SIXTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES) 
First Regular Session 
) 
SENATE 
'98';' 
S.No. __ _ 
Introduced by Senator Ralph G. Recto 
Explanatory Note 
'IJ 
JIJL Z ~) P 1, :fl f,) 
-<. 
HI 
This bill seeks to rationalize our system of fiscal incentives that paved the way to a regime of 
irrational investment plans and wasteful tax breaks. For almost three decades, the Investment Priority 
Plans have been ineffective in attracting more significant and sustained investments. 
The United Nations Conference On Trade And Development Foreign Direct Investments (FDI) 
Attraction Index, which measures the success of economies in attracting FDI (combining total FDI 
inflows and inflows relative to GDP), features 8 developing and transition economies in the top ten (10), 
wherein the Philippines is among those who have received less FDIs than could be expected based on 
economic detenninants. At $1.5 Trillion global FDI in 2011, the Philippines only contributed between 
$1.0 billion and $9.9 billion. [1] 
We are lagging behind our neighbors in tenns ofFDIs despite our generous incentives package. 
We could not even recoup half of our foregone revenues in 2005 ofP282.76 billion as we are only getting 
$ 2.9 billion in foreign investments. [2] 
This measure also aims to end the indiscriminate dispensation of fiscal perks to investors who are 
primarily motivated by the prospects in the domestic market and investments that would have been made 
even without incentives. These redundant incentives, in the fonn of income tax holidays and VAT 
exemptions, are enough to build 10,000 [3] elementary and secondary school buildings of the basic one-
classroom type, pave 14,700 kilometers of national roads [41, fund various PPP projects [5], hire 61,510 
new teachers and 3,500 non-teaching personnel [6], and even wipe out tuberculosis. [7] 
This bill will streamline the administration of fiscal incentives. At present there are about 180 [8] 
laws which created a myriad of incentive-providing authorities. It aims to consolidate all Investment 
Promoting Agencies (TI'As) into one centralized agency. Thus, the Board of Investments (BOI) and 
Philippine Economic Zone Authority (PEZA) will be merged to form the Philippine Investment 
.Promotion Administration (PTI' A). This would then prevent locators from cherry-picking incentives by 
registering with different TI' As to avail themselves ofthe best possible incentives package. 
Under this proposal, incentives are given to registered domestic enterprises that locate in any of 
the 30 poorest provinces, bring in investments of P500 million and above, or generate at least 200 jobs. 
I United NatIOns Publication "World Investment Report 2012: Towards a New Generation ofInvestment Policies" 
:2 Gascon, Rechilda. STSRO Senate Tax Bits. Volume 1 Second Issue 
June~July 2010. "Overview of RP's Fiscal Incentives" 
~:llwww.scnate.gov.!)h/publicatiQns/stsro taxbits02.pdf 
3 ConstlUction estimates given by the DPWH - BUteau of Construction: 1 classroom 7x9 wind zone 3 2S0kph := Pl.16 M 
4 Construction estimates given by the DPWH - Bureau of Construction: asphalt paving of national road 23cm thickness := P8.25 M/km' 
5 Modcmization or the Philippitw Orthopedic Center PS.7 B, LRT Line 1 South Extension Project P59 2 B, NLEX-SLEX Connector Road P21.2 
B, Cavite-Laguna Expressway P43.33 B" 
http://lmJ!,gov ph/wp-contentlypload;>l2012/10/PPPBrochme Sept2012.pdf 
G Jess Diaz, "DepEd: No more classroom, teacher Shortage Next Year," The Philippine Star, 4 September 2012, Headlines. 
http://www.philslar.com/hcadlincs/20 12/09/04/8452291depcd-no-mol'e-c lassroom-teacher-shOl tage-nexl-ycar (Accessed on 2 Apri120 13) 
7 Per the World HeaUh Organization's Global Tuberculosis Report 2012, the total flmding required for Til Care and control in 2013 would be 
US$ 176 million. htto://apps" who.illt/iris/bitstreamJI0665!75938!1/9789241564502 eng.pdf(Accessed on 2 Apri12013) 
8 Transcript of Stenographic Notes, 1 March 2011 Committee on Ways and Means Joint With the Committee on 
Economic Affairs Hearing on Fiscal Incentives, page 61. 


