Republic of the Philippines
HOUSE OF REPRESENTATIVES
Queson City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 1909

Introduced by HON. LUIS RAYMUND “LRAY” F. VILLAFUERTE, JR.

EXPLANATORY NOTE

The passage of the TRAIN law, or Republic Act No. 10963 (Tax Reform for
Acceleration and Inclusion Act), has made our personal income taxation simple, fair,
and efficient. This has fired up the start of the Duterte Administration's Comprehensive
Tax Reform Program (CTRP). To follow this, and complete the administration's fiscal
reform package, the corporate income tax and incentives must likewise be made fair
and efficient.

This bill seeks to lower the corporate tax rate through rationalizing the administration
of tax incentives. The incentives shall be performance-based, target, time-bound, and
most of all transparent. It hopes to widen the corporate tax base and plug its tax
leakages. The tax incentives will be rationalized and disciplined to ensure the benefits
investments would bring.

Our current corporate income tax system is characterized by a narrow base and a high
rate of 30%-- the highest in the ASEAN region. With the tax incentives rationalized
and the base expanded, the proposed reduced corporate income tax rate would help
alleviate financial burden on the business community, especially the micro, small, and
medium-sized enterprises.

The incentives hope to attract investments and push the country to its full potential. In
view of the foregoing, the approval of this bill is earnestly sought

a gee

LUIS MUND “LRAY” F. VILLAFUERTE, JR.


Republic of the Philippines
HOUSE OF REPRESENTATIVES.
Queson City

EIGHTEENTH CONGRESS
First Regular Session

1909
HOUSE BILL NO.

_—

Introduced by HON. LUIS RAYMUND “LRAY” F, VILLAFUERTE, JR.

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 House of Representatives of the Philippines
in Congress assembled:

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

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

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

The power to decide disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in relation
thereto, or other matters arising under this Code or other laws or portions
thereof administered by the Bureau of Internal Revenue is vested in the


Commissioner, subject to the exclusive appellate jurisdiction of the Court
of Tax Appeals.

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

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

(A) x00

(B) 0%

(C) 0x

(D) 0%; [ and ]
(E) xxx; AND

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

[(B) 1 (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. - .0x«
(A) 0x
(B) xx
(C) xxx
(D) xxx
(E) The term ‘nonresident citizen’ means;

(1) Acitizen 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.
@ 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 return to and reside in the Philippines as the case may be for purpose
of this Section.

Ox.

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

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

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

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

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

(A) In General. - Except as otherwise provided in this Code, AN
INCOME TAX RATE OF PERCENT (30%), is hereby imposed upon the
taxable income derived during each taxable year from all sources within
and without the Philippines by every corporation, as defined in Section
22(B) of this Code and taxable under this Title as a corporation,
organized in, or existing under the laws of the Philippines: [ Provided,
that effective January 1, 2009, the rate of income tax shall be thirty
percent (30%). ] PROVIDED, THAT THE RATE OF CORPORATE
INCOME TAX SHALL BE TWENTY EIGHT PERCENT (28%)
BEGINNING JANUARY 1, 2021; TWENTY SIX PERCENT (26%)
BEGINNING JANUARY 1, 2023; TWENTY FOUR PERCENT (24%)
BEGINNING JANUARY 1, 2025; TWENTY TWO PERCENT (22%)
BEGINNING JANUARY 1, 2027; AND TWENTY PERCENT (20%)


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

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

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

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


(C) xx
(D) 0x
(E) 200

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

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

The corporate income tax rate shall be applied on the amount
computed by multiplying the number of months covered by the new rate


within the fiscal year by the taxable income of the corporation for the
period, divided by twelve.

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

(2) 10x
(3) xxx

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

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

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

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

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


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

L(7)] (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 '/2%) ] of such interest income.

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

pore

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

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

(d) Intercorporate Dividends.- xxx

(B) Tax on Nonresident Foreign Corporation. -

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

10


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

IN THE CIT RATE, BASED ON THE ANNUAL REVIEW OF THE
MEDIUM TERM FISCAL PROGRAM.

(2) Nonresident Cinematographic Film Owner, Lessor or
Distributor. - A cinematographic film owner, lessor, or distributor shall

pay a tax of twenty-five percent (25%) of its gross income from all
sources within the Philippines.

(3) xxx
(4) 20

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

(a) Interest on Foreign Loans. - xx

(b) Intercorporate Dividends. — A final withholding tax at
the rate of fifteen percent (15%) is hereby imposed on the amount
of cash and/or property dividends received from a domestic
corporation, which shall be collected and paid as provided in
Section 57 (A) of this Code, subject to the condition that the
country in which the nonresident foreign corporation is domiciled,
shall allow a credit against the tax due from the nonresident
foreign corporation taxes deemed to have been paid in the
Philippines equivalent to [ twenty percent (20%) ] FIFTEEN
PERCENT (15%) which represents the difference between the

TT


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% J”

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

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

(A) Expenses. -

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

XK
(2) x0
(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

12


taxpayer's otherwise allowable deduction for interest expense
shall be reduced by [ forty-two percent (42%) JTHIRTY 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) xxx

(C) Taxes. - xxx

(D) Losses. - xxx

(E) Bad Debts. - xxx

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

(H) Charitable and Other Contributions. - xxx

(1) Research and Development. - xxx


XXX

(J) Pension Trusts. - xxx

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

(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 return shall be irrevocable for the
taxable year for which the return is made: Provided, That an
individual who is entitled to and claimed for the optional standard
deduction shall not be required to submit with his tax return such
financial statements otherwise required under this Code:
Provided, further, That 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 Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:

“SEC. 40. Determination of Amount and Recognition of Gain or Loss.
(A) x xx
(B) xxx

(C) Exchange of Property.
(1) 0x

(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

15


SUCH ACQUIRING CORPORATION HAD
CONTROL IMMEDIATELY BEFORE THE
ACQUISITION;

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

(D) A RECAPITALIZATION; OR
(E) A REINCORPORATION

No gain or loss shall also be recognized if property is transferred
to a corporation by a person in exchange for stock or unit of participation
in such a corporation of which as a result of such exchange said person,
alone or together with others, not exceeding four (4) persons, [ gains
control of said corporation ] AND, IMMEDIATELY AFTER, SUCH
PERSON OR PERSONS ARE IN CONTROL OF SAID
CORPORATION: Provided, that stocks issued for services shall not be
considered as issued in return for property.

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

THE PROVISION OF SECTION 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).

xr

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

“SEC. 50.[ Allocation of Income and Deductions. In the case of
two or more organizations, trades or businesses (whether or not
incorporated and whether or not organized in the Philippines) owned or
controlled directly or indirectly by the same interests, the Commissioner
is authorized to distribute, apportion or allocate gross income or
deductions between or among such organization, trade or business, if
he determined that such distribution, apportionment or allocation is
necessary in order to prevent evasion of taxes or clearly to reflect the
income of any such organization, trade or business. ] AUTHORITY OF
THE COMMISSIONER TO DISTRIBUTE, APPORTION, ALLOCATE,
AND IMPUTE INCOME AND DEDUCTIONS TO DISREGARD AND
COUNTERACT TAX AVOIDANCE ARRANGEMENTS. — IN CASE OF
TWO OR MORE ORGANIZATIONS, TRADES OR BUSINESSES,
WHETHER OR NOT ORGANIZED IN THE PHILIPPINES, OWNED OR
CONTROLLED DIRECTLY OR INDIRECTLY BY THE SAME
INTERESTS, THE COMMISSIONER IS AUTHORIZED TO
DISTRIBUTE, APPORTION, ALLOCATE, OR IMPUTE INCOME OR
DEDUCTIONS BETWEEN OR AMONG SUCH ORGANIZATIONS,
TRADES OR BUSINESSES, IF THE COMMISSIONER DETERMINES
THAT SUCH DISTRIBUTION, APPORTIONMENT, ALLOCATION, OR
IMPUTATION IS NECESSARY IN ORDER TO PREVENT EVASION
OF TAXES OR TO CLEARLY REFLECT THE INCOME OF ANY SUCH
ORGANIZATION, TRADE, OR BUSINESS.

IN CASES WHERE THE TRANSACTION OR ARRANGEMENT
IS MOTIVATED BY OBTAINING TAX BENEFIT OR ADVANTAGE
WITH NO COMMERCIAL REALITY OR ECONOMIC EFFECT, SUCH
AS (A) DIRECTLY OR INDIRECTLY ALTERING THE INCIDENCE OF
ANY INCOME TAX; (B) DIRECTLY OR INDIRECTLY RELIEVING A
PERSON FROM LIABILITY TO PAY INCOME TAX OR FROM A
POTENTIAL OR PROSPECTIVE LIABILITY TO FUTURE INCOME

17


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

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

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

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

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

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

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


L (C) 1 () Dividends Distributed are Deemed Made from Most
Recently Accumulated Profits. - Any distribution made to the
shareholders or members of a corporation shall be deemed to have been
made from the most recently accumulated profits or surplus, and shall
constitute a part of the annual income of the distribute for the year in
which received.

[ (©) 1() Net Income of a Partnership Deemed Constructively
Received by Partners. - The taxable income declared by a partnership
for a taxable year which is subject to tax under Section 27 (A) of this
Code, after deducting the corporate income tax imposed therein, shall
be deemed to have been actually or constructively received by the
partners in the same taxable year and shall be taxed to them in their
individual capacity, whether actually distributed or not.”

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

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

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

"(B) Cancellation of VAT Registration. - A person whose
registration has been cancelled due to retirement from or cessation of
business, or due to changes in or cessation of status under Section
106(C) of this Code may, within two (2) years from the date of

19


cancellation, apply for REFUND. [ the issuance of a tax credit certificate
for any unused input tax. which may be used in payment of his other
internal revenue taxes]

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

“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.

200

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

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

xX”

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

20


of the return, 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 return is filed beyond the
period prescribed by law, the [three (3)] FIVE (5) year period shall be
counted from the day the return was filed. For purposes of this Section,
a return 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 [
(P1,000.000) ] (P10,000,000) 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.

OX”

SEC. 19. Sec. 222 of the National Internal Revenue Code of 1997, as amended, is
hereby amended to read as follows:

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

21


(a) x

(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.

00

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

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

(A) Issuance. - xxx

“Within 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 JTHRU
DESIGNATED ELECTRONIC CHANNELS WITH A_ PUBLIC
CERTIFICATION SYSTEM ACCREDITED BY THE BUREAU, subject
to the rules and regulations to be issued by the Secretary of Finance
upon recommendation of the Commissioner [ and after a ] following a
public hearing [ shall have been ] held for this purpose: Provided, That
taxpayers not covered by the mandate of this provision may issue
electronic receipts of sales or commercial invoices in lieu of manual
receipts or sales or commercial invoices. PROVIDED FURTHER,
SUBJECT TO THE RULES AND REGULATIONS TO BE ISSUED BY
THE SECRETARY OF FINANCE, THE COMMISSIONER MAY
REQUIRE ANY TAXPAYER TO COMPLY WITH THE PROVISIONS
OF THIS SECTION.

22


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, 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 internal 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 of the taxpayers:
PROVIDED, FURTHER, SUBJECT TO THE RULES AND
REGULATIONS TO BE ISSUED BY THE SECRETARY OF FINANCE,
THE COMMISSIONER MAY REQUIRE ANY TAXPAYER TO COMPLY
WITH THE PROVISIONS OF THIS SECTION.

IN YEAR ONE TO YEAR FOUR OF THE IMPLEMENTATION PERIOD,
A TAXPAYER WHO ADOPTS THE REQUIRED SYSTEM SHALL BE

23


GRANTED A TAX CREDIT OF 0.1% OF THE PURCHASE VALUE,
NET OF VALUE ADDED TAX, FOR EVERY ELECTRONIC RECEIPT
OR SALE OR COMMERCIAL INVOICE TRANSMITTED THROUGH
THE DESIGNATED ELECTRONIC CHANNELS OF THE BUREAU
AND ISSUED AN ELECTRONIC TAX TRANSACTION NUMBER.

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

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

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

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

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

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

“SEC. 255. Failure to File Return, Supply Correct and Accurate
Information, Pay Tax Withhold and Remit Tax and Refund Excess Taxes
Withheld on Compensation. - Any person required under this Code or by
rules and regulations promulgated thereunder to pay any tax make a

24


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

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

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

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

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

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

25


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

(1) Willfully falsifies any report or statement bearing on any
examination or audit, or renders a report, including exhibits,
statements, schedules or 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 internal revenue purposes not in conformity with the
requirements prescribed in this Code or rules and regulations
promulgated thereunder; or

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

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

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

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

26


variance with books or records kept by him in another language;
or

(8) Willfully attempts in any manner to evade or defeat any tax
imposed under this Code, or knowingly uses fake or falsified
revenue official receipts, Letters of Authority, certificates
authorizing registration, Tax Credit Certificates, Tax Debit
Memoranda and other accountable forms shall, upon conviction
for each act or omission, be punished by a fine not less than [Fifty
thousand pesos (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) J
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.”

27


SEC. 26. Sec. 260 of the National Internal Revenue Code of 1997, as 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.”

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 internally, or knowingly sells or offers for sale such preparations
containing as an ingredient such alcohol, shall upon conviction for each
act or omission be punished by a fine of not less than than[Twenty
thousand pesos (P20,000) but not more than One hundred thousand
pesos (P100,000) ] ONE MILLION FIVE HUNDRED THOUSAND
PESOS (P1,500,000) BUT NOT MORE THAN FIFTEEN MILLION
PESOS (P15,000,000) and suffer imprisonment for a term of not less
than six (6) years and one (1) day but not more than twelve (12) years.

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

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

28


“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 Internal Revenue Code of 1997, as amended, is
hereby amended to read as follows:

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

(a) A fine of not less than [ One thousand pesos (P1,000) ]TWENTY
FIVE THOUSAND PESOS (P25,000) [ nor] BUT NOT more than [ Two
thousand pesos (P2,000) JSEVENTY FIVE THOUSAND PESOS
(P75,000) and suffer imprisonment of not less than [ sixty (60) days but
not more than one hundred (100) days ] THIRTY (30) DAYS BUT NOT
MORE THAN SIX (6) MONTHS if the appraised value, to be determined
in the manner prescribed in the [ Tariff and Customs Code JCUSTOMS
MODERNIZATION AND TARIFF ACT, including duties and taxes, of the
articles does not exceed [ One thousand pesos (P1,000). ]TWO
HUNDRED FIFTY THOUSAND PESOS (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 JSIX (6) MONTHS AND ONE (1)
DAY BUT NOT MORE THAN ONE (1) YEAR if the appraised value, to

29


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 L 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

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

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

30


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

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

Any person who is found in possession of locally manufactured
articles subject to excise tax, the tax on which has not been paid in
accordance with law, or any person who is found in possession of such
articles which are exempt from excise tax other than those to whom the
same is lawfully issued shall be punished with a fine of not less than (10)
times the amount of excise tax due on the articles found but not less than
[ Five hundred pesos (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

31


THOUSAND (P25,000) and suffer imprisonment of not less than [ one
(1) year but not more than two (2) years ] TWO (2) YEARS BUT NOT
MORE THAN FOUR (4) YEARS.

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

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

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

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

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

(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
\dentification Number, and business address of the person
or entity.”

32


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

(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 [

33


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
(P40,000) 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 Internal
Revenue Code of 1997, as amended, to read as follows:

“SEC. 282-A. VIOLATION OF THE PROVISIONS OF THIS CODE
AMOUNTING TO ECONOMIC SABOTAGE. - ANY VIOLATION OF
SECTION 254 OF THIS CODE THAT UNDERMINES, WEAKENS OR
RENDERS INTO DISREPUTE THE ECONOMIC SYSTEM OR
VIABILITY OF THE COUNTRY OR TENDS TO BRING OUT SUCH
EFFECTS, IN LIEU OF THE PENALTY SET IN THE PRECEDING
PROVISIONS, SHALL CONSTITUTE ECONOMIC SABOTAGE, AND,
UPON CONVICTION FOR EACH ACT OR OMISSION, BE PUNISHED
BY A FINE OF NOT LESS THAN FIFTY 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. —

peed

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

(1) 00%,

(2) 0G

(3) xx; [and]
(4) ol];

34


(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. Anew 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.

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

35


ARE ZERO-RATED AND DOMESTIC SALES ARE SUBJECT TO THE
REGULAR VALUE-ADDED TAX RATE.

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

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

(B) THE TERM ‘CAPITAL EQUIPMENT’ REFERS TO MACHINERY,
EQUIPMENT, MAJOR COMPONENTS THEREOF, FITTINGS AND
ACCOMPANIMENTS WHICH ARE DIRECTLY AND REASONABLY NEEDED
IN THE REGISTERED ACTIVITY OF THE REGISTERED ENTERPRISE.

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

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

36


AND FREEPORT AUTHORITY (APECO), AUTHORITY OF THE FREEPORT
AREA OF BATAAN (AFAB), TOURISM INFRASTRUCTURE AND
ENTERPRISE ZONE AUTHORITY (TIEZA), AND ALL OTHER SIMILAR
AUTHORITIES EXISTING OR THAT MAY BE CREATED BY LAW.

(E) THE TERM ‘OTHER GOVERNMENT AGENCIES ADMINISTERING
FISCAL INCENTIVES (OGA)’ SHALL REFER TO GOVERNMENT
AGENCIES OTHER THAN IPAS WHICH REGISTER OR ADMINISTER
FISCAL INCENTIVES OF ANY KIND TO ANY SPECIFIC ENTITIES AND/OR
CLASS OF PERSONS PURSUANT TO ANY LAW. THESE SHALL
INCLUDE, BUT SHALL NOT BE LIMITED TO THE COOPERATIVE
DEVELOPMENT AUTHORITY (CDA), DEPARTMENT OF SOCIAL
WELFARE AND DEVELOPMENT (DSWD), COMMISSION ON HIGHER
EDUCATION (CHED), BUREAU OF INTERNAL REVENUE (BIR),
DEPARTMENT OF AGRARIAN REFORM (DAR), DEPARTMENT OF
AGRICULTURE (DA), DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS (DOTC), CIVIL AVIATION AUTHORITY OF THE
PHILIPPINES (CAAP), DEPARTMENT OF PUBLIC WORKS AND
HIGHWAYS (DPWH), REGIONAL GOVERNMENT-AUTONOMOUS
REGION IN MUSLIM MINDANAO, REGIONAL GOVERNMENT-
CORDILLERA ADMINISTRATIVE REGION, DEPARTMENT OF TOURISM
(DOT), BANGKO SENTRAL NG PILIPINAS (BSP), NATIONAL BOOK
DEVELOPMENT BOARD (NBDB), BOY SCOUT OF THE PHILIPPINES,
GIRL SCOUT OF THE PHILIPPINES, DEPARTMENT OF FINANCE (DOF),
BUREAU OF CUSTOMS (BOC), NATIONAL TELECOMMUNICATIONS
COMMISSION (NTC), PRESIDENTIAL COMMUNICATIONS OPERATIONS
OFFICE (PCOO), NATIONAL COUNCIL FOR CHILDREN’S TELEVISION
(NCCT), NATIONAL COMMISSION FOR CULTURE AND THE ARTS
(NCCA), NATIONAL HISTORICAL COMMISSION OF THE PHILIPPINES
(NHCP), FILM DEVELOPMENT COUNCIL, NATIONAL COUNCIL FOR
DISABILITY AFFAIRS, SECURITIES AND EXCHANGE COMMISSION
(SEC), COMMISSION ON HIGHER EDUCATION (CHED), DEPARTMENT
OF EDUCATION (DEPED), DEPARTMENT OF SCIENCE AND
TECHNOLOGY (DOST), TECHNICAL EDUCATION AND SKILLS
DEVELOPMENT AUTHORITY (TESDA), COMMISSION ON ELECTIONS
(COMELEC), NATIONAL ELECTRIFICATION ADMINISTRATION (NEA),
NATIONAL POWER CORPORATION (NPC), DEPARTMENT OF
ENVIRONMENT AND NATURAL RESOURCES (DENR), NATIONAL
DISASTER AND RISK REDUCTION MANAGEMENT COUNCIL (NDRRMC),
DEPARTMENT OF FOREIGN AFFAIRS (DFA), DEPARTMENT OF HEALTH
(DOH), PHILIPPINE RED CROSS, HOUSING AND URBAN DEVELOPMENT
COORDINATING COUNCIL (HUDCC), NATIONAL GOVERNMENT
CENTER ADMINISTRATION COMMITTEE, HOUSING AND LAND USE
REGULATORY BOARD (HLURB), NATIONAL COMMISSION ON

37


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.

38


(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.

()) 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,

39


(ii)

IMPACT STATEMENTS (EIS), SUCH AS BUT
NOT LIMITED TO: (A) HEAVY INDUSTRIES
(NON-FERROUS METAL INDUSTRIES, IRON
AND STEEL MILLS, PETROLEUM AND
PETROCHEMICAL INDUSTRIES, AND
SMELTING PLANTS); (B) RESOURCE
EXTRACTIVE INDUSTRIES (MAJOR MINING
AND QUARRYING PROJECTS, FORESTRY
PROJECTS, DIKES AND  FISHPOND
DEVELOPMENT PROJECTS); (c)
INFRASTRUCTURE PROJECTS (MAJOR
DAMS, MAJOR POWER PLANTS, MAJOR
RECLAMATION PROJECTS, MAJOR ROAD
AND BRIDGES); AND (D) GOLF COURSE
PROJECTS.

PROJECTS LOCATED IN
ENVIRONMENTALLY CRITICAL AREAS
(ECA) WHOSE PROJECT PROPONENT IS
REQUIRED TO SUBMIT AN EIS LATER, IF
DEEMED NECESSARY, IS REQUIRED.
SUCH AREAS INCLUDE BUT ARE NOT
LIMITED TO: (A) ALL AREAS DECLARED
BY LAW AS NATIONAL PARKS,
WATERSHED RESERVES, WILDLIFE
PRESERVES, AND SANCTUARIES; (B)
AREAS SET ASIDE AS AESTHETIC
POTENTIAL TOURIST SPOTS; (C) AREAS
WHICH CONSTITUTE THE HABITAT FOR
ANY ENDANGERED OR THREATENED
SPECIES OF INDIGENOUS PHILIPPINE
WILDLIFE (FLORA AND FAUNA); (D) AREAS
OF UNIQUE HISTORIC, ARCHEOLOGICAL
OR SCIENTIFIC INTEREST; (E) AREAS
WHICH ARE TRADITIONALLY OCCUPIED BY
CULTURAL COMMUNITIES OR TRIBES
(INDIGENOUS CULTURAL COMMUNITIES);
(F) AREAS FREQUENTLY VISITED AND/OR
HARD-HIT BY NATURAL CALAMITIES
(GEOLOGIC HAZARDS, _—FLOODS,
TYPHOONS, VOLCANIC ACTIVITY, ETC.);
(G) AREAS WITH CRITICAL SLOPES; (H)
AREAS CLASSIFIED AS — PRIME
AGRICULTURAL LANDS; (1) RECHARGED

40


AREAS OF AQUIFERS; (J) WATER BODIES
CHARACTERIZED BY ONE OR ANY
COMBINATION OF THE FOLLOWING
CONDITIONS: (I.) TAPPED FOR DOMESTIC
PURPOSES, (II) WITHIN THE CONTROLLED
AND/OR PROTECTED AREAS DECLARED
BY APPROPRIATE AUTHORITIES, (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: (I) WITH FIFTY
PERCENT (50%) AND ABOVE LIVE
CORALLINE COVER, (II) SPAWNING AND
NURSERY GROUNDS FOR FISH, (III) WHICH
ACT AS NATURAL BREAKWATER OF
COASTLINES.

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

(c) INDUSTRIES THAT DISCHARGE REGULATED

EFFLUENTS AND ARE REQUIRED TO SECURE A
DISCHARGE PERMIT FROM THE DENR UNDER RA

41


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 II

TAX AND DUTY INCENTIVES

42


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

4B


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 INCLUDE INDIRECT LABOR, SALARIES AND WAGES,
AND OTHER PERSONNEL COSTS INCURRED FOR
ADMINISTRATIVE AND OTHER SUPPORT SERVICES.

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

44


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 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),

45


(4), (8), (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 BOI SHALL PRESCRIBED THE
LEVEL OF ADDITIONAL DEDUCTION FOR SELECTED INDUSTRIES.

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

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

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

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

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

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

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

SEC. 296. PROJECTS LOCATED IN LESS DEVELOPED AREAS OR
THOSE RECOVERING FROM ARMED CONFLICT OR A MAJOR
DISASTER. PROJECTS OR ACTIVITIES OF REGISTERED ENTERPRISES

46


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

47


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.

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;

48


(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

(C)

(D)

©

)

)

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

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

49


(F)

(G

(H)

10)

)

(kK)

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;

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

TO FIX AND IMPOSE REASONABLE FEES AND CHARGES FOR THE
PROCESSING OF APPLICATIONS FOR FISCAL INCENTIVES OR TAX

50


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.

51


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

(A) TO RECEIVE, REVIEW, AND PROCESS APPLICATIONS ON FISCAL

(B)

(Cc)

(D)

(E)

(F)

G

)

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 PROJECTS/ACTIVITIES AS
DEFINED UNDER SEC. 293(I) OF THIS ACT.

(A) REGISTERED PROJECTS WITH INVESTMENT AMOUNT OF FIFTY

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

52


(B) 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

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

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

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

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

CHAPTER IV

FISCAL INCENTIVES MANAGEMENT AND TRANSPARENCY

53


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.

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.

54


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

55


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.

56


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

CHAPTER VI
ADMINISTRATIVE REMEDIES

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

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

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

CHAPTER VII
QUALIFIED ACTIVITIES FOR TAX INCENTIVES

SEC. 313. ‘STRATEGIC INVESTMENTS PRIORITY PLAN’ (SIPP). — THE
BOARD OF INVESTMENTS (BO)), INCOORDINATION 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.

S7


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)

(8)

(Cc)

(D)

(E)

(F)

(G)

(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.

SUBSTANTIAL AMOUNT OF INVESTMENTS;

CONSIDERABLE GENERATION OF
EMPLOYMENT;

ADOPT INCLUSIVE BUSINESS ACTIVITIES
AND VALUE ADDING PRODUCTION BY
MSMES;

USE OF MODERN OR NEW TECHNOLOGY;

ADOPTION OF ADEQUATE
ENVIRONMENTAL PROTECTION SYSTEMS;

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

PROMOTION OF MARKET
COMPETITIVENESS.

OR GLOBAL OPERATIONS IN THE COUNTRY.

58


(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.

59


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

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.

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CHAPTER VIII
AVAILMENT OF TAX INCENTIVES

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

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

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

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

61


IMPORTATION, THE REGISTERED ENTERPRISE SHALL FIRST
SEEK PRIOR APPROVAL OF THE AUTHORITY, AND PAY THE
TAXES AND CUSTOMS DUTIES THAT WERE NOT PAID UPON ITS
IMPORTATION; AND

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

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

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

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

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

(4) FOR REASONS OF PROVEN TECHNICAL
OBSOLESCENCE.

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

62


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;

63


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

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

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

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

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

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

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

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

64


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

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

SEC. 39. Amendatory Clause. —

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

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

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

(3) Section 3 of Executive Order No. 80, series of 1993, entitled “Authorizing

the Establishment of the Clark Development Corporation as the Implementing
Arm of the Bases Conversion and Development Authority for the Clark Special
Economic Zone, and Directing All Heads of Departments, 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

65


the Zamboanga City Special Economic Zone Authority, Appropriating Funds
therefor, and for other Purposes;”

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

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

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

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

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

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

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

(1) Section 18 of Republic Act No. 7884, entitled “An Act Creating the
National Dairy Authority to Accelerate the Development of the Dairy Industry in

66


the Philippines, Providing for a Dairy Development Fund, and for Other
Purposes;”

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

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

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

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

(8) 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

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National Policy Objective for the Total Electrification of the Philippines on an
Area Coverage Service Basis, the Organization, Promotion and Development
of Electric Cooperatives to Attain the Said Objective, Prescribing Terms and
Conditions for their Operations, the Repeal Of Republic Act 6038, and for Other
Purposes;”

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

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

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

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

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

(16) Section 19 of Republic Act No. 6847, entitled “An Act Creating and
Establishing the Philippine Sports 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.”

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Sec. 40. Repealing Clauses. —

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

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

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

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

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

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

(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”;

69


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

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

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

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

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

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

(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”;

70


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

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

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

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

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

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

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

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

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

7


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

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

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

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

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

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

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

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

72


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

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

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

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

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

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

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

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

Another Twenty-Five (25) Years From The Date Of The Effectivity Of
This Act”;

BB


(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”;

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

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

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

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

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

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

74


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

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

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

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

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

(51) Section 10 of Republic Act No. 10972 entitled “An Act Renewing
For Another Twenty-Five (25) Years The Franchise Granted To Infocom
Communications Network, Inc. (Presently Known As Now Telecom
Company, Inc.) Under Republic Act No. 7301, Entitled * An Act Granting
Infocom Communications Network, Inc. (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”;

75


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

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

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

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

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

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

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

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

(3) Section 32 of R.A. 10654, or “An Act To Prevent, Deter And
Eliminate Illegal, Unreported And Unregulated Fishing, Amending

76


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 II, 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 I, Title Ill, Article 39 (A), (B), (C), (D), (E), (G), (I), (J), (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,

7


Regional Warehouses Of Multinational Companies Amending For The
Purpose Certain Provisions Of The Omnibus Investment Code Of 1987";

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

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

(17) Section 17, In So Far As Tax Exemption and/or VAT Zero Rating
On Domestic Merchandise Is Concerned, and Section 18 (A), (B), (C)
and (F) of Presidential Decree No. 68, 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 Concerned, of R.A. 7903, or
The “Zamboanga City Special Economic Zone Act Of 1995”.

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

78


Act No. 7227, As Amended By Republic Act No. 9400, Inside The Clark
Freeport Zone”;

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

(25) Sections 3 (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 concerned, and
Sections 5, 6 and 10 of R.A. 9728, or The “Freeport Area Of Bataan
(FAB) Act Of 2009";

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

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

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

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

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

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

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

(34) Chapter VII, Section 15 Except (H), Sections 19, 21 (A) to (D),
and 23 of R.A. 9513, or “An Act Promoting The Development, Utilization

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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 Alternative Health
Care Development Fund And For Other Purposes”;

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

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

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

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

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

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

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

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

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

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

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

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

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

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(55) Section 4 (1.1) of E.0. 97-As. of 1993 Entitled, “Further Clarifying
The Tax And Duty-Free Privilege Within The Subic Special Economic
And Free Port Zone”,

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

(57) Section 5 (5.1) 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";

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

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

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

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

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

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

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

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

(1) Sections 4 (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 (a); Section 2 of Executive Order No. 93, series of 1986,
entitled ‘Withdrawing All Tax and Duty Incentives, Subject to Certain
Exceptions, Expanding the Powers of the Fiscal Incentives Review Board
and for other Purposes”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 41. Implementing Rules and Regulations. - Within thirty (30) days from the
effectivity of this Act, the Secretaries of Finance, and Trade and Industry, shall, upon
consultations with the Bureau of Internal Revenue and Board of Investments and other

Investment Promotion Agencies, promulgate the necessary rules and regulations for
its effective implementation.

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

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

Approved,

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