTERS A DEADLOCK IN THE IPAS Board, the FIRB:
“(I) Shall formulate policies on tax INCENTIVES IN ACCORDANCE WITH THE
PROVISIONS OF THIS CODE;
(2) Shall review IPAS’ compliance with THE POLICIES SET FORTH IN THIS CODE:
PROVIDED, That the FIRB may cancel or suspend the power OF IPAS to grant incentives for
violations OF SUCH POLICIES;
“(3) Shall approve the grant op incentives ON THE ABOVE INSTANCES; AND
“(4) ON THE ABOVE INSTANCES MAY SUSPEND OR CANCEL THE TAX INCENTIVES
GRANTED TO REGISTERED ENTERPRISES WHICH ARE NOT COMPLIANT WITH THE
CONDITIONS ON THE AVAILMENT OF TAX INCENTIVES AS WELL AS THE POLICIES
SET FORTH BY THE IPAS
“(D) TO PUBLISH THE NAMES OF THE REGISTERED ENTERPRISES OR
BENEFICIARIES OF TAX INCENTIVES WITH APPROVED ESTIMATED AMOUNT OF
THE CORRESPONDING TAX INCENTIVES.
“(E) TO GRANT TAX SUBSIDIES TO GOVERNMENT -OWNED AND/OR -
CONTROLLED CORPORATIONS (GOCCS), GOVERNMENT INSTRUMENTALITIES
(GIS), GOVERNMENT COMMISSARIES, AND STATE UNIVERSITIES AND COLLEGES
(SUCS) AS MAY BE PROVIDED UNDER THE ANNUAL GENERAL APPROPRIATIONS
ACT.
“Provided, That, as Chair of the FIRB AND AS THE CUSTODIAN OF FISCAL PRUDENCE
AND RESPONSIBILITY, THE SECRETARY OF FINANCE SHALL EXERCISE
OVERSIGHT FUNCTIONS AND SHALL HAVE VETO POWER OVER THE APPROVAL
AND CANCELLATION OF TAX INCENTIVES UNDER SECTION 298 (C).
“Provided, further, That the Secretary of Finance shall automatically be the Co-chair of ALL
THE EXISTING AND FUTURE IPAS.
“Provided, finally, That the National Economic and Development Authority (NEDA) AND THE
DEPARTMENT OF TRADE AND INDUSTRY (DTI) SHALL BE MEMBERS OF ALL THE
EXISTING AND FUTURE IPAS.
“SEC. 299. COMPOSITION OF THE FIRB. - THE FIRB SHALL BE RECONSTITUTED AS
FOLLOWS:
"Board Proper:
“CHAIRPERSON - SECRETARY OF FINANCE
"MEMBERS — - SECRETARY OF TRADE AND INDUSTRY
Director General op the National economic and Development authority
(NEDA)
Secretary op budget and Management
executive Secretary op the Office of the president
“Technical committee:
“Chairperson - Undersecretary of Finance
“Members
Undersecretary of Trade AND INDUSTRY/BOARD OF Investments
Managing Head
Undersecretary of Budget and Management


deputy Director General of the national Economic and development
Authority
Commissioner op Internal Revenue
~ Commissioner op Customs
~ Executive Director of the national Tax Research Center (NTRC)
“Secretariat: = National Tax Research Center

“Chapter IV
“Qualified activities for Tax Incentives

“Sec. 300. Strategic Investment Priority Plan (SIPP). - The Board of Investments (BOI), in
coordination with the Office of the President, the Fiscal Incentives Review Board, THE CONCERNED
IPAS, AND OTHER GOVERNMENT AGENCIES AND THE PRIVATE SECTOR, SHALL
FORMULATE THE SIPP TO BE SUBMITTED TO THE President for his approval not later than
December of the third year set for periodic review. The plan shall be valid for a period of THREE (3)
YEARS SUBJECT TO REVIEW AND AMENDMENT AS THE NEED ARISES. ALL SECTORS
OR INDUSTRIES THAT MAY BE INCLUDED IN THE SIPP SHALL UNDERGO AN
EVALUATION PROCESS TO DETERMINE THE SUITABILITY AND POTENTIAL OF THE
INDUSTRY OR THE SECTOR IN PROMOTING LONG-TERM GROWTH AND DEVELOPMENT,
AND THE NATIONAL INTEREST.

“THE SIPP SHALL:

“(a) Include activities that comply with THE FOLLOWING:

"(1) The activity shall be covered by the Philippine Development Plan or its equivalent AND
OTHER GOVERNMENT PROGRAMS;

“(2) The activity shall take into account ANY OF THE FOLLOWING:

“(i) Substantial amount of investments;

) Considerable generation of employment;

i) Adopt inclusive business activities AND VALUE-ADDING PRODUCTION BY MSMES;
“(iv) Use of modern or new technology;

“(v) Adoption of adequate environmental PROTECTION SYSTEMS;

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

“(vii) Promotion of market COMPETITIVENESS.

“(B) IDENTIFY AGRIBUSINESS ACTIVITIES, THE LESS DEVELOPED AREAS OR
‘THOSE RECOVERING FROM ARMED CONFLICT OR A MAJOR DISASTER.

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

"(D) Include existing registered projects or activities that shall relocate from Metro Manila to
other areas of the country.

"The activities must comply with the SPECIFIC QUALIFICATION REQUIREMENTS OR
CONDITIONS FOR A PARTICULAR SECTOR OR INDUSTRY AND OTHER
LIMITATIONS AS SET AND DETERMINED BY THE BOI.

“The threshold amount of investments and EMPLOYMENT GENERATION REQUIRED FOR
A SPECIFIC ACTIVITY SHALL BE SUBJECT TO A PERIODIC REVIEW EVERY THREE
(3) YEARS TAKING INTO CONSIDERATION INTERNATIONAL STANDARDS AND
OTHER INDICATORS.

“Sec. 301. Power of the President to Grant Incentives. - The President may, in the INTEREST
OF NATIONAL ECONOMIC DEVELOPMENT AND UPON THE RECOMMENDATION OF
THE FISCAL Incentives Review’ Board, grant incentives in addition to those that are provided
under this Code, including a longer period, to highly DESIRABLE PROJECTS: PROVIDED,
THAT THE BENEFITS THAT THE GOVERNMENT MAY DERIVE FROM SUCH
INVESTMENT THERETO IS CLEAR AND CONVINCING AND FAR OUTWEIGH THE.
COST OP INCENTIVES THAT WILL BE GRANTED.”

“Sec. 301-A. Criteria for Availment. ~ The Board of investments shall consider the
FOLLOWING CRITERIA IN DETERMINING THE TYPES OF INCENTIVES AND THE


DURATION THEREOF THAT MAY BE GRANTED:

“(A) THE PROJECT HAS A COMPREHENSIVE SUSTAINABLE DEVELOPMENT PLAN
WITH CLEAR INCLUSIVE BUSINESS APPROACHES AND INNOVATIONS; OR “(b)
Minimum investment of Two hundred million US Dollars (US$200,000,000) or a MINIMUM
DIRECT EMPLOYMENT GENERATION OF AT LEAST ONE THOUSAND FIVE
HUNDRED (1,500) WITHIN THREE (3) YEARS FROM THE START OF COMMERCIAL,
OPERATION.

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

“THE BOL MAY IMPOSE OTHER TERMS AND CONDITIONS TAKING INTO
CONSIDERATION THE AMOUNT OR KIND OP INCENTIVES THAT WILL BE
GRANTED TO SUCH INVESTMENTS.”

“Sec. 301-B. Use of Resources. - In the EXERCISE OF THE POWER OF THE PRESIDENT
TO GRANT INCENTIVES, THE GOVERNMENT MAY UTILIZE ITS RESOURCES SUCH
AS LAND USE, WATER APPROPRIATION, POWER PROVISION, AMONG OTHERS, AS
MAY BE IDENTIFED BY THE BOI.”

“SEC. 302, AMENDMENTS. - SUBJECT TO PUBLICATION REQUIREMENTS AND THE
CRITERIA FOR INVESTMENT PRIORITY DETERMINATION, THE BOI MAY, AT ANY
TIME, INCLUDE ADDITIONAL AREAS IN THE SIPP, ALTER ANY OF THE TERMS OF
THE DECLARATION OF AN INVESTMENT AREA, AND TEMPORARILY OR
PERMANENTLY SUSPEND ACTIVITIES ON THE SIPP IF IT CONSIDERS THAT SUCH
ACTIVITY IS NO LONGER A PRIORITY. IN NO CASE SHALL THE I PAS ACCEPT
APPLICATIONS UNLESS THE ACTIVITY IS JSTED IN THE SIPP.”

“SEC. 303. PUBLICATION. - UPON APPROVAL OF THE PLAN, IN WHOLE OR IN PART,
OR UPON APPROVAL OF AN AMENDMENT THEREOF, THE PLAN OR THE
AMENDMENT, SPECIFYING AND DECLARING THE AREAS OF INVESTMENTS
SHALL BE PUBLISHED IN AT LEAST ONE (1) NEWSPAPER OF GENERAL
CIRCULATION or the Official Gazette and all such areas SHALL BE OPEN FOR
APPLICATION UNTIL PUBLICATION OF AN AMENDMENT OR DELETION THEREOF.”

“Sec. 304. Qualifications of a Registered Enterprise for Tax Incentives. - In the review AND
GRANT OF TAX INCENTIVES, A REGISTERED ENTERPRISE MUST:

“(A) BE ENGAGED IN AN ACTIVITY INCLUDED IN THE SIPP;

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

"(c) Comply with the e-invoice and e-sales REQUIREMENT IN ACCORDANCE WITH
SECTION 237-A OF THIS CODE.”

"CHAPTER V
“Availment of Tax Incentives

"Sec. 305. Income Tax-based Incentives. - All registered enterprises are required to FILE ALL
THEIR TAX RETURNS USING THE ELECTRONIC/ONLINE FACILITIES OF THE
BUREAU OF Internal Revenue (BIR). In availing the income TAX-BASED INCENTIVES,
THE REGISTERED ENTERPRISE SHALL BE REQUIRED TO SECURE A CERTIFICATE
OF ENTITLEMENT ISSUED BY THE I PA AND ATTACH THE SAME TO ITS INCOME
TAX RETURN (ITR) OR ANNUAL INFORMATION RETURN (AIR), WHICHEVER IS
APPLICABLE. THEREAFTER, THE REGISTERED ENTERPRISE SHALL FILE ITS
CLAIM WITH THE BIR FOR VALIDATION.


“Failure to secure and attach the CERTIFICATION TO THE ITR OR AIR, AND/OR FILE
THE INCENTIVE AVAILMENT APPLICATION SHALL CAUSE THE FORFEITURE OF
THE INCENTIVE FOR THAT TAXABLE PERIOD.”

“Sec. 306. Customs Duty Exemption on Capital Equipment. - Importation of capital
EQUIPMENT, MACHINERY AND SPARE PARTS EXCLUSIVELY USED FOR CAPITAL
EQUIPMENT AND MACHINERY INCLUDING CONSIGNMENT THEREOF BY
REGISTERED ENTERPRISES MAY BE EXEMPTED TO THE EXTENT OF ONE
HUNDRED PERCENT (100%) OF THE CUSTOMS DUTY: PROVIDED, THAT THE
FOLLOWING CONDITIONS ARE COMPLIED WITH:

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

“(b) The approval of the IPA was obtained BY THE REGISTERED ENTERPRISE PRIOR TO
THE IMPORTATION OF SUCH CAPITAL EQUIPMENT AND/OR SPARE PARTS.

“Approval of the IPA must be secured BEFORE THE SALE, TRANSFER OK DISPOSITION
OF THE CAPITAL EQUIPMENT AND/OR SPARE PARTS WHICH WERE GRANTED
TAX AND CUSTOMS DUTY EXEMPTION HEREUNDER, AND SHALL BE ALLOWED
ONLY UNDER THE FOLLOWING CIRCUMSTANCES:

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

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

“(3) Exportation of capital equipment,
MACHINERY, SPARE PARTS OR SOURCE DOCUMENTS, OR THOSE REQUIRED FOR
POLLUTION ABATEMENT AND CONTROL; OR

“(4) FOR REASONS OF PROVEN TECHNICAL OBSOLESCENCE.

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


CAPITAL EQUIPMENT IF IT HAS VIOLATED ANY OF ITS REGISTRATION TERMS
AND CONDITIONS."

“SBC. 307. VAT REFUND MECHANISM ON Importation of Capital Equipment and Raw
Materials. - The VAT on importation of capital EQUIPMENT AND RAW MATERIALS
PAID BY EXPORT REGISTERED ENTERPRISES THAT DID NOT MEET THE NINETY
PERCENT (90%) EXPORT SALES THRESHOLD OR ARE LOCATED OUTSIDE THE
ECOZONE, FREEPORT, OR THOSE UTILIZING THE CUSTOMS BONDED
MANUFACTURING WAREHOUSE REGARDLESS OF THE THRESHOLD SHALL BE
REFUNDED PURSUANT TO THE ENHANCED VAT REFUND SYSTEM UNDER
SECTIONS 106 AND 108 OF THIS CODE.”

"CHAPTER VI

“Final Provisions

“Sec. 308. No Double Registration of ENTERPRISES. - REGISTERED ENTERPRISES
SHALL NOT BE ALLOWED TO REGISTER THEIR ACTIVITIES IN MORE THAN ONE
(1) IPA”

“Sec. 309. Governance Rules. ~ The DIFFERENT IPAS MAY REQUIRE DOMESTIC
REGISTERED ENTERPRISES TO LIST THEIR SHARES OF STOCK IN ANY
ACCREDITED STOCK EXCHANGE OR DIRECTLY OFFER A PORTION OF THEIR
CAPITAL STOCK TO THE PUBLIC AND/OR THEIR EMPLOYEES WITHIN FIVE (5)
YEARS FROM DATE OF REGISTRATION.”

“Sec. 310, Investments Prior to the Effecttvity op this Act. - Existing registered ACTIVITIES
GRANTED THE INCOME TAX HOLIDAY SHALL BE ALLOWED TO CONTINUE WITH
THE AVAILMENT OF THE SAID INCENTIVE FOR THE REMAINING PERIOD OF THE
ITH OR FOR A PERIOD OF FIVE (5) YEARS ONLY, WHICHEVER COMES FIRST:
PROVIDED, THAT OTHER TAX INCENTIVES GRANTED TO EXISTING REGISTERED
ACTIVITIES, SUCH AS THE FIVE PERCENT (5%) TAX ON GROSS INCOME EARNED
IN LIEU OF ALL TAXES, BOTH NATIONAL AND LOCAL, SHALL BE ALLOWED TO
CONTINUE FOLLOWING THE SCHEDULE STATED HEREIN:

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

“(b) Three (3) years for activities enjoying THE TAX INCENTIVE BETWEEN FIVE (5) AND
TEN (10) YEARS;

“(c) Five (5) years for activities enjoying THE TAX INCENTIVE BELOW FIVE (6) YEARS.
“Provided, ‘That the five percent (5%) tax ON GROSS INCOME EARNED SHALL
COMMENCE AFTER THE ITH PERIOD HAS LAPSED ONLY FOR THE REMAINING
YEARS WITHIN THE FIVE (5)-YEAR PERIOD.”

“Sec, 311. Suspension and Forfeiture of Tax Incentives of Registered Enterprises, Refund and
Penalties; Waiver and Condonation. - The IPA may impose fines and penalties, SUSPEND
AND/OR FORFEIT THE INCENTIVES GRANTED TO THE REGISTERED
ENTERPRISES WHENEVER THERE ARE VIOLATIONS OF THE REGISTRATION
TERMS AND CONDITIONS BY THE LATTER, WITHOUT PREJUDICE TO THE
CANCELLATION OF THE REGISTRATION OF SAID ENTERPRISE.

"When there is probable cause to believe THAT THE REGISTERED ENTERPRISE HAS
VIOLATED ITS REGISTRATION TERMS AND CONDITIONS, THE IPA SHALL
SUSPEND THE AVAILMENT OF INCENTIVES UNTIL PROVEN OTHERWISE:
PROVIDED, THAT FOR PROJECTS under Section 298(C), the concerned IPA shall
RECOMMEND TO THE FIRB THE SUSPENSION OF ITS AVAILMENT OF
INCENTIVES.

“IN CASE OF CANCELLATION OF THE CERTIFICATE OF REGISTRATION, THE
CONCERNED IPA MAY, IN APPROPRIATE CASES, REQUIRE THE PAYMENT OF


TAXES, CUSTOMS DUTIES AND ANY APPLICABLE PENALTIES THEREON TO THE.
APPROPRIATE AGENCY, AND IMPOSE ADDITIONAL FINES AND PENALTIES.

“For this purpose, the IPAs shall prepare A SCHEDULE OF FEES, FINES AND PENALTIES
TO BE IMPOSED ON ERRING REGISTERED ENTERPRISES DEPENDING ON
THE GRAVITY OF THE VIOLATION INCURRED IN ADDITION TO THE FINES AND
PENALTIES IMPOSABLE UNDER THIS CODE.
“In MERITORIOUS CASES, THE IPA MAY WAIVE, CONDONE OR REDUCE FINES OR
PENALTIES IMPOSED ON REGISTERED ENTERPRISES BY THE IPAS: PROVIDED,
That the minimum compromise rate, in case of REDUCTION, SHALL NOT BE LESS THAN
FORTY PERCENT (40%) OF THE BASIC ASSESSED FINES OR PENALTIES."

“Sec. 312. Structural Adjustment Fund. - The FOLLOWING AMOUNTS SHALL BE
APPROPRIATED TO COMPENSATE WORKERS THAT MAY BE DISPLACED BY THE
RATIONALIZATION OF FISCAL INCENTIVES TO IMPROVE EMPLOYABILITY OF
WORKERS:

“() The amount of Five hundred million PESOS (P500.000.000) SHALL BE
APPROPRIATED ANNUALLY, IN ADDITION TO ANY ADJUSTMENT FUND
APPROPRIATED UNDER THE BUDGET OF THE Department of Labor and Employment,
to PROVIDE TARGETED CASH GRANTS OR OTHER SUPPORT PROGRAMS TO
DISPLACED WORKERS OF FIRMS THAT MAY BE AFFECTED BY THE
RATIONALIZATION OF FISCAL INCENTIVES;

"(2) THE AMOUNT OF FIVE HUNDRED MILLION PESOS (P500,000,000) SHALL BE
APPROPRIATED ANNUALLY TO PROVIDE TARGETED TRAININGS TO DISPLACED
WORKERS OF FIRMS THAT MAY BE AFFECTED BY THE RATIONALIZATION OF
FISCAL INCENTIVES;

"(3) The amount of Five billion pesos (P5,000,000,000) SHALL be allocated annually for THE
SKILLS UPGRADE PROGRAM OF THE IT-BPO INDUSTRY. The fund shall be solely used
to pay FOR FORMAL ACADEMIC OR TRAINING PROGRAMS OF ACCREDITED
PRIVATE OR PUBLIC SCHOOLS AND TRAINING CENTERS; AND

“(4) The amount of Fifteen billion pesos (P_15,000,000,000), IN ADDITION TO ANY
ADJUSTMENT FUND APPROPRIATED UNDER THE BUDGET OF PERTINENT
GOVERNMENT DEPARTMENTS/AGENCIES, SHALL BE APPROPRIATED FOR THE
DEVELOPMENT OF INFRASTRUCTURE SURROUNDING AND WITHIN THE
AREAS/LOCALITIES OF SPECIAL ECONOMIC ZONES AND FREEPORTS TO BE
AFFECTED BY THIS ACT. THIS SUBSIDY SHALL LIKEWISE BE UTILIZED TO
‘SUPPORT ARCH AND DEVELOPMENT; COSTS OF POWER, WATER AND
OTHER UTILITIES; LEASE OF PROPERTIES; AND OTHER ECONOMIC ACTIVITIES
RELEVANT TO DEVELOPING THE ABOVEMENTIONED AREAS/LOCALITIES.

"Provided, That releases to the INVESTMENT PROMOTION AGENCIES SHALL BE
GOVERNED BY IMPLEMENTING GUIDELINES TO BE PROMULGATED BY THE
DEPARTMENT OF FINANCE AND the Department of Budget and Management.

"Provided, further, That earmarking for THESE FUNDS IN THIS SECTION SHALL BE
TERMINATED FIVE (5) YEARS AFTER THE EFFECTIVITY OF THIS ACT.”

“Sec. 313, Enhanced Tax Expenditure Fund System. - All internal revenue tax and duty
OBLIGATIONS OF | GOVERNMENT-OWNED = AND/OR CONTROLLED
CORPORATIONS SHALL BE CHARGEABLE TO THE TAX EXPENDITURE FUND OF
THE GOVERNMENT UPON THE ESTABLISHMENT AND IMPLEMENTATION OF AN
ENHANCED TAX EXPENDITURE FUND SYSTEM THAT GRANTS TAX SUBSIDY
WITHIN THIRTY (30) DAYS FROM THE FILING OF APPLICATION WITH THE Fl RB.

“Sec. 314. The name of recipients of INCENTIVES AND THE AMOUNT OF INCENTIVES


AVAILED SHALL BE REPORTED BY THE INVESTMENT PROMOTION AGENCIES
ANNUALLY TO CONGRESS. THE REPORT SHALL BE MADE AVAILABLE TO THE
PUBLIC.”

SEC. 35. Title XIII of the National Internal Revenue Code of 1997, as amended, is hereby
retitled as Title XIV.

SEC. 36. Title XIV of the National Internal Revenue Code of 1997, as amended, is hereby
retitled as Title XV.

‘See. 37. Amendatory Clause. ~

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

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

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

(3) Section 3 of Executive Order No. 80, series of 1993, entitled “Authorizing the
Establishment of the Clark Development Corporation as the Implementing Arm of the
Bases Conversion and Development Authority for the Clark Special Economic Zone,
and Directing all Heads of Departments, Bureaus, Offices, Agencies and
Instrumentalities of Government to Support the Program";

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

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

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

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

(8) Section 15 of Republic Act No. 9490, entitled “An Act Establishing the Aurora
Special Economic Zone in the Province of Aurora, Creating for the Purpose the Aurora
Special Economic Zone Authority, Appropriating Funds Therefor and for Other
Purposes”, as amended by Republic Act No. 10083;


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

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

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

(b) The following laws are hereby amended to mandate all internal revenue tax and duty
obligations of the relevant entities be chargeable to the Tax Expenditure Fund (TEF) pursuant
to Section 313 of this Act:

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

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

(3) Section 12(a) of Republic Act No. 10083, entitled "An Act Amending Republic Act
‘No. 9490, Otherwise Known as the ‘Aurora Special Economic Zone Act of 2007”;

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

(5) Section 10 of Presidential Decree No. 538, entitled "Creating and Establishing the
PHIVIDEC Industrial Authority and Making it a Subsidiary Agency of the Philippine
Veterans Investment Development Corporation, Defining its Powers, Functions and
Responsibilities, and for Other Purposes";

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

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

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


(9) Sections 2 and 19 of Republic Act No. 9679, entitled “An Act Amending the Home
Development Mutual Fund, Otherwise Known as the Pag-IBIG Fund";

(10) Section 17(c) under Section 8 of Republic Act No. 9676, entitled "An Act
Increasing the Maximum Deposit Insurance Coverage, and in Connection Therewith,
to Strengthen the Regulatory and Administrative Authority, and Financial Capability
of the Philippine Deposit Insurance Corporation (PDIC), Amending for this Purpose
Republic Act Numbered Three Thousand Five Hundred Ninety-One, as Amended,
Otherwise Known as the PDIC Charter and for Other Purposes";

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

(12) Section 64) of Republic Act No. 9610, entitled “An Act Establishing the Credit
Information System and for Other Purposes";

(13) Section 13(e) of Presidential Decree No. 857, entitled "Providing for the
Reorganization of Port Administrative and Operation Functions m the Philippines,
Revising Presidential Decree No. 605 dated July 11, 1974, Creating the Philippine Port
Authority, by Substitution, and for Other Purposes”;

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

(15) Section 8(aXb) and Section 13 of Republic Act No. 6395, entitled “An Act
Revising the Charter of the National Power Corporation"; and (16) Section 21 of
Republic Act No. 7306, entitled “An Act Providing for the Establishment of the
People’? Television Network. Inc., Defining its Powers and Functions, Providing for
its Sources of Funding and for Other Purposes.”

SEC. 38. Repealing Clauses. ~

(a) The tax treatment provisions of entities covered by the following franchise laws are hereby
amended or repealed effective two (2) years from the implementation of this Act: Provided,
‘That the tax treatment provisions of entities covered by franchise laws pertaining to energy and
telecommunications shall be deferred for an additional two (2) years:

(1) Section 9 of Republic Act No. 7953, entitled “An Act Amending Republic Act Numbered
Sixty-Six Hundred Thirty-Two, entitled “An Act Granting the Philippine Racing Act, Inc., a
Franchise to Operate and Maintain a Race Track for Horse Racing in the Province of Rizal, and
Extending the Said Franchise by Twenty-five (25) Years From the Expiration of the Term
Thereof";

(2) Section 12 of Republic Act No. 8407, entitled “An Act Amending Republic Act Numbered
Sixty-Six Hundred Thirty-One, entitled “An Act Granting Manila Jockey Club, Inc., a Franchise
to Construct, Operate and Maintain a Race Track for Horse Racing in the City of Manila or any
Place Within the Provinces of Bulacan, Cavite or Rizal and Extending the Said Franchise by
‘Twenty-five (25) Years From the Expiration of the Term Thereof

(3) Section 9 of Republic Act No. 8298, entitled "An Act Amending Republic Act Numbered
Seventy-Nine Hundred Seventy-Eight, entitled ‘An Act Granting the Metro Manila Turf Club,
Inc., a Franchise to Construct, Operate and Maintain a Racetrack for Horse Racing in the City
of Kalookan"; and

(4) Section 12 of Republic Act No. 8446, entitled “An Act Granting the Fil-Asia Racing Club
a Franchise to Construct, Operate and Maintain a Racetrack for Horse Racing in Rizal or Tarlac,


or Pampanga or Batangas or Quezon City”.

(b) The provisions of the following laws, including the tax incentives, that are inconsistent with
this Act are hereby amended or repealed effective two (2) years from the implementation of
this Act: Provided, That the tax treatment provisions of entities covered by special laws
pertaining to energy, agriculture, and telecommunications shall be deferred for an additional
two (2) years:

(1) Section 37 of Republic Act No. 6848, entitled “An Act Providing for the 1989 Charter of
the Al-Amanah Islamic Investment Bank of the Philippines, Authorizing its Conduct of Islamic
Banking Business, and Repealing for this Purpose Presidential Decree Numbered Two Hundred
and Sixty-Four as Amended by Presidential Decree Numbered Five Hundred and Forty-Two";

(2) Section 17 of Republic Act No. 7906, entitled “An Act Providing for the Regulation of the
Organization and Operations of Thrift Banks, and for Other Purposes”;

(3) Section 16 of Republic Act No. 7353, entitled “An Act Providing for the Creation,
Organization and Operation of Rural Banks, and for Other Purposes”;

(4) Book I, Title HI, Article 39(A), (B), (C), (D), (E), (G), a) and (J); Title IV, Article 40; Book
Ill, Articles 69, 60, 61; Book IV Article 69; Book VI, Articles 77 and 78 of Executive Order
No. 226, series of 1987, entitled ‘The Omnibus Investments Code of 1987*;

(5) Section 1 of Republic Act No. 7918, entitled “An Act Amending Article 39, Title m of
Executive Order No. 226, Otherwise Known as the Omnibus Investments Code of 1987, as
Amended, and for Other Purposes”;

(6) Articles 62, 63, 64. 65, 66, 67, and 69 of Republic Act No. 8756, entitled “An Act Providing
for the Terms, Conditions and Licensing Requirements of Regional or Area Headquarters,
Regional Operating Headquarters, Regional Warehouses of Multinational Companies,
Amending for the Purpose Certain Provisions of Executive Order No. 226, Otherwise Known
as the Omnibus Investment Code of 1987”;

(7) Executive Order No. 22, series of 2017, amending Executive Order No. 70, series of 2012
and Executive Order No. 628, series of 2006 and Executive Order No. 313, series of 2004,
entitled "Reducing the Rates of Duty on Capital Equipment, Spare Parts and Accessories
Imported by Board of Investments - Registered New and Expanding Enterprises”;

(8) Section 12 of Republic Act No. 8047, entitled “An Act Providing for the Development of
the Book Publishing Industry Through the Formulation and Implementation of a National Book
Policy and a National Book Development Plan”;

(9) Section 17(1) to (8) insofar as tax exemption and/or VAT zero-rating on domestic
merchandise is concerned, and Section 18(a), (b), (c), and (f) of Presidential Decree No. 66,
entitled “Creating the Export Processing Zone Authority and Revising Republic Act No. 5490";

(10) Si 4(e) and (f), insofar as tax exemption and/or VAT zero-rating on domestic
merchandise is concerned, of Republic Act No. 7903, entitled “An Act Creating Special
Economic Zone and Freeport in the City of Zamboanga and Establishing for this Purpose the
Zamboanga City Special Economic Zone Authority, Appropriating Funds Therefor, and for
Other Purposes";

(11) Section 4(b\(), insofar as tax exemption and/or VAT zero-rating on domestic merchandise
is concemed, of Republic Act No. 7922, entitled “An Act Establishing n Special Economic
Zone and Freeport in the Municipality of Santa Ana and the Neighboring Islands in the
Municipality of Aparri, Province of Cagayan Providing Funds Therefor, and for Other
Purposes”;


(12) Section 4 of Republic Act No. 8748, entitled “An Act Amending Republic Act No, 7916,
Otherwise Known as the Special Economic Zone Act of 1995";

(13) Sections 23 and 24 of Republic Act No. 7916, entitled "An Act Providing for the Legal
Framework and Mechanisms for the Creation, Operation, Administration, and Coordination of
Special Economic Zones in the Philippines, Creating for the Purpose the Philippine Economic
Zone Authority (PEZA), and for Other Purposes”;

(14) Section 1 of Republic Act No. 9400, amending Section 12(b) of Republic Act No. 7227,
insofar as tax exemption and VAT zero-rating of domestic merchandise and capital equipment
are concerned, Section 12(c), Section 2 amending Section 15, second, third and last paragraph
of Republic Act No. 7227, Section 3, first and second paragraph; Sections 4 and 5 entitled “An
‘Act Amending Republic Act No. 7227, as Amended, Otherwise Known as the Bases
Conversion and Development Act of 1982, and for Other Purposes”;

(15) Section 1 of Executive Order No. 619, entitled "Creating and Designating Special
Economic Zones Pursuant to Republic Act No. 7916, aa Amended by Republic Act No. 8784,
in Relation to Republic Act No. 7227, as Amended by Republic Act No. 9400, Inside the Clark
Freeport Zone”

(16) Sections 6, 6, 7, 8, and 9 of Republic Act No, 9490, entitled “An Act Establishing the
Aurora Special Economic Zone in the Province of Aurora, Creating for the Purpose the Aurora
Special Economic Zone Authority, Appropriating Funds Therefor and for Other Purposes”;

(17) Sections 3(e(f(1>) and 4 of Republic Act No. 10083, entitled “An Act Amending
Republic Act No. 9490”; (18) Section 4(0, insofar as tax exemption and/or value-added tax or
VAT zero-rating on domestic merchandise and capital equipment are concemed, and Sections
5,6, and 10 of Republic Act No. 9728, entitled “An Act Converting the Bataan Economic Zone
Located in the Municipality of Mariveles, Province of Bataan, into the Freeport Area of Bataan
(FAB), Creating for this Purpose the Authority of the Freeport Area of Bataan (AFAB),
Appropriating Funds Therefor and for Other Purposes”;

(19) Section 36(e) and (f) of Presidential Decree No. 706, entitled “Revising PD No. 389,
Otherwise Known as the Forestry Reform Code of the Philippines”;

(20) Section (b1(c) of Republic Act No. 9003, entitled “An Act Providing for an Ecological
Solid Waste Management Program, Creating the Necessary Institutional Mechanisms and
Incentives, Declaring Certain Acts Prohibited and Providing Penalties, Appropriating Funds
‘Therefor and for Other Purposes";

(21) Section 26(aX(1)(3) of Republic Act No. 9276, entitled "An Act Providing for
Comprehensive Water Quality Management and for Other Purposes";

(22) Sections 16 and 17 of Republic Act No. 7844, entitled “An Act to Develop Exports as a
Key Towards the Achievement of the National Goals Towards the Year 2000";

(23) Section 13 of Republic Act No. 10817, entitled "An Act Instituting the Philippine Halal
Export Development and Promotion Program, Creating for the Purpose the Philippine Halal
Export Development and Promotion Board, and for Other Purposes”;

(24) Section 14 of Republic Act No. 8423, entitled “An Act Creating the Philippine Institute of
Traditional and Altemative Health Care (PITAHC) to Accelerate the Development of
Traditional and Alternative Health Care in the Philippines, Providing for a Traditional and
Alternative Health Care Development Fund and forOther Purposes”;

(25) Section 20(d)(1) to (5) of Republic Act No. 10884, entitled "An Act Strengthening the
Balanced Housing Development Program, Amending for the Purpose Republic Act No. 7279,
as Amended, Otherwise Known as the Urban Development and Housing Act of 1992”;


(26) Republic Act No. 7718, entitled "An Act Amending Certain Sections of Republic Act No.
6957, Entitled ‘An Act Authorizing the Financing, Construction, Operation and Maintenance
of Infrastructure Projects by the Private Sector, and for Other Purposes’ ";

(27) Section 6(cd)(A) and Sections 7 and 8 of Republic Act No. 7103, entitled “An Act to
Strengthen the Iron and Steel Industry and Promote Philippine Industrialization and for Other
Purposes”;

(28) Section 3(a) to (d) and (h) of Republic Act No. 8602, entitled "An Act to Promote the
Development of the Jewelry Manufacturing Industry, Providing Incentives Therefor and for
Other Purposes";

(29) Section 5(a)(b) of Republic Act No. 10771, entitled “An Act Promoting the Creation of
Green Jobs, Granting Incentives and Appropriating Funds Therefor”;

(30) Sections 9(h)(10) of Republic Act No. 9601, entitled “Promoting Entrepreneurship by
Strengthening Development and Assistance Programs to Micro, Small and Medium Scale
Enterprises Amending Republic Act No. 6977, Otherwise Known as the Magna Carta For Small
Enterprises";

(31) Section 7 of Republic Act No. 9178, entitled "An Act to Promote the Establishment of
Barangay Micro Business Enterprises (BMBES), Providing Incentives and Benefits Therefor,
and for Other Purposes";

(32) Chapter XV, Section 83; Chapter XVI, Sections 90, 91, 92, and 93 of Republic Act No.
7942, entitled "An Act Instituting a Now System of Mineral Resources Exploration,
Development, Utilization and Conservation”;

(33) Chapter Il, Section 4 and Chapter VIII, Section 19 of Republic Act No. 9295, entitled "An
Act Promoting the Development of Philippine Domestic Shipping, Shipbuilding, Ship Repair
and Ship Breaking, Ordaining Reforms in Government Policies Towards Shipping in the
Philippines and for Other Purposes";

(34) Section 6 of Republic Act No. 7471, as amended, entitled “An Act to Promote the
Development of Philippine Overseas Shipping”;

(35) Sections 86, 88. and 95(a) and (b) of Republic Act No. 9593, entitled “An Act Declaring,
a National Policy for Tourism as an Engine of Investment, Employment, Growth and National
Development, and Strengthening the Department of Tourism and its Attached Agencies to
Effectively and Efficiently Implement That Policy, and Appropriating Funds Therefor”;

(36) Section 8, insofar as investment incentives are concerned, of Republic Act No. 10816,
entitled “An Act Providing for the Development and Promotion of Farm Tourism in the
Philippines";

(37) Section 8 of Presidential Decree No. 1491, Amending Section 8 of Presidential Decree No.
538 (Philippine Veterans Investment Development Corporation);

(38) Section 8, insofar as tax exemption and VAT zero-rating of domestic merchandise are
concerned, and Section 9 of Presidential Decree No. 538, entitled “Creating and Establishing
the PHIVIDEC Industrial Authority and Making it a Subsidiary Agency of the
Veterans Development Corporation, Defining its Powers, Functions and Responsibilities, and
for Other Purposes”;

(39) Section 1(1.1) of Executive Order No. 97-A, series of 1993, entitled “Further Clarifying
the Tax and Duty-Free Privilege Within the Subic Special Economic and Free Port Zone";


(40) Sections 4(£) and 6(c)(k), insofar as tax exemption and/or VAT zero-rating on domestic
merchandise is concerned, and Section 12(b) of Republic Act No. 10083, entitled “An Act
Amending Republic Act No. 9490, Otherwise Known as the Aurora Special Economic Zone
Act of 2007”;

(41) Section 5(5.1) and (5.2) of Executive Order No. 290, series of 2004, entitled
“Implementing the Natural Gas Vehicle Program for Public Transport”;

(42) Sections 18 and 20 of Republic Act No. 6847, entitled “An Act Creating and Establishing,
the Philippine Sports Commission, Defining its Powers, Functions, and Responsibilities,
Appropriating Funds Therefor, and for Other Purposes";

(43) Section 22 of Republic Act No. 9337, entitled “An Act Amending Sections 27, 28, 34,
106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 161, 236, 237, and 288
of the National Internal Revenue Code of 1997, as Amended, and for Other Purposes”;

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

(45) Section 2 of Presidential Decree No. 1931, series of 1984, entitled “Directing the
Rationalization of Duty and Tax Exemption Privileges Granted to Government-Owned or -
Controlled Corporations and All Other Units of Government”;

(46) Section 1(c) and (4) of Executive Order No. 93, series of 1986, entitled “Withdrawing All
Tax and Duty Incentives, Subject to Certain Exceptions, Expanding the Powers of the Fiscal
Incentives Review Board and for Other Purposes"; and

(47) Section 1(a) and (b) of Presidential Decree No. 1966, entitled "Withdrawing, Subject to
Certain Conditions, the Duty and Tax Privileges Granted to Private Business Enterprises and/or
Persons Engaged in Any Economic Activity and for Other Purpose:

(©) Memorandum Order No. 23, series of 1986, entitled "Expanding the Membership of the
Fiscal Incentives Review Board", 13 is hereby repealed.

(d) In General. — All other laws, decrees, executive orders, rules and regulations or parts
thereof which are contrary to or inconsistent with this Code are hereby repealed, amended or
modified accordingly.

SEC. 39, Implementing Rules and Regulations. — Within ninety (90) days from the effectivity of this
Act, the Secretaries of Finance and Trade and Industry shall, upon consultations with the Commissioner
of Internal Revenue and the Board of Investments and other Investment Promotion Agencies,
promulgate the necessary rules and regulations for its effective implementation.

SEC. 40. Separability Clause. - If any clause, sentence, paragraph, or part of this Code shall be adjudged
by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate
the remainder of said Code, but shall be confined in its operation to the clause, sentence, paragraph, or
part thereof directly involved in the controversy.

SEC. 41. Effectivity. — This Act shall take effect on January 1, 2020 after its complete publication in
the Official Gazette or in a newspaper of general circulation.

Approved,