They also get reduced income tax rate of 15%, net operating losses carry over during the first 5 years, and 
accelerated depreciation. 
Registered export enterprises would enjoy reduced income tax rate of 15% with option to choose 
between the preferential rate of 15% and 5% on gross income earned in lieu of all taxes except V AT, 
duty-free importation on capital equipments, extended NOLCO and accelerated depreciation, among 
others. 
The savings to be generated [rom this measure shall be earmarked for infrastructure (50%) and 
for education (50%). Better physical infrastructure and a well-educated labor force will undoubtedly be 
more effective than tax incentives in attracting capital into the country. Investing in infrastructure and 
education are keys to sustainable growth and are the best factors in luring investments. 
This measure is our answer to the challenge of this administration to raise additional revenues for 
better government services without imposing new taxes. 
In view of the foregoing, immediate approval oftbis bill is requested. 


SIXTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES) 
First Regular Session 
) 
SENATE 
S.No. 98) 
Introduced by Senator Ralph G. Recto 
'13 
JUL D 
P 1 :40 
~---------------~-------------------
AN ACT 
HARMONIZING THE GRANT AND ADMINISTRATION OF FISCAL AND NON-FISCAL 
INCENTIVES, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
1 
PRELIMINARY TITLE 
2 
TITLE AND DECLARATION OF POLICY 
3 
SECTION 1. Title. - This Act shall be known as "The Consolidated Investments and Incentives 
4 
Code of the Philippines". 
5 
SEC. 2. Declaration of Investment Policies. - The national economy shall be developed so as to 
6 
enbance its competitiveness in the global economy and encourage investments that promote countrywide 
7 
development, generate employment and foreign exchange. Accordingly, the following are declared 
8 
policies of the State: 
9 
(1) The State shall pursue a market responsive investment regime and to that end shall 
10 
ensure that the incentives shall promote substantial social and economic spillovers, equitable 
11 
development across income classes and across provinces, are fiscally sustainable, financially and 
12 
economically justifiable, and are consistent with international treaties. The State shall therefore 
13 
provide the means for ascertaining that these objectives are being attained. 
14 
(2) The State shall grant the necessary incentives that encourage long-term and recurrent 
15 
investment, are simple to administer, are time-bound and whose performance and outcomes are 
16 
easily verifiable. 
17 
(3) The State shall devote resources to monitoring enterprises benefiting from incentives, 
18 
and shall vigorously prosecute abuses. The State shall also closely monitor the level of tax 
19 
expenditures arising from the provision of incentives and ~hall ensure that concerned government 
20 
agencies are well-informed of these developments. 
21 
(4) In the granting of fiscal incentives, the State will make efforts to ascertain that the 
22 
incentives are not redundant: that the investments they benefit require and are truly motivated by 
23 
the incentives or that the incentives, as much as possible, are not given to investors who would 
24 
have made the investments even in the absence of incentives. 
25 
(5) The State shall vigorously promote investments in basic infrastructure such as, but not 
26 
limited to power, roads, airports, water ports and housing. 
27 
(6) The State recognizes that industrial peace is essential to attracting investments. 
28 
(7) The State shan undertake investment promotion activities. 
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TITLE I 
DEFINITION OF TERMS 
SEC. 3. Definition of Terms. - As used herein, the following shall mean: 
(a) "PIPA" is the Philippine Investment Promotion Administration created under this Act. 
(b) "Investment Promotion Agencies (IPAs)" shall include the Philippine Investment 
Promotion Administration (PIP A), Bases Conversion and Development Authority (BCDA), Subic 
Bay Metropolitan Authority (SBMA), Clark Development Corporation (CDC), Jolm Hay 
Management Corporation (JHMC), Poro Point Management Corporation (PPMC), Bataan 
Technology Park Inc. (BTPI), Cagayan Economic Zone Authority (CEZA), Zamboanga City 
Special Economic Zone Authority (ZCSEZA), and PHIVIDEC Industrial Authority (PIA). 
(c) "Registered enterprise" is any individual, partnership, corporation, Philippine branch 
of a foreign corporation or other entity incorporated and/or organized and existing under 
Philippine laws and registered with any of the IP As, in accordance with this Act: Provided, 
however, That the term "registered enterprise" shall not include commercial banks, savings and 
mortgage banks, rural banks, savings and loan associations, building and loan associations, 
developmental banks, trust companies, investment banks, finance companies, brokers and dealers 
in securities, Consumers cooperatives and credit unions, and other business organizations whose 
principal purpose or principal source of income is to receive deposits, lend or borrow money, buy 
and sell or otherwise deal, trade or invest in common or preferred stocks, debentnres, bonds or 
other marketable instruments generally recognized as securities, or discharge other similar 
intermedialY, hust or fiduciary functions. 
(d) "Gross income earned" is the gross sales or gross revenues derived by the registered 
enterprise from its registered business activity net of sales discounts, sales returns and allowances 
minus cost of sales or services or direct costs but before any deductions for administrative, 
marketing, selling, operating expenses or incidental losses during a given taxable year. 
(e) "Export sales" is the sales values and/or revenues paid for in freely convertible 
foreign currency, determined from invoices, bills of lading, inward letters of credit, landing 
certificates, or other commercial documents, by a registered enterprise of its (1) products shipped 
out of the country and sold in the territory of another country or (2) services rendered to clients 
abroad such as but not limited to information teclmology (IT) activities, application and/or 
installation of teclmology and systems in the project sites, including but not limited to the fields 
of engineering and construction design and other similar activities which may be approved by the 
Board, excluding mere deployment of people or individual practice of profession abroad; or (3) 
logistics, repair and maintenance, and other similar services rendered to international 
airlines/shipping Jines/military aircraft or seacraft even if rendered locally. 
(1) "Tax refund" is any refund against taxes and/or duties equal to those actually paid by a 
registered export enterprise and to be released by PIP A as provided for under Section 17 of this 
Act. 
(g) "Information Technology Activities" are activities which involve the use of any IT 
software and/or system for value addition, IT, being the collective term for various teclmologies 
involved in processing and transmitting information which include computing, multimedia, 
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telecommunications, microelectronics and their interdependencies, including the convergence of 
various information-based, broadcast and mass media communication technologies. 
(h) An "expolt enterprise" is a registered enterprise which is a manufacturer, processor or 
service provider and whose export sale of its products or services is at least seventy percent 
(70%) of its output. 
(i) A "domestic enterprise" is a registered enterprise whose export sales is less than 
seventy percent (70%) of its output, and is located in the thirty (30) poorest provinces 
as 
determined by the Department of Finance (DOF): PrOVided, That such domestic enterprise has a 
minimum investment of Five hundred million pesos (P500,000,000) or can provide a minimum 
employment of two hundred (200) jobs: Provided, further, 1bat existing enterprises already 
located in the thirty (30) poorest provinces as determined by the DOF before the effectivity of 
this Act and have satisfied the minimum investment of Five hundred million pesos 
(P500,000,000) or minimum employment of two hundred (200) jobs are qualified to register and 
avail of the incentives provided in this Act. 
(j) "Capital Equipment" refers to machinery, spare parts, tools and dies, or those required 
for pollution abatement and control, cleaner production and water reduction. 
(k) "Source documents" are input materials and documents reasonably needed by 
IT and IT -enabled industries such as, but not limited to, books, directories, magazines, 
newspapers, brochures, pamphlets, medical records/files, legal records/files, instruction 
materials, drawingslblueprints/outlines. 
(1) "Processing" is converting raw materials into marketable form through 
physical, mechanical, chemical, electrical, biochemical, biological or other means, or by 
a special treatment or a series of actions, such as slaughtering, milling, pastenrizing, 
drying or desiccating, quick freezing, that results in a change in the nature or state of the 
products. Mere packing or packaging shall not constitute processing. 
(m) "Industrial Estate (IE)" refers to a tract of land subdivided and developed according 
to a comprehensive plan under a unified continuous management and with provisions for basic 
infrastructure and utilities, with or without pre-built standard factory buildings and community 
facilities for the use of a community of industries. 
(n) "Export Processing Zone (EPZ)" refers to a specialized industrial estate and 
predominantly oriented to export production. 
(0) "Special Economic Zones (SEZ)" hereinafter referred to as ecozones, are selected 
areas with highly developed or which have the potential to be developed into agro-industrial, 
industrial, information technology, creative industries, tourist/recreational centers. An ecozone 
may contain any or all ofthe following: industrial estates (IEs), export processing zones (EPZs), 
IT parks and centers, creative industries center and tourism estates. 
(P) "Tourism Estate" is a tract of land with defined boundaries, suitable for development 
into an integrated resort complex, with prescribed carrying capacities, of tounst facilities and 
activities, such as, but not limited to, sport and recreation centers, accommodations, convention 
and cultural facilities, food and beverage outlets, commercial establishments and other special 
interest and attraction activities/establishments, and provided with roads, water snpply facilities, 
Page 30f21 


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power distribution facilities, drainage and sewage systems, and other necessary infrastructures 
2 
and facilities. A tourism estate shall be under unified and continuous management, and can either 
3 
be a component of an ecozone or the whole ecozone itself. 
4 
(q) "Freeport" is an isolated and policed area adjacent to a p0l1 of entry as defined by 
5 
Section 3519 of the Tariff and Customs Code, which shall be operated and managed as a separate 
6 
customs territory to ensure free flow or movement of goods, except those expressly prohibited by 
7 
law, within, into and exported out in the freeport zone where imported goods may be unloaded for 
8 
immediate transshipmeut or stored, repacked, sorted, mixed, or otherwise manipulated without 
9 
being subject to import duties. However, movement of these imported goods from the free-trade 
10 
area to a non-free-trade area in the country shall be subject to import duties aud taxes. 
11 
TITLE II 
12 
CREATION OF THE PHILIPPINE INVESTMENT PROMOTION ADMINISTRATION (PIPA) 
13 
SEC. 4. Creation of The Philippine Investment Promotion Administration (PIPA). - The 
14 
Board of Investments (BOI) created under Executive Order No. 226, Series of 1987, as 
15 
amended, and the Philippine Economic Zone Authority (PEZA) created under Republic Act No. 
16 
7916, as amended, are hereby merged, renamed, and reorganized as the Philippine Investment 
17 
Promotion Administration (PIP A), attached to the Department of Trade and Industry (DTI), and 
18 
which shall implement the provisions of this Act except as otherwise provided herein. The 
19 
unexpended appropriations, assets and properties of BOI and the assets and properties of PEZA 
20 
are hereby trans felTed to PIP A. 
21 
The personnel ofPEZA and BOI shall be absorbed by PIP A or DTI. For this purpose, the 
22 
Board shall determine the personnel to be absorbed by PIP A. Those who will not be absorbed 
23 
due to either the inability to meet the qualification standards and selection criteria or the non-
24 
-existence of a suitable position in- PIP A or DTI shall be deemed separated from the service: 
25 
Provided, That those who will not be absorbed by PIP A or DTI, including those who will opt to 
26 
retire from government service shall be entitled to all gratuities and benefits under existing laws. 
27 
Existing Conventions or Agreements for the Avoidance of Double Taxation and the 
28 
Prevention of Fiscal Evasion with Respect to Taxes on Income (income tax treaties) that grant 
29 
reduced income tax rates on dividends, interests and royalties paid by BOI-registered enterprises 
30 
to foreign persons shall, after the merger of BOI and PEZA by virtue of this Act, continue to 
31 
grant the reduced rates to foreign persons until the expiration of the enterprises' registration 
32 
certificates with BOI and after such enterprises registered with PIPA. 
33 
SEC. 5. General Powers and Functions of the Administration. - PIP A shall have the 
34 
following powers and functions: 
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1. 
To establish, operate, administer, manage and develop the ecozones and 
fi'eepo11s according to the principles and provisions set forth in this Act; 
2. 
To register, regulate and supervise the enterprises in the ecozones and 
freeports in an efficient and decentralized manner; 
3. 
To register, regulate and supervise qualified enterprises outside the 
ecozones and freeports; 
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4. 
To coordinate with local government units and exerCIse general 
supervision over the development, plans, activities and operations of ecozones, industrial 
estates, export processing zones, free trade zones, and the like; 
5. 
To regulate and undertake the establishment, operation and maintenance 
of utilities, other services and infrastructure in the ecozones, such as heat, light and 
power, water supply, telecommunications, transport, toll roads and bridges, port services, 
and others, and to fix just, reasonable and competitive rates, charges, and fees therefor: 
Provided, That the appropriate government. regulatory agencies shall regulate the 
operation, maintenance and services of utilities such as heat, light, power, water supply, 
telecommunications, transport, toll roads and bridges, port services, and others based 
inside the ecozones insofar as such services are rendered outside the ecozones; 
6. . 
To construct; acquire, own, ·Iease, operate and maintain on its own or 
through contract, franchise, license, bulk purchase from the private sector and build-
operate-transfer scheme or joint venture, adequate facilities and infrastructure, such as 
light and power systems, water supply and distribution systems, telecommunication and 
transportation, buildings, structures, warehouses, roads, bridges, ports and other facilities 
for the operation and development of the ecozones and freeports, in coordination with the 
local government units concerned and appropriate agencies; 
7. 
To create, operate andlor contract to operate such agencies and functional 
units or offices and or subsidiaries of PIP A on its own or jointly with any private 
individual or entity as it may deem necessary and provide funds therefor; 
8. 
To adopt, alter and use a corporate seal; make contracts, lease, own or 
othelwise dispose of personal and real property; sue and be sued; and otherwise carry out 
its duties and functions as provided for in this Act; 
9. 
To coordinate the formulation and preparation of the development plans 
of the qualified enterprises; 
10. 
To formulate and implement industrial development plans and programs; 
11. 
To formulate and coordinate investments promotion activities; 
12. 
To establish an investments one-stop-action-center; 
13. 
To formulate positions and strategies on bilateral, regional or multilateral 
investments agreements or arrangements; 
14. 
To coordinate with the National Economic and Development Authority, 
Department of Trade and Industry, Department of Science and Technology, and the local 
government units and appropriate government agencies for policy and program 
formulation and implementation; and 
15. 
To monitor and evaluate the development and requirements of registered 
enterprises and recommend to the local government units or other appropriate authorities 
the location, incentives; basic services, utilities and infrastructure required or to be made 
available for said enterprises. 
Page 5 of 21 


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SEC. 6. The Board. - 'PIP A shall be governed by' a Board created under this Act , 
2 
hereinafter referred to as the "Board". 
3 
SEC. 7. Composition of the Board. - The Board shall be composed of thirteen (13) 
4 
members as fol1ows: the Secretary of the Department of Trade and Industry (DTI) as Chairman; 
5 
the Director-General of PIP A as Vice-Chairman; an undersecretary of the Department of 
6 
Finance (DO F), Department of Labor and Employment (DOLE), Department of Environment 
7 
and Natural Resources (DENR), Department of Public Works and Highways (DPWH), 
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Department of Science and Technology (DOST), and Department of Energy (DOE); the Deputy 
9 
Director-General of the National Economic and Development Authority (NEDA); the 
10 
Commissioner of Bureau of Internal Revenue (BIR); the Commissioner of Bureau of Customs 
11 
(BOC); one (1) representative from the labor sector; and one (1) representative from the 
12 
investorslbusiness sector. The representatives from the labor and investorslbusiness sectors shall 
13 
be appointed by the President from the nominees of their respective sectors and from among the 
14 
enterprises registered with PIP A. In case of the unavailability of the Secretary of DTI to attend a 
15 
particular Board meeting, the Director-General of PIP A shal1 act as chairman. 
16 
SEC. 8. Powers and Duties of the Board. - The Board shall be responsible for the regnlation and 
17 
promotion of investments. It shall meet as often as necessary. Notice of regular and special meetings shall 
18 
be given to all members of the Board. The presence of seven (7) members of the Board shall constitute a 
19 
quorum and the affirmative vote of seven (7) members of the Board in a meeting validly held shall be 
20 
necessary to exercise its powers and perform its duties, which shall include but not be limited to the 
21 
following: 
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(1) 
Set the general policies on the establishment and operations of the ecozones, 
industrial estates, export processing zones, free trade zones, and the like; 
(2) 
Promulgate rules and regulations t6 implement the purposes of this Act and such 
other laws as the Board is mandated to implement; 
(3) 
(4) 
Formulate investment promotion policies under a 'one country approach'; 
Approve, deny, suspend, revoke applications for registration with the Board, 
imposing terms' and conditions as it may deem necessary to promote the purposes of this Act, 
including the refund and forfeiture of incentives when appropriate, restricting availment of 
incentives not needed by the project as determined by the Board, requiring performance bonds 
from PIP A-accredited bonding companies, and payment of application, registration, publication 
and other fees when warranted; 
(5) 
Decide controversies arising from the implementation of this Act that may arise, 
within thirty (30) days after the controversy has been submitted for decision: Provided, That the 
investor or the registered enterprise may appeal the decision for registration by the Board within 
thirty (30) days from receipt thereof to the President. The Board shall have the power to subpoena 
witnesses, administer oaths, and compel the production of books, papers, and other evidence, and 
to cite for contempt any person/organization that fails to comply with the aforestated processes: 
Provided, jilrther, That the Board may grant immunity from prosecution to any person whose 
testimony or documents or other evidence is necessary or relevant to the case; 
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(6) 
Cancel the registration or suspend the incentives of a registered enterprise and/or 
require refund of incentives as well as interests and monetary penalties. The Board shall 
recommend to the appropriate bureau of DOF to levy properties of the registered enterprise for 
grave failure to comply with the substantive terms and conditions of registration: Provided, That 
the registration of an enterprise whose project timetable for implementation, as approved by the 
Board, shall be considered automatically cancelled if it is delayed by one year, unless otherwise 
reinstated as a registered enterprise by the Board; 
(7) 
Determine the organizational structure of PIP A taking into account Section 12 of 
this Act; appoint, discipline or remove its personnel consistent with the provisions of civil service 
laws, rules and regulations; 
(8) 
(9) 
Monitor and coordinate investment promotion activities of allIP As; 
Formulate position for bilateral, regional or multilateral investments and 
investment-related trade agreements and/or arrangements; 
(10) 
Formulate industrial programs on economic development including those relating 
to the implementation of international trade, investments and trade, and investment-related 
enviro1Unental agreements and protocols; 
(II) 
Formulate industry and sectoral development programs, the National Plan for 
Investment Promotions (NPIP) and gather and compile data required for the effective 
implementation of this act; 
(12) 
Recommend to the President, subject to constitutional limitations and other 
nationalization laws, the suspension of the nationality requirement provided for in this Act in 
cases involving bilateral or regional investments or trading agreements of the Philippines with 
other countries or when the existing laws of another country where the investor comes from 
provides no nationality restrictions for Filipino investors or provides for reciprocal nationality 
accommodations; 
(13) 
(14) 
Establish offices in the Philippines and abroad, as needed; 
Within four (4) months after the close of the fiscal year, submit an annual report 
to the President and Congress on the Board's administration of this Act, including 
recommendations on investment policies; 
(15) 
Formulate policies that will stimulate investments in the most poverty-stricken 
areas of the country, and reduce regional and social inequality; 
(16) 
Enter into agreements with other agencies for the simplification of systems and 
procedures involved in the promotion of investments, operation of economic zones and registered 
enterprises, and other activities necessary for the effective implementation of this Act; and 
(17) 
In general, exercise all powers necessary or incidental to attain the purposes of 
36 
this Act and other laws vesting additional functions on the Board. 
37 
SEC. 9. Powers and Duties of the Chairman. - The Chairman shall have the following powers 
38 
and duties: 
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(1) Preside over the meetings of the Board; 
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(2) Sign annual and special reports to the President and Congress; 
41 
(3) Act as liaison between investors seeking joint venture arrangements; 
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(4) Recommend to the Board policies and measures necessary to carry out the objectives 
2 
of this Act; and 
3 
(5) Generally exercise other powers and perfonn other duties as may be directed by the 
4 
Board, 
5 
SEC. '10. 'The Director~General, -
PIP A shall have it Director-General with the rank of 
6 
a department undersecretary who shall be appointed by the President. The Director-General 
7 
shall be at least forty (40) years of age, of proven probity and integrity, and a degree holder in 
8 
any of the following fields: economics, business, public administration, law, management or 
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their equivalent, and with at least ten (l0) years of relevant working experience preferably in the 
10 
field of management or public administration, 
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The Director-General shall be assisted by six (6) Deputy Directors-General each for 
12 
policy and planning, administration, operations, investment promotion, industry development, 
13 
and Investments One-Stop-Action-Center (OSAC), who shall be appointed by the Board, upon 
14 
the recommendation of the Director-General. The Deputy Directors-General shall be at least 
15 
thirty-five (35) years old, with proven probity and integrity, and a degree holder in any of the 
16 
following fields: economics, business, public administration, law, management or their 
17 
equivalent. 
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SEC. 11. Powers and Duties of the Director-General - The Director-General shall have the 
19 
following powers and duties: 
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(1) Execute all acts of administration; 
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(2) Prepare and recommend to the Board the staffing pattern and personnel complement 
22 
of PIP A and establish regional offices, when necessary, subject to the approval of the Board; 
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(3) Prepare the agenda for the meetings of the Board and submit for its consideration and 
24 
approval the policies and measures which the Chainnan deems necessary and proper to carry out 
25 
the provisions ofthis Act; 
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(4) Preside over the meetings of the Board in the absence of the Chainnan; and 
27 
(5) Assist registered enterprises and prospective investors to expedite processing of 
28 
papers required by all government offices, agencies, instrumentalities and financial institutions; 
29 
and in addition he shall have the following specific powers and responsibilities: 
30 
(A) To safeguard all the lands, buildings, records, monies, credits and other 
31 
properties and rights ofthe ecozones under their jurisdictions; 
,32 
(B) To ensure that all revenues of the 'ecozones are collected and applied in 
33 
accordance with its budget; 
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(C) To ensure that the investors/finns and employees of the ecozones are 
35 
properly discharging their respective duties; 
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(D) To give such information and recommend such measures to the Board, as he 
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shall deem advantageous to the ecozone; 
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(E) To submit to the Board the ongoing and proposed projects, work and 
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financial program, annual budget of receipts, and expenditures of the ecozones; 
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(F) To represent the administration in all its business matters and sign on its 
behalf after approval of the Board, all its bonds, borrowings, contracts, agreements and 
obligations made in accordance with this Act; 
(G) To acquire jurisdiction, as he may deem proper, over the protests, 
complaints, and claims of the residents and enterprises in the ecozone concerning 
administrative matters; 
(H) To recormnend to the Board the grant, approval, refusal, amendment or 
tennination of franchises, licenses, permits, contracts, and agreements within the 
ecozones in accordance with the policies set by the Board; 
(1) To require owners of houses, buildings or other structures constructed without the 
necessary permit whether constructed on public or private lands, to remove or demolish 
such houses, buildings, structures within sixty (60) days after notice and upon failure of 
such owner to remove or demolish such houses, building or structure within said period. 
The Director-General or his authorized representative may summarily cause their 
removal or demolition at the expense of the owner, any existing law, decree, executive 
order and other issuances or part thereof to the contrary notwithstanding; 
(J) To take such emergency measures as may be necessary to avoid fires, floods, 
and mitigate the effects of storms and other natural or public calamities; 
(K) To prepare and make out plans for the physical and economic development 
of the economic zone, including zoning and land subdivision, and issue such rules and 
regulations which'shali be submitted'to the Board tor its approval; and 
(L) To perform such other duties and exercise such powers as may be 
prescribed by the Board, and to implement policies, rules and regulations set by 
the Board. 
SEC. 12. Appointment of Personnel. - The Board shall provide for an organization of officers and 
employees of PIP A, and upon recommendation of the Director-General, appoint and fix the 
remunerations and other emoluments: Provided, That the Board shall have exclusive and final authority 
to promote, transfer, assign or reassign officers and other personnel subject to civil service laws, rules and 
regulations. 
All positions in PIP A shall be governed by a compensation and position classification 
system and qualification standards approved by the Board based on a comprehensive job 
analysis and audit of actual duties and responsibilities. 
The compensation plan shall be 
comparable with the prevailing compensation plans in the SBMA, CDC, BCDA and the private 
sector, and shall be subject to periodic review by the Board no more than once every two (2) 
years without prejudice to yearly merit reviews or increases based on productivity and 
profitability. PIP A shaIl therefore be exempt from existing laws, rules and regulations on 
compensation and position classification standards. It shall endeavor to make its system conform 
as closely as possible with the principles under Republic Act No. 6758, otherwise known as the 
Salary Standardization Law. 
Page 9 of 21 


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TITLE III 
2 
INCENTNES TO REGISTERED ENTERPRISES 
3 
SEC. 13. Qualified Enterprises. - The following may register with 
PIP A to avail of the 
4 
incentives provided in this Act: 
5 
6 
7 
(a) 
export enterprises; or 
(b) 
domestic enterprises 
SEC. 14. Incentives to Registered Export Enterprises. 
PIP A shall make the following 
8 
incentives available to registered export enterprises: 
9 
(a) 
Reduced Tax Rates. -
hnposition of a preferential tax rate of fifteen percent 
10 
(15%) of taxable income as defined under Section 31 of the National Internal Revenue Code of 
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1997, as amended. 
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(b) 
Net Operating Loss Carryover (NOLCO) -
The net operating loss of the 
registered export enterprise during the first five (5) years from start of connnercial operation 
which had not been previously offset as deduction from gross income shall be carried over as a 
deduction from gross income for the next ten (10) years immediately following the year of such 
loss: Provided, That after the availment of NOLCO of registered export enterprises under this 
provision, the pertinent provisions under the National Internal Revenue Code of 1997, as 
amended, shaH apply. 
(c) 
Accelerated Depreciation. - Accelerated depreciation of plant, machinery, and 
equipment that are reasonably needed and actuaHy used for the production and transport of goods 
and services may be depreciated using a rate not exceeding twice the rate which would have been 
used had the annual allowance been computed in accordance with the rules and regulations 
prescribed by the Secretary of Finance and the provisions of the National Internal Revenue Code 
of 1997, as amended. 
(d) 
Capital Equipment Incentives. - Importations of capital equipment, including 
consignment thereof by registered export enterprises upon the effectivity of this Act, shall be 
exempt from customs duties: Provided, That the impOltation thereof, shall be used exclusively by 
the registered export enterprise in its registered activity. If the capital equipment shall be used by 
the registered export enterprise other than for its registered activity, the availment of incentives 
under this paragraph shal! be subject to the rules and regulations to be promulgated by PIP A: 
PrOVided, further, That for export enterprises, value-added tax paid on imported capital 
equipment shaH be refunded upon proof of exportation of their products under the mechanism and 
guidelines provided in Section 17 of this Act. 
(e) 
Raw Material Incentives. - Every registered export enterprise shall be entitled to 
duty-free importation of raw materials which are used in the manufacture, processing as defined 
in Section 3 of this Act, or production of its export products: Provided, That value-added tax shall 
be refunded upon presentation of proof of exportation of their products under the mechanism 
provided in Section 17 ofthis Act. 
(f) 
(g) 
Duty-free importation of source documents by IT registered export enterprises. 
Exemption from Wharfage Dues. - The provisions of law to the contrary 
notwithstanding, exports by a registered export enterprise sball be exempted from wharfage dues. 
Page 10 of 21 


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(h) 
Registered export enterprises shall have an option between the preferential (ax 
rate of fifteen percent (15%) as provided in Section 14 (a) of this Act, or the five percent (5%) of 
the gross income earned in lieu of all national and local taxes, except value-added tax (V AT) and 
real property tax on land. Once a registered export enterprise has made an option provided in this 
paragraph, such option shall be irrevocable for the duration of its registration. 
The five percent (5%) of the gross income earned by registