EIGHTEENTH CONGRESS
REPUBLIC OF THE PHILIPPINES
First Regular Session

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez
3846

Stor 97

House Bill No.
EXPLANATORY NOTE
This bill covers part of 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 modemizing investment tax incentives which will broaden
the tax base.
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 addressed by overhauling the
corporate income tax system and improving the collection process.
2. Rationalize, modemize and simplify the Philippines’ tax incentives system.

3. ‘The outdated tax code lacks adequate provisions to address transfer pricing and other
anti-avoidance practices which is being corrected by this bill

In view of the foregoing, immediate approval of this bill is earnestly requested

Rl B. RODR!


EIGHTEENTH CONGRESS
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez ___
3846

House Bill No.

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

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

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

‘SEC. 2. Section 4 of the National Intemal 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 XiIll 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 intemal 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 intemal 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 retum, or in making a retum when none has been made, or in
determining the liability of any person for any internal revenue tax, or in
collecting any such liability, or in evaluation tax compliance, the
Commissioner is authorized:

(A) xxx
(B) xx

{C) xxx


{D) 0% [ and J
(E) x0; AND

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

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
PERSONALLY OR BY MAIL, OR 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 intemal Revenue
Code of 1997, as amended, to read as follows:

“SEC. 6-A. — SERVICE OF LETTER OF AUTHORITY, AUDIT 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 ADRESS. 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, as 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 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, UNLESS
TAXPAYER CONSENTS IN WRITING TO SUCH DISCLOSURE.

[ (8) ] (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. - 20
“(A) 10x
(B) xx
(C) xxx
(D) x0
() 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 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.


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

20K,

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

“SEC. 25, Tax on Nonresident Alien Individual. -
(A) Non-resident Alien Engaged in trade or Business Within the Philippines. ~

(1) In General. — A nonresident alien individual engaged in trade or
business in the Philippines shall be subject to an income tax in the
same manner as an individual citizen and a resident alien individual,
on taxable income received from all sources within the Philippines. A
nonresident alien individual who shall come to the Philippines and stay
therein for an aggregate period of more than one hundred eighty
THREE [(180)] (183) days OR MORE during any calendar year shall
be deemed a ‘nonresident alien doing business in the Philippines.”
Section 22 (G) of this Code notwithstanding

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

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

(A) In General. - Except as otherwise provided in this Code, AN
INCOME TAX RATE OF PERCENT (30%), is hereby imposed upon the
taxable income derived during each taxable year from all sources within and
without the Philippines by every corporation, as defined in Section 22(B) of
this Code and taxable under this Title as a corporation, organized in, or
existing under the laws of the Philippines: [ Provided, that effective January
1, 2008, the rate of income tax shall be thirty percent (30%). ] PROVIDED,
THAT THE RATE OF CORPORATE INCOME TAX SHALL BE TWENTY
EIGHT PERCENT (28%) BEGINNING JANUARY 1, 2021; TWENTY SIX
PERCENT (26%) BEGINNING JANUARY 1, 2023; TWENTY FOUR
PERCENT (24%) BEGINNING JANUARY 1, 2025; TWENTY TWO
PERCENT (22%) BEGINNING JANUARY 1, 2027; AND TWENTY
PERCENT (20%) BEGINNING JANUARY 1, 2029. PROVIDED FURTHER,
THAT THE SCHEDULED DECREASE IN THE RATE MAY BE
SUSPENDED BY THE PRESIDENT UPON RECOMMENDATION OF THE
SECRETARY OF FINANCE IF THE PROJECTED DEFICIT TARGET AS A
PERCENT OF GDP EXCEEDS THE PROGRAMMED DEFICIT, AS
DETERMINED BY THE DEVELOPMENT BUDGET COORDINATION
COMMITTEE (DBCC), IN THE PRECEDING YEAR PRIOR TO THE
SCHEDULED REDUCTION IN THE CIT RATE, BASED ON THE ANNUAL
REVIEW OF THE MEDIUM TERM FISCAL PROGRAM.

In the case of corporations adopting the fiscal-year accounting period,
the taxable income shall be computed without regard to the specific date
when specific sales, purchases and other transactions occur. Their income


and expenses for the fiscal year shall be deemed to have been earned and
spent equally for each month of the period.

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

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

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

(2) 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; and

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

(B) 10%
(C) xxx
(D) xx
(E) 0x

SEC. 9. 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) Tax on Resident Foreign Corporations. -

(1) In General. - Except as otherwise provided in this Code, a
corporation organized, authorized, or existing under the laws of any foreign
country, engaged in trade or business within the Philippines, shall be subject
to an income tax equivalent to THIRTY PERCENT (30%) [ thirty-five percent
(35%) ] of the taxable income derived in the preceding taxable year from all
sources within the Philippines: [ Provided, That effective January 1, 2009, the
rate of income tax shall be thirty percent (30%). ] PROVIDED, THAT THE
RATE OF CORPORATE INCOME TAX SHALL BE TWENTY. EIGHT
PERCENT (28%) BEGINNING JANUARY 1, 2021; TWENTY SIX PERCENT
(26%) BEGINNING JANUARY 1, 2023; TWENTY FOUR PERCENT (24%)
BEGINNING JANUARY 1, 2025; TWENTY TWO PERCENT (22%)
BEGINNING JANUARY 1, 2027; AND TWENTY PERCENT (20%)

6


BEGINNING JANUARY 1, 2029. PROVIDED FURTHER, THAT THE
SCHEDULED DECREASE IN THE RATE MAY BE SUSPENDED BY THE
PRESIDENT UPON RECOMMENDATION OF THE SECRETARY OF
FINANCE IF THE PROJECTED DEFICIT TARGET AS A PERCENT OF
GDP EXCEEDS THE PROGRAMMED DEFICIT, AS DETERMINED BY THE
DBCC, IN THE PRECEDING YEAR PRIOR TO THE SCHEDULED
REDUCTION IN THE CIT RATE, BASED ON THE ANNUAL REVIEW OF
THE MEDIUM TERM FISCAL PROGRAM.

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

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

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

£(S) 1 (4) Tax on Branch Profits Remittances. — Any profit remitted by
a branch to its head office shall be subject to a tax of fifteen percent (15%)
which shall be based on the total profits applied or earmarked for remittance
without any deduction for the tax component thereof (except those activities
which are registered with the Philippine Economic Zone Authority) . Xxx

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

7


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

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

£7) 1 (8) Tax on Certain incomes Received by a Resident Foreign
Corporation. —

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

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

coed

(©) 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 100,000 5%
On any amount in excess of P100,000 10% ]

(d) Intercorporate Dividends. xxx

(8) Tax on Nonresident Foreign Corporation. -

(1) In General. - Except as otherwise provided in this Code, a foreign
corporation not engaged in trade or business in the Philippines shall pay a tax
equal to THIRTY PERCENT (30%) [ thirty-five percent (35%) ] of the gross
income received during each taxable year from all sources within the
Philippines, such as interests, dividends, rents, royalties, salaries, premiums
(except reinsurance premiums), annuities, emoluments or other fixed or
determinable annual, periodic or casual gains, profits and income, and capital
gains, except capital gains subject to tax under subparagraph 5 (c)
[Provided, That effective January 1, 2009, the rate of income tax shall be
thirty percent (30%). ] PROVIDED, THAT THE RATE OF CORPORATE
INCOME TAX SHALL BE TWENTY EIGHT PERCENT (28%) BEGINNING
JANUARY 1, 2021; TWENTY SIX PERCENT (26%) BEGINNING JANUARY
4, 2023; TWENTY FOUR PERCENT (24%) BEGINNING JANUARY 1, 2025;
TWENTY TWO PERCENT (22%) BEGINNING JANUARY 1, 2027; AND

8


TWENTY PERCENT (20%) BEGINNING JANUARY 1, 2029. PROVIDED
FURTHER, THAT THE SCHEDULED DECREASE IN THE RATE MAY BE
SUSPENDED BY THE PRESIDENT UPON RECOMMENDATION OF THE
SECRETARY OF FINANCE IF THE PROJECTED DEFICIT TARGET AS A
PERCENT OF GDP EXCEEDS THE PROGRAMMED DEFICIT, AS
DETERMINED BY THE DBCC, IN THE PRECEDING YEAR PRIOR TO THE
SCHEDULED REDUCTION IN THE CIT RATE, BASED ON THE ANNUAL
REVIEW OF THE MEDIUM TERM FISCAL PROGRAM.

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

(3) xx
(4) 10

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

(a) Interest on Foreign Loans. ~ xxx

(b)_Intercorporate Dividends. ~ A final withholding tax at the
rate of fifteen percent (15%) is hereby imposed on the amount of cash
and/or property dividends received from a domestic corporation, which
shall be collected and paid as provided in Section 57 (A) of this Code,
Subject to the condition that the country in which the nonresident
foreign corporation is domiciled, shall aliow a credit against the tax
due from the nonresident foreign corporation taxes deemed to have
been paid in the Philippines equivalent to [ twenty percent (20%) ]
FIFTEEN PERCENT (15%) which represents the difference between
the regular income tax [ of thirty-five percent (35%) ] and the fifteen
Percent (15%) tax on dividends as provided in this subparagraph:
Provided, that EFFECTIVE JANUARY 1, 2021, [ effective January 1,
2009 ], the credit against the tax due shall be equivalent to [ fifteen
percent (15%), which represents ] the difference between the regular
income tax RATE [ of thirty percent (30%) ] and the fifteen percent
(15%) tax on dividends

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

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

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

“SEC. 34. Deductions from Gross Income. ~ Except for taxpayers eaming
‘compensation income arising from personal services rendered under an
employer-employee relationship where no deductions shall be allowed under

9


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
(2) 0x
(B) Interest.-

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

IF RATE IS 28%, INTEREST EXPENSE REDUCTION RATE IS 29%
IF RATE IS 26%, THE INTEREST EXPENSE REDUCTION RATE IS
23%
IF RATE IS 24%, THE INTEREST EXPENSE REDUCTION RATE IS
16%
IF RATE IS 22%, THE INTEREST EXPENSE REDUCTION RATE IS
9%
IF RATE IS 20%, THE INTEREST EXPENSE REDUCTION RATE IS
0%
PROVIDED, FINALLY, THAT IF THE TAX ON INTEREST INCOME
IS ADJUSTED IN THE FUTURE, THE INTEREST EXPENSE
REDUCTION RATE SHALL BE ADJUSTED ACCORDINGLY
BASED ON THE PRESCRIBED STANDARD FORMULA AS
DEFINED IN THE RULES AND REGULATIONS TO BE
PROMULGATED BY THE SECRETARY OF FINANCE, UPON THE
RECOMMENDATION OF THE COMMISSIONER.

(2) 20x
(C) Taxes, - xxx
(D) Losses. - xxx
(E) Bad Debts. — xxx
(F) Depreciation. - xxx

10


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

(H) Charitable and Other Contributions. - xxx

(\) Research and Development. - xxx

(J) Pension Trusts. - xxx

(ik) 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 MICRO, SMALL OR MEDIUM-
SIZED ENTERPRISE (MSME) AS DETERMINED BY THE
DEPARTMENT OF TRADE AND INDUSTRY AND subject to tax
under Sections 27(A) and 28 (A)(1), [ it ] may elect a standard
deduction in an amount not exceeding forty percent (40%) of its gross
income as defined in Section 32 of this Code: Unless the taxpayer
signifies in his return his intention to elect the optional standard
deduction, he shall be considered as having availed himself of the
deductions allowed in the preceding Subsections. Such election when
made in the retum shall be irrevocable for the taxable year for which
the retum 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 except when 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 provision 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
law.”

SEC. 11. Section 40(C)(2) of the National intemal 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

1


(B) xx

(C) Exchange of Property. —
(1) x0

(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;

(©) [ A security holder of a corporation, which is
a party to the merger or consolidation, exchanges his
securities in such corporation, solely for stock or
securities in such corporation, a party to the merger or
consolidation. ] THE ACQUISITION BY ONE
CORPORATION, IN EXCHANGE SOLELY FOR ALL
OR A PART OF ITS VOTING STOCK OR IN
EXCHANGE SOLELY FOR ALL OR A PART OF
THE VOTING STOCK OF A CORPORATION WHICH
ISIN 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

12


(E) AREINCORPORATION

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 OF SAID CORPORATION: Provided, that stocks issued
for services shall not be considered as issued in retum 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 50 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).

Ox"

SEC. 12. Section 50 of the National Intemal 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 determined that such distribution,
apportionment or allocation is necessary in order to prevent evasion of taxes
or clearly to reflect the income of any such organization, trade or business. ]
AUTHORITY OF THE COMMISSIONER TO DISTRIBUTE, APPORTION,
ALLOCATE, AND IMPUTE INCOME AND DEDUCTIONS TO DISREGARD
AND COUNTERACT TAX AVOIDANCE ARRANGEMENTS. - IN CASE OF
TWO OR MORE ORGANIZATIONS, TRADES OR BUSINESSES,
WHETHER OR NOT ORGANIZED IN THE PHILIPPINES, OWNED OR
CONTROLLED DIRECTLY OR INDIRECTLY BY THE SAME INTERESTS,
THE COMMISSIONER IS AUTHORIZED TO DISTRIBUTE, APPORTION,
ALLOCATE, OR IMPUTE INCOME OR DEDUCTIONS BETWEEN OR
AMONG SUCH ORGANIZATIONS, TRADES OR BUSINESSES, IF THE
COMMISSIONER DETERMINES THAT SUCH DISTRIBUTION,
APPORTIONMENT, ALLOCATION, OR IMPUTATION IS NECESSARY IN
ORDER TO PREVENT EVASION OF TAXES OR TO CLEARLY REFLECT
THE INCOME OF ANY SUCH ORGANIZATION, TRADE, OR BUSINESS.

IN CASES WHERE THE TRANSACTION OR ARRANGEMENT IS
MOTIVATED BY OBTAINING TAX BENEFIT OR ADVANTAGE WITH NO
COMMERCIAL REALITY OR ECONOMIC EFFECT, SUCH AS (A)
DIRECTLY OR INDIRECTLY ALTERING THE INCIDENCE OF ANY

13


INCOME TAX; (B) DIRECTLY OR INDIRECTLY RELIEVING A PERSON
FROM LIABILITY TO PAY INCOME TAX OR FROM A POTENTIAL OR
PROSPECTIVE LIABILITY TO FUTURE INCOME TAX; OR (C) DIRECTLY
OR INDIRECTLY AVOIDING, POSTPONING, OR REDUCING ANY
LIABILITY TO INCOME TAX, OR ANY POTENTIAL OR PROSPECTIVE
LIABILITY TO FUTURE INCOME TAX, THEN THE COMMISSIONER IS
AUTHORIZED TO DISREGARD AND CONSIDER SUCH TRANSACTION
OR ARRANGEMENT AS VOID FOR INCOME. TAX PURPOSES, AND MAY
ADJUST THE TAXABLE INCOME OF A PERSON AFFECTED BY THE
ARRANGEMENT IN A WAY THE COMMISSIONER DEEMS
APPROPRIATE, IN ORDER TO COUNTERACT A TAX ADVANTAGE
OBTAINED BY THE PERSON FROM OR UNDER THE ARRANGEMENT.

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

“SEC. 73. Distribution of Dividends or Assets by Cosporations. -

(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. ]

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

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

[ (C) 1 (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 @ part of the
annual income of the distribute for the year in which received

L (0) 1 (E) Net Income of a Partnership Deemed Constructively
Received by Partners. - The taxable income declared by a partnership for a
taxable year which is subject to tax under Section 27 (A) of this Code, after
deducting the corporate income tax imposed therein, shall be deemed to have

14


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

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

"(A) Zero-rated or Effectively Zero-rated Sales. - Any VAT-registered
person, whose sales are zero-rated or effectively zero-rated may, within two
(2) years after the close of the taxable quarter when the sales were made,
apply for [the issuance of a tax credit certificate or ] refund of creditable
input tax due or paid attributable to such sales, except transitional input tax, to
the extent that such input tax has not been applied against output tax:
Provided, however, That in the case of zero-rated sales under Section
406(A)(2)(a)(1) ,(2) and [ (b) ] and Section 108 (B)(1) and (2), the acceptable
foreign currency exchange proceeds thereof had been duly accounted for in
accordance with the rules and regulations of the Bangko Sentral ng Pilipinas
(BSP): Provided, further, That where the taxpayer is engaged in zero-rated or
effectively zero-rated sale and also in taxable or exempt sale of goods or
properties or services, and the amount of creditable input tax due or paid
cannot be directly and entirely attributed to any one of the transactions, it
shall be allocated proportionately on the basis of the volume of sales.
Provided, finally, that for a person making sales that are zero-rated under
Section 108(8)(6), the input taxes shall be allocated ratably between his zero-
fated and non-zero-rated sales.

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

SEC. 15. SEC. 117 of the National intemal 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

bong

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

“SEC. 119. Tax on Franchises. - Any provision of general or special law to the
contrary notwithstanding, there shall be levied, assessed and collected in
respect to all EXISTING franchise agreement or law pertaining TO franchises

15


‘on radio and/or television broadcasting companies [whose annual gross
receipts of the preceding year do not exceed Ten million pesos
(P10,000,000.00) } , subject to Section 236 of this Code, a FRANCHISE tax
of three percent (3%) and on gas and water utilities, a FRANCHISE tax of two
percent (2%) on the gross receipts derived from the business covered by the
law granting the franchise: Provided, however, That radio and/OR television
broadcasting companies referred to in this Section shall {have an option to]
be registered as a value-added taxpayer and pay the tax due thereon [
Provided, further, That once the option is exercised, said option shall not be
irrevocable ].

Xxx”

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

"SEC. 203. Period of Limitation Upon Assessment and Collection. - Except
as provided in Section 222, internal revenue taxes “Except as provided in
Section 222, internal revenue taxes shall be assessed within [three (3)] FIVE
(5) years after the last day prescribed by law of the filing of the retum, and no
proceeding in court without assessment for the collection of such taxes shall
be begun after the expiration of such period: Provided, That in a case where
a retum is filed beyond the period prescribed by law, the [three (3)] FIVE (5)
year period shalll be counted from the day the return was filed. For purposes
of this Section, a retum filed before the last day prescribed by law for the
filing thereof shall be considered filed on such last day.”

SEC. 18. Sec. 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 [
(1,000,000) } (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.

16


ro”

‘SEC. 19. Sec. 222 of the National Intemal 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) xx

(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 JAPPLICATION made before the
expiration of the period previously [ agreed upon JAPPLIED FOR

ror

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

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

“Within five (5) years from the effectivity of this Act and upon the
establishment of a system capable of storing and processing the required
date, the Bureau shall require taxpayers engaged in the export of goods and
service, 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 réceipts or sales or commercial invoices. 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.

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)] FIVE (5) years from
the close of the taxable year in which such invoice or receipt was issued,

7


while the duplicate shall be kept and preserved by the issue, 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
intemal revenue tax from compliance with the provision of this Section.”

SEC. 21.

Sec. 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, 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
FORMAT REQUIRED electronically report their sales data to the Bureau of
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 ofthe taxpayers:
PROVIDED, FURTHER, SUBJECT TO THE RULES AND REGULATIONS
TO BE ISSUED BY THE SECRETARY OF FINANCE, THE
COMMISSIONER MAY REQUIRE ANY TAXPAYER TO COMPLY WITH
THE PROVISIONS OF THIS SECTION.

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

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

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

18


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, training, and technologies to protect the cyber environment,
organization, and data in compliance with Republic Act No. 10175 or the
“Cybercrime Prevention Act of 2012."

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

“SEC. 255. Failure to File Retum, 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 retum, keep any
record, or supply correct the accurate information, who willfully fails to pay
‘such tax, make such retum, keep such record, or supply correct and accurate
information, or withhold or remit taxes withheld, or refund excess taxes
withheld on compensation, at the time or times required by law or rules and
regulations shall, in addition to other penalties provided by law, upon
conviction thereof, be punished by a fine of not less than [Ten thousand
pesos (P10,000) ] ONE HUNDRED THOUSAND (P100,000) BUT NOT
MORE THAN ONE MILLION TWO HUNDRED THOUSAND PESOS
{P1,200,000) and suffer imprisonment of not less than one (1) year but not
more than ten (10) years.

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

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

“SEC. 256, Penal Liability of Corporations. - Any corporation, association or
general _co-partnership liable for any of the acts or omissions penalized under
this Code, in addition to the penalties imposed herein upon the responsible
corporate officers, partners, or employees shall, upon conviction for each act
or omission, be punished by a fine of not less than [Fifty thousand pesos
(P50,000) but not more than One hundred thousand pesos (P100,000)] TWO

19


HUNDRED THOUSAND PESOS (P200,000) BUT NOT MORE THAN TWO
MILLION FOUR HUNDRED THOUSAND PESOS (P2,400,000).”

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

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

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

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

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

(B) Any person who:

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

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

(3) Offers any taxpayer the use of accounting bookkeeping records for
intemal 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

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

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

20


(8) Willfully attempts in any manner to evade or defeat any tax
imposed under this Code, or knowingly uses fake or falsified revenue
official receipts, Letters of Authority, certificates authorizing
registration, Tax Credit Certificates, Tax Debit Memoranda and other
accountable forms shall, upon conviction for each act or omission, be
punished by a fine not less than [Fifty thousand pesos (P50,000) but
not more than One hundred thousand pesos (P100,000)] THREE
HUNDRED THOUSAND PESOS (P300,000) BUT NOT MORE THAN
ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000)
and suffer imprisonment of not less than two (2) years but not more
than six (6) years.

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

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

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

“SEC. 258. 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 (P50,000) ] 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. 26. Sec. 260 of the National Internal Revenue Code of 1997, ds amended, is hereby
amended to read as follows:

“SEC. 260. Unlawful Possession of Cigarette Paper in Bobbins or Rolls, 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 than{ Twenty thousand pesos (P20,000)
but not more than One hundred thousand pesos (P100,000) ] ONE MILLION
FIVE HUNDRED THOUSAND PESOS (P1,500,000) BUT NOT MORE THAN
FIFTEEN MILLION PESOS (P15,000,000) and suffer imprisonment for a term
of not less than six (6) years and one (1) day but not more than twelve (12)
years.”

21


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

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

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

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

“SEC. 262. Shipment or Removal of Liquor or Tobacco Products under False
Name or Brand or as an Imitation of any Existing or Otherwise Known
Product Name or Brand. - Any person who ships, transports or removes
spirituous, compounded or fermented liquors, wines or any manufactured
products of tobacco under any other than the proper name or brand known to
the trade as designating the kind and quality of the contents of the cask,
bottle or package containing the same or as an imitation of any existing or
‘otherwise known product name or brand or causes such act to be done, shall,
upon conviction for each act or omission, be punished by a fine of not less
than [ Twenty thousand pesos (P20,000) but not more than One hundred
thousand pesos (P100,000) ] ONE MILLION FIVE HUNDRED THOUSAND
PESOS (P1,500,000) BUT NOT MORE THAN FIFTEEN MILLION PESOS
(P15,000,000) and suffer imprisonment of not less than six (6) years and one
(1) day but not more than twelve (12) years.”

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

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

(a) A fine of not less than [ One thousand pesos (P1,000) JTWENTY FIVE
THOUSAND PESOS (P25,000) [ nor ] BUT NOT more than [ Two thousand
pesos (P2,000) JSEVENTY FIVE THOUSAND PESOS (P75,000) and suffer
imprisonment of not less than [ sixty (60) days but not more than one hundred

22


(100) days ] THIRTY (30) DAYS BUT NOT MORE THAN SIX (6) MONTHS if
the appraised value, to be determined in the manner prescribed in the [ Tariff
and Customs Code JCUSTOMS MODERNIZATION AND TARIFF ACT,
including duties and taxes, of the articles does not exceed [ One thousand
pesos (P1,000). TWO HUNDRED FIFTY THOUSAND PESOS (P250,000).

(b) A fine of not less than [Ten thousand pesos (P10,000) ] SEVENTY FIVE
THOUSAND PESOS (P75,000) but not more than [ Twenty thousand pesos
(P20,000) JONE HUNDRED FIFTY THOUSAND PESOS (P150,000) and
suffer imprisonment of not less than [ two (2) years but not more than four
(4) years SIX (6) MONTHS AND ONE (1) DAY BUT NOT MORE THAN
ONE (1) YEAR if the appraised value, to be determined in the manner
prescribed in the [ Tariff and Customs Code JCUSTOMS MODERNIZATION
AND TARIFF ACT, including duties and taxes, of the articles exceeds [ One
thousand pesos (P1,000) ] TWO HUNDRED FIFTY THOUSAND PESOS
(P250,000) but does not exceed [ Fifty thousand pesos (P50,000) JFIVE
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) JTHREE HUNDRED THOUSAND PESOS
{P300,000) and suffer imprisonment of not less than [ four (4) years but
not more than six (6) years ] ONE (1) YEAR AND ONE (1) DAY BUT NOT
MORE THAN THREE (3) YEARS, if the appraised value, to be determined in
the manner prescribed in the [ Tariff and Customs Code JCUSTOMS
MODERNIZATION AND TARIFF ACT, including duties and taxes of the
articles is more than [Fifty thousand pesos (P50,000) but does not
exceed One hundred fifty thousand pesos (P150,000)_JFIVE HUNDRED
THOUSAND PESOS (P500,000) BUT DOES NOT EXCEED ONE MILLION
PESOS (P1,000,000); or

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

(E) A FINE OF NOT LESS THAN ONE MILLION FIVE HUNDRED
THOUSAND PESOS (P 1,500,000.00) BUT NOT MORE THAN FIFTEEN
MILLION PESOS (P15,000,000.00), AND SUFFER IMPRISONMENT OF
NOT LESS THAN SIX (6) YEARS AND ONE (1) DAY BUT NOT MORE
THAN TWELVE (12) YEARS, IF THE APPRAISED VALUE, TO BE
DETERMINED IN THE MANNER PRESCRIBED IN THE CUSTOMS
MODERNIZATION AND TARIFF ACT, INCLUDING DUTIES AND TAXES,
OF THE ARTICLES IS MORE THAN FIVE MILLION PESOS (P5,000,000)
BUT NOT MORE THAN FIFTY MILLION PESOS (P50,000,000);

(F) A FINE OF NOT LESS THAN FIFTEEN MILLION PESOS (P
15,000,000.00) BUT NOT MORE THAN FIFTY MILLION PESOS

23


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

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

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

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

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

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

“SEC. 264. Failure or refusal to Issue Receipts or Sales or Commercial

Invoices, Violations related to the Printing of such Receipts or Invoices and
Other Violations. -

24


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

(©) 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. 31. Sec. 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 (P700,000.00) but not more than [ Fifty
thousand pesos (P50,000) ] ONE MILLION TWO HUNDRED THOUSAND
PESOS (P1,200,000) and suffer imprisonment of not less than four (4) years
but not more than eight (8) years:

(a) 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

25


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

SEC. 32. Sec. 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 (P100,000) 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. 33. Sec. 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. 34. A new section is hereby inserted after Section 282 of the National intemal
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 MILIION (P50,000,000) AND RECLUSION TEMPORAL.

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

"SEC. 290. Congressional Oversight Committee. —
20x

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

(1) 2006,

(2) “xo;

(3) >90«, [and]
(4) oJ;

26


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

og

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

“TITLE Xill
CHAPTER |
“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, EXCEPT THE PHILIPPINE
ECONOMIC ZONE AUTHORITY (PEZA),

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

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

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

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

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

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

27


(B) 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.

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

(D) THE TERM ‘INVESTMENT PROMOTION AGENCIES (IPAS)’ SHALL.
REFER TO GOVERNMENT ENTITIES CREATED BY LAW, EXECUTIVE ORDER,
DECREE OR OTHER ISSUANCE, IN CHARGE OF PROMOTING INVESTMENTS,
ADMINISTERING TAX AND NON-TAX INCENTIVES, AND/OR OVERSEEING THE
OPERATIONS FOR THE DIFFERENT ECONOMIC ZONES AND FREEPORTS IN
ACCORDANCE WITH THEIR RESPECTIVE CHARTERS. THESE INCLUDE THE
BOARD OF INVESTMENTS (BOI), REGIONAL BOARD OF INVESTMENTS
AUTONOMOUS REGION IN MUSLIM MINDANAO (RBOI-ARMM), 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. THE PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA) IS NOT
COVERED BY THIS SECTION.

{E) THE TERM ‘OTHER GOVERNMENT AGENCIES ADMINISTERING
FISCAL INCENTIVES (OGA)’ SHALL REFER TO GOVERNMENT AGENCIES
OTHER THAN IPAS WHICH REGISTER OR ADMINISTER FISCAL INCENTIVES
OF ANY KIND TO ANY SPECIFIC ENTITIES AND/OR CLASS OF PERSONS
PURSUANT TO ANY LAW. THESE SHALL INCLUDE, BUT SHALL NOT BE
LIMITED TO THE COOPERATIVE DEVELOPMENT AUTHORITY (CDA),
DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT (DSWD),
COMMISSION ON HIGHER EDUCATION (CHED), BUREAU OF INTERNAL
REVENUE (BIR), DEPARTMENT OF AGRARIAN REFORM (DAR),
DEPARTMENT OF AGRICULTURE (DA), DEPARTMENT OF TRANSPORTATION
AND COMMUNICATIONS (DOTC), CIVIL AVIATION AUTHORITY OF THE
PHILIPPINES (CAAP), DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
(DPWH), REGIONAL GOVERNMENT-AUTONOMOUS REGION IN MUSLIM
MINDANAO, REGIONAL GOVERNMENT- CORDILLERA ADMINISTRATIVE
REGION, DEPARTMENT OF TOURISM (DOT), BANGKO SENTRAL NG
PILIPINAS (BSP), NATIONAL BOOK DEVELOPMENT BOARD (NBDB), BOY
SCOUT OF THE PHILIPPINES, GIRL SCOUT OF THE PHILIPPINES,
DEPARTMENT OF FINANCE (DOF), BUREAU OF CUSTOMS (BOC), NATIONAL
TELECOMMUNICATIONS COMMISSION (NTC), PRESIDENTIAL
COMMUNICATIONS OPERATIONS OFFICE (PCOO), NATIONAL COUNCIL FOR
CHILDREN’S TELEVISION (NCCT), NATIONAL COMMISSION FOR CULTURE

28


AND THE ARTS (NCCA), NATIONAL HISTORICAL COMMISSION OF THE
PHILIPPINES (NHCP), FILM DEVELOPMENT COUNCIL, NATIONAL COUNCIL
FOR DISABILITY AFFAIRS, SECURITIES AND EXCHANGE COMMISSION
(SEC), COMMISSION ON HIGHER EDUCATION (CHED), DEPARTMENT OF
EDUCATION (DEPED), DEPARTMENT OF SCIENCE AND TECHNOLOGY
(DOST), TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY
(TESDA), COMMISSION ON ELECTIONS (COMELEC), NATIONAL
ELECTRIFICATION ADMINISTRATION (NEA), NATIONAL POWER
CORPORATION (NPC), DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES (DENR), NATIONAL DISASTER AND RISK REDUCTION
MANAGEMENT COUNCIL (NDRRMC), DEPARTMENT OF FOREIGN AFFAIRS
(DFA), DEPARTMENT OF HEALTH (DOH), PHILIPPINE RED CROSS, HOUSING
AND URBAN DEVELOPMENT COORDINATING COUNCIL (HUDCC), NATIONAL
GOVERNMENT CENTER ADMINISTRATION COMMITTEE, HOUSING AND
LAND USE REGULATORY BOARD (HLURB), NATIONAL COMMISSION ON
INDIGENOUS PEOPLE (NCIP), QUEZON CITY DEVELOPMENT AUTHORITY,
SOCIAL SECURITY SYSTEM (SSS), GOVERNMENT SERVICE INSURANCE
SYSTEM (GSIS), PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC),
SUPREME COURT (SC), DEPARTMENT OF LABOR AND EMPLOYMENT
(DOLE), OVERSEAS WORKERS WELFARE ADMINISTRATION (OWWA),
PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION _(POEA),
DEPARTMENT OF JUSTICE (DOJ), DEPARTMENT OF INTERIOR AND LOCAL.
GOVERNMENT (DILG), NATIONAL ANTI-POVERTY COMMISSION (NAPC),
PARTIDO DEVELOPMENT ADMINISTRATION, PHILIPPINE VETERANS
AFFAIRS OFFICE (PVAO), DEPARTMENT OF NATIONAL DEFENSE (DND),
PHILIPPINE PORTS AUTHORITY (PPA), PHILIPPINE SPORTS COMMISSION
(PSC), NATIONAL YOUTH COMMISSION, AND HUMAN RIGHTS VIOLATIONS
VICTIM'S MEMORIAL COMMISSION, AMONG OTHERS.

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

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

29


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

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

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

(2) REGISTERED PROJECTS OR ACTIVITIES THAT ARE:

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

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

(i) ENVIRONMENTALLY CRITICAL PROJECTS
(ECP) WHICH HAVE A HIGH POTENTIAL FOR
NEGATIVE ENVIRONMENTAL IMPACTS AND
WHOSE PROPONENTS ARE REQUIRED TO
SUBMIT ENVIRONMENTAL IMPACT
STATEMENTS (EIS), SUCH AS BUT NOT
LIMITED TO: (A) HEAVY INDUSTRIES (NON-
FERROUS METAL INDUSTRIES, IRON AND

STEEL MILLS, PETROLEUM AND
PETROCHEMICAL INDUSTRIES, AND
SMELTING PLANTS); (B) | RESOURCE

EXTRACTIVE INDUSTRIES (MAJOR MINING
AND QUARRYING PROJECTS, FORESTRY
PROJECTS, DIKES AND FISHPOND
DEVELOPMENT PROJECTS); (Cc)
INFRASTRUCTURE PROJECTS (MAJOR DAMS,
MAJOR POWER PLANTS, MAJOR

30


(ii)

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

PROJECTS LOCATED IN ENVIRONMENTALLY
CRITICAL AREAS (ECA) WHOSE PROJECT
PROPONENT IS REQUIRED TO SUBMIT AN EIS
LATER, IF DEEMED NECESSARY, IS
REQUIRED. SUCH AREAS INCLUDE BUT ARE
NOT LIMITED TO: (A) ALL AREAS DECLARED
BY LAW AS NATIONAL PARKS, WATERSHED
RESERVES, WILDLIFE PRESERVES, AND
SANCTUARIES; (B) AREAS SET ASIDE AS
AESTHETIC POTENTIAL TOURIST SPOTS; (C)
AREAS WHICH CONSTITUTE THE HABITAT
FOR ANY ENDANGERED OR THREATENED
SPECIES OF INDIGENOUS _ PHILIPPINE
WILDLIFE (FLORA AND FAUNA); (D) AREAS OF
UNIQUE HISTORIC, ARCHEOLOGICAL OR
SCIENTIFIC INTEREST; (E) AREAS WHICH ARE
TRADITIONALLY OCCUPIED BY CULTURAL
COMMUNITIES OR TRIBES (INDIGENOUS
CULTURAL COMMUNITIES); (F) AREAS
FREQUENTLY VISITED AND/OR HARD-HIT BY
NATURAL CALAMITIES (GEOLOGIC HAZARDS,
FLOODS, TYPHOONS, VOLCANIC ACTIVITY,
ETC.); (G) AREAS WITH CRITICAL SLOPES;
(H) AREAS CLASSIFIED AS PRIME
AGRICULTURAL LANDS; (I) RECHARGED
AREAS OF AQUIFERS; (J) WATER BODIES
CHARACTERIZED BY ONE OR ANY
COMBINATION OF THE FOLLOWING
CONDITIONS: (I.) TAPPED FOR DOMESTIC
PURPOSES, (ll) WITHIN THE CONTROLLED
AND/OR PROTECTED AREAS DECLARED BY
APPROPRIATE AUTHORITIES, (Ill) WHICH
SUPPORT WILDLIFE AND FISHERY ACTIVITIES;
(K) MANGROVE AREAS CHARACTERIZED BY
ONE OR ANY COMBINATION OF THE
FOLLOWING CONDITIONS: (I) WITH PRIMARY
PRISTINE AND DENSE YOUNG GROWTH, (Il)
ADJOINING MOUTH OF MAJOR RIVER
SYSTEMS, (Ill) NEAR OR ADJACENT TO
TRADITIONAL PRODUCTIVE FRY OR FISHING
GROUNDS, (IV) WHICH ACT AS NATURAL
BUFFERS AGAINST SHORE EROSION,
STRONG WINDS AND STORM FLOODS, (V) ON
WHICH PEOPLE ARE DEPENDENT FOR THEIR
LIVELIHOOD; AND (L) CORAL REEFS
CHARACTERIZED BY ONE OR ANY
COMBINATION OF THE FOLLOWING
CONDITIONS: (1) WITH FIFTY PERCENT (50%)
AND ABOVE LIVE CORALLINE COVER, (Il)
SPAWNING AND NURSERY GROUNDS FOR
FISH, (Ill) WHICH ACT AS NATURAL
BREAKWATER OF COASTLINES.

31


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

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

(2.2) “HEALTH RISKY PROJECTS” OR THOSE FALLING UNDER
THE SCOPE OF THE PHILIPPINE NATIONAL
FRAMEWORK AND GUIDELINES FOR ENVIRONMENTAL
HEALTH IMPACT ASSESSMENT SUCH AS PROJECTS
THAT HAVE HEALTH-SENSITIVE COMPONENTS AND
THOSE LOCATED IN HEALTH-SENSITIVE PROJECT
LOCATIONS AS DETERMINED BY THE DEPARTMENT OF
HEALTH (DOH), OTHER GOVERNMENT AGENCIES AND
RELEVANT ENTITIES, WITHOUT PREJUDICE TO THE
ESTABLISHMENT OF A HEALTH IMPACT ASSESSMENT
(HIA) SYSTEM IN THE FUTURE, AND ISSUANCE OF A
PRESIDENTIAL PROCLAMATION ON THE MATTER.

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

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

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

CHAPTER I

TAX AND DUTY INCENTIVES

32


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

(A) INCOME TAX INCENTIVES

(1) INCOME TAX HOLIDAY (ITH). - THE ITH SHALL BE GRANTED FOR
A PERIOD NOT EXCEEDING THREE (3) YEARS: PROVIDED, THAT
AFTER THE EXPIRATION OF THE ITH, THE FOLLOWING INCENTIVES
MAY BE APPLIED FOR A PERIOD NOT EXCEEDING FIVE (5) YEARS,
WHICH INCLUDES THE PERIOD OF ITH AVAILMENT, EXCEPT THOSE
PROVIDED UNDER SECTIONS 294 (7) and (9), 295, 296, AND 297.

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

FIFTEEN PERCENT (15%) TO THE NATIONAL
GOVERNMENT;

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

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

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

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

(4) UP TO FIFTY PERCENT (50%) ADDITIONAL DEDUCTION ON THE
INCREMENT OF LABOR EXPENSE: PROVIDED, THAT THIS DOES NOT

33


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 ACTIVITIVIIES OF THE EN TITY, AND

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

(7) UP TO ONE HUNDRED PERCENT (100%) DEDUCTION ON
INFRASTRUCTURE DEVELOPMENT. - REGISTERED ENTERPRISES
ESTABLISHING THEIR ACTIVITY IN AN AREA THAT THE STRATEGIC
INVESTMENT PRIORITY PLAN (SIPP) DESIGNATES AS NECESSARY
FOR COUNTRY-WIDE DEVELOPMENT OR IN AN AREA FOUND TO BE
DEFICIENT IN INFRASTRUCTURE, PUBLIC UTILITIES, AND OTHER
FACILITIES, SUCH AS IRRIGATION, DRAINAGE, OR OTHER SIMILAR
WATERWORKS INFRASTRUCTURE, MAY DEDUCT FROM THE GROSS
INCOME AN AMOUNT EQUIVALENT TO UP TO ONE HUNDRED
PERCENT (100%) OF NECESSARY AND MAJOR INFRASTRUCTURE
WORKS IT MAY HAVE UNDERTAKEN WITH THE PRIOR APPROVAL
AND RECOMMENDATION OF THE IPA CONCERNED: PROVIDED, THAT
THE TITLE TO ALL SUCH INFRASTRUCTURE WORKS SHALL UPON
COMPLETION, BE TRANSFERRED TO THE PHILIPPINE GOVERNMENT:
PROVIDED FURTHER, THAT ANY AMOUNT NOT DEDUCTED FOR A
PARTICULAR YEAR MAY BE CARRIED OVER FOR DEDUCTION FOR
SUBSEQUENT YEARS NOT EXCEEDING FIVE (5) YEARS FROM
COMMERCIAL OPERATION.

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

(9) ENHANCED NET OPERATING LOSS CARRY-OVER (NOLCO). -
THE NET OPERATING LOSS OF THE REGISTERED ACTIVITY DURING
THE FIRST THREE (3) YEARS FROM THE START OF COMMERCIAL
OPERATION WHICH HAD NOT BEEN PREVIOUSLY OFFSET AS

34


DEDUCTION FROM GROSS INCOME MAY BE CARRIED OVER AS
DEDUCTION FROM GROSS INCOME WITHIN THE NEXT FIVE (5)
CONSECUTIVE TAXABLE YEARS IMMEDIATELY FOLLOWING THE
YEAR OF SUCH LOSS.

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

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

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

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

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

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

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

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

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

35


SEC. 296. PROJECTS LOCATED IN LESS DEVELOPED AREAS OR
THOSE RECOVERING FROM ARMED CONFLICT OR A MAJOR DISASTER.
PROJECTS OR ACTIVITIES OF REGISTERED ENTERPRISES LOCATING IN
LESS DEVELOPED AREAS AS IDENTIFIED IN THE STRATEGIC INVESTMENT
PRIORITY PLAN, OR THOSE RECOVERING FROM ARMED CONFLICT AND/OR
A MAJOR DISASTER AS DETERMINED BY THE OFICE OF THE PRESIDENT
SHALL BE ENTITLED TO ADDITIONAL TWO (2) YEARS OF INCENTIVE UNDER
SECTION 294, OF WHICH ONE (1) YEAR MAY BE AN ADDITIONAL YEAR OF
INCOME TAX HOLIDAY.

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

CHAPTER Il
GOVERNANCE OF FISCAL INCENTIVES

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

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

(B) TECHNICAL COMMITTEE. - THE TECHNICAL COMMITTEE SHALL BE
COMPOSED OF AN UNDERSECRETARY OF FINANCE DESIGNATED BY
THE SECRETARY OF FINANCE AS CHAIRPERSON AND SIX (6)
MEMBERS CONSISTING OF: (1) A DEPUTY OR ASSISTANT DEPUTY
EXECUTIVE SECRETARY OF THE OFFICE OF THE PRESIDENT; (2) AN
UNDERSECRETARY OR ASSISTANT SECRETARY OF TRADE AND
INDUSTRY; (3) A DEPUTY OR ASSISTANT DIRECTOR GENERAL OF
NATIONAL ECONOMIC DEVELOPMENT AUTHORITY; (4) AN
UNDERSECRETARY OR ASSISTANT SECRETARY OF BUDGET AND
MANAGEMENT; (5) THE COMMISSIONER OR DEPUTY COMMISSIONER
OF INTERNAL REVENUE; AND (6) THE COMMISSIONER OR DEPUTY
COMMISSIONER OF CUSTOMS.

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

36


SEC. 299. EXPANDED FUNCTIONS OF THE FIRB. - THE POWERS AND.
FUNCTIONS OF THE FIRB WHICH SHALL BE VESTED IN AND EXERCISED BY
THE BOARD SHALL BE EXPANDED AS FOLLOWS:

(A) TO EXERCISE OVERSIGHT FUNCTIONS OVER THE IPAS. FOR THIS
PURPOSE, THE FIRB SHALL:

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

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

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

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

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

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

(B) TO APPROVE OR DISAPPROVE THE GRANT OF FISCAL INCENTIVES TO
SPECIAL PROJECTS/ACTIVITIES AS DEFINED IN THIS ACT UPON THE
RECOMMENDATION OF THE IPA BOARD: PROVIDED, THAT FOR THESE
SPECIAL PROJECTS/ACTIVITIES, THE IPA BOARD SHALL RECOMMEND

37


(Cc)

(D)

(E)

(F)

(G)

(H)

w

TO THE FIRB THE APPROVAL OF SUCH GRANT OF FISCAL INCENTIVES
ONLY AFTER A THOROUGH REVIEW OF THE APPLICATION;

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

TO CANCEL, SUSPEND, OR WITHDRAW THE ENJOYMENT OF TAX
SUBSIDY OF CONCERNED GOCCS, GIS, GOVERNMENT COMMISSARIES,
AND SUCS AND ENDORSE THE SAME TO THE CONCERNED REVENUE
AGENCIES FOR ASSESSMENT AND COLLECTION OF TAXES AND
DUTIES DUE, INCLUDING FINES OR PENALTIES, IF WARRANTED, FOR
VIOLATIONS OF ANY OF THE CONDITIONS IMPOSED IN THE GRANT OF
TAX SUBSIDY, OR PROVISIONS OF THIS ACT, OR APPLICABLE RULES
AND REGULATIONS;

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

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

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

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

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

38


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

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

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

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

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

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

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

SEC. 300. ROLES AND RESPONSIBILITIES OF THE TECHNICAL COMMITTEE. -
THE TECHNICAL COMMITTEE SHALL HAVE THE FOLLOWING ROLES AND
RESPONSIBILITIES:

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

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

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

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

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

39


(8)

(Cc)

(0)

(€)
(F)

©)

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

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

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

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

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

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

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

SEC. 302. COVERAGE AND SCOPE OF THE POWER OF THE FIRB TO GRANT
FISCAL INCENTIVES. - THE FIRB HAS THE POWER TO GRANT FISCAL INCENTIVES
TO THE FOLLOWING SPECIAL PROJECTSI/ACTIVITIES AS DEFINED UNDER SEC.
293(1) OF THIS ACT.

(A)

(B)

(Cc)

REGISTERED PROJECTS WITH INVESTMENT AMOUNT OF FIFTY
MILLION PESOS (PHP 50,000,000) AND ABOVE;

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

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

40


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

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

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

CHAPTER IV
FISCAL INCENTIVES MANAGEMENT AND TRANSPARENCY

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

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

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

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

41


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

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

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

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

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

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

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

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PROCESSING OF APPLICATIONS FOR REGISTRATIONS, AND EVALUATION OF
ENTITLEMENT OF INCENTIVES BY IPAS OR OGAS.

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

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

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

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

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

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

CHAPTER V
SUSPENSION AND FORFEITURE OF FISCAL INCENTIVES.

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

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

CHAPTER VI
ADMINISTRATIVE REMEDIES

43


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

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

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

CHAPTER VII
QUALIFIED ACTIVITIES FOR TAX INCENTIVES

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

THE SIPP SHALL:
(A) INCLUDE ACTIVITIES THAT COMPLY WITH THE FOLLOWING:
(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:

(A) SUBSTANTIAL AMOUNT OF INVESTMENTS;

(B) CONSIDERABLE GENERATION OF
EMPLOYMENT;

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

(D) USE OF MODERN OR NEW TECHNOLOGY;

(E) ADOPTION OF ADEQUATE ENVIRONMENTAL
PROTECTION SYSTEMS;

44


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

(G) PROMOTION OF MARKET COMPETITIVENESS.

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

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

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

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

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

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

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

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

THE BO! MAY IMPOSE OTHER TERMS AND CONDITIONS TAKING INTO
CONSIDERATION THE AMOUNT OR KIND OF INCENTIVES THAT WILL BE
GRANTED TO SUCH INVESTMENTS

45


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

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

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

SEC. 317. QUALIFICATIONS OF A REGISTERED ENTERPRISE FOR TAX
INCENTIVES. — 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 PROJECT UNDERTAKEN BY THE
ENTERPRISE SEPARATELY FROM THE AGGREGATE INVESTMENTS,
REVENUES, COSTS AND PROFITS OR LOSSES OF THE WHOLE
ENTERPRISE; OR ESTABLISH A SEPARATE CORPORATION FOR EACH
REGISTERED PROJECT IF THE IPA SHOULD SO REQUIRE;

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

CHAPTER VIil
AVAILMENT OF TAX INCENTIVES

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

FAILURE TO SECURE AND ATTACH THE CERTIFICATION TO THE ITR OR AIR,

AND/OR FILE THE INCENTIVE AVAILMENT APPLICATION SHALL CAUSE THE
FORFEITURE OF THE INCENTIVE FOR THAT TAXABLE PERIOD.

46


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

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

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

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

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

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

(3) EXPORTATION OF CAPITAL EQUIPMENT, MACHINERY,

SPARE PARTS OR SOURCE DOCUMENTS, OR THOSE

REQUIRED FOR POLLUTION ABATEMENT AND CONTROL; OR

(4) FOR REASONS OF PROVEN TECHNICAL OBSOLESCENCE.
PROVIDED, THAT IF THE REGISTERED ENTERPRISE SELLS, TRANSFERS OR
DISPOSES THE AFOREMENTIONED IMPORTED ITEMS WITHOUT PRIOR APPROVAL,
THE REGISTERED ENTERPRISE AND THE VENDEE, TRANSFEREE, OR ASSIGNEE

47


SHALL BE SOLIDARILY LIABLE TO PAY TWICE THE AMOUNT OF THE DUTY
EXEMPTION THAT SHOULD HAVE BEEN PAID DURING ITS IMPORTATION:
PROVIDED, FURTHER, THAT EVEN IF THE SALE, TRANSFER OR DISPOSITION OF
THE CAPITAL EQUIPMENT WAS MADE AFTER FIVE (5) YEARS FROM DATE OF
IMPORTATION WITH THE APPROVAL OF THE IPA, THE REGISTERED ENTERPRISE
IS STILL LIABLE TO PAY THE DUTIES BASED ON THE NET BOOK VALUE OF THE
CAPITAL EQUIPMENT IF IT HAS VIOLATED ANY OF ITS REGISTRATION TERMS AND
CONDITIONS.

CHAPTER IX
MISCELLANEOUS PROVISIONS

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

CHAPTER X
FINAL PROVISIONS

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

SEC. 322. GOVERNANCE RULES. ~ THE DIFFERENT IPAS MAY REQUIRE
DOMESTIC REGISTERED ENTERPRISES TO LIST THEIR SHARES OF STOCK IN ANY
ACCREDITED STOCK EXCHANGE OR DIRECTLY OFFER A PORTION OF THEIR
CAPITAL STOCK TO THE PUBLIC AND/OR THEIR EMPLOYEES WITHIN FIVE (5)
YEARS FROM DATE OF REGISTRATION.

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

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

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

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

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

48


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

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

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

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

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

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

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

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

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

SEC. 39. Amendatory Clause. -

(A) To ensure that the DOF, NEDA and DTI are represented in the Goveming 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:

49


(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 Deciaring 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 Apar, Province of Cagayan Providing Funds Therefor
and for other Purposes;

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

50


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

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

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

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

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

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

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

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

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

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

54


(12) Section 17 (c) under section 8 of Republic Act No. 9576, entitled “An Act
Increasing the Maximum Deposit Insurance Coverage, and in connection therewith,
to strengthen the regulatory and administrative authority, and financial capability of
the Philippine Deposit insurance Corporation (PDIC) amending for this purpose
Republic Act Numbered Three Thousand Five Hundred Ninety One, as amended
otherwise known as the PDIC Charter and for other purposes;”

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

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

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

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

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

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

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

Sec. 40. Repealing Clauses. —

|n consideration of the franchise and rights granted under applicable laws, the

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

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

52


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

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

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

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

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

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

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

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

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

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

53


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

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

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

(15) _ Section 9 of Republic Act No. 8086 entitled "An Act Granting The Isla
Paging Company, A Franchise To Construct, Maintain, Establish, And
Operate Commercial Radio Paging Services In The Philippines”.

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

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

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

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

(20) Section 8 of Republic Act No. 8094 entitled “An Act Granting The Ipil
Broadcasting News Network, Inc. A Franchise To Construct, Install, Operate
And Maintain Radio And Television Broadcasting Stations In Zamboanga Del
‘Sur And For Other Purposes";

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

(22) Section 8 of Republic Act No. 8096 entitled “An Act Granting The
Allied Broadcasting Center, Incorporated A Franchise To Construct, Operate
And Maintain Stations For Radio In Cebu City And Other Areas In The

54


Philippines Where Frequencies Are Still Available For Radio Broadcasting For
Educational And Cultural, As Well As For Commercial Purposes”,

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

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

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

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

(27) Section 8 of Republic Act No. 8116 entitled, “An Act Granting The
Vimeontu Broadcasting Corporation A Franchise To Construct, install,
Operate And Maintain Radio And Television Broadcasting Stations, Within
The Philippines And For Other Purposes”,

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

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

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

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

(32) | Section 8 of Republic Act No. 8128 entitled “An Act Granting. A
Franchise To The Oriental Mindoro Management Resources Corporation

55


(Omarco) To Construct, Install, Establish, Operate, Manage And Maintain A
Network Of Radio And Television Stations Anywhere In The Philippines, And
For Other Purposes”,

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

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

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

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

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

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

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

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

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

56


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

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

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

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

(48) | 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”;

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

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

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

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

57


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

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

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

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

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

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

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

(8) The provisions of the following laws, including the tax incentives, that are inconsistent
with this Act are hereby amended or repealed:
(1) Section 5 of Republic Act No. (R.A.) 9379, or “An Act Defining

Handline Fishing, Providing Effective Regulations Therefor And For Other
Purposes”;

58


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

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

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

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

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

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

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

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

(10) _ Section 17 of Republic Act No. 7906 Entitled, “An Act Providing For
The Regulation Of The Organization And Operations Of Thrift Banks, And For
Other Purposes;”

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

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

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

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

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

59


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

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

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

(19) Section 4 (B) (C), In So Far As Tax Exemption and/or VAT Zero
Rating On Domestic Merchandise Is Concemed, of R.A. 7922, or “An Act
Establishing A Special Economic Zone And Free Port In The Municipality Of
Santa Ana And The Neighboring Islands in The Municipality Of Aparri,
Province Of Cagayan Providing Funds Therefor, And For Other Purposes”:

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

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

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

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

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

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

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

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

(28) P.D. 529 (Restored By FIRB Resolution 19-87), Entitled “Granting To
Petroleum Exploration Concessionaires Under The Petroleum Act Of 1949

60


Exemption From Customs Duty And Compensating Tax On Importations Of
Machinery And Equipment, Spare Parts And Materials Required For Their
Exploration Operations”;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(48) Section 5 (A) (B) of R.A. 10771, or “An Act Promoting The Creation Of
Green Jobs, Granting Incentives And Appropriating Funds Therefor’:

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

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

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

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

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

($2) |_ Subchapter V-A, Sections 86, 88, And 95 (A) and (B) of R.A. 9593, or
The “Tourism Act of 2009", as amended by Republic Act No. 11262:

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

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

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

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(86) _ Section 4(F) and Section 5(C)(K), In So Far As Tax Exemption and/or
VAT Zero Rating on Domestic Merchandise Is Concemed, and Section 12-B
of Republic Act No. 10083 Entitled, “An Act Amending Republic Act No. 9490,
Or ‘The Aurora Special Economic Zone Act Of 2007”;

(57) _ Section 5 (6.1) and (5.2) of E.O. 290 Entitled, “Implementing The
Natural Gas Vehicle Program For Public Transport”;

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

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

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

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

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

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

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

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

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

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

(2) Section 1 (c) and (d); Section 2 of Executive Order No. 93, series of 1986,
entitled “Withdrawing All Tax and Duty Incentives, Subject to Certain Exceptions,

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Expanding the Powers of the Fiscal Incentives Review Board and for other
Purposes”

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

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

(1) Article 7 of Executive Order No. 226, series of 1987, entitled “the Omnibus
Investments Code of 1987", as amended by RA 7918, entitled “An Act Amending
Article 39, Title Ill of Executive Order No. 226, series of 1967, entitled, ‘the
Omnibus Investment Code of 1987, as Amended, and for Other Purposes”:

(2) Section 7 of RA 7903, entitled "An Act Creating a Special Economic Zone and
Freeport in the City of Zamboanga City Special Economic Zone Authority,
Appropriating Funds Therefor, and for Other Purposes":

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

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

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

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

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

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

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

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

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

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

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

SEC. 42. Separability Clause. If any clause, sentence, paragraph, or part of this Code
shall be adjudged by any Court of competent jurisdiction to be invalid, such judgment shall
Rot affect, impair, or invalidate the remainder of said Code, but shall be confined in its
Operation to the clause, sentence, paragraph, or part thereof directly involved in the
controversy.

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

Approved,

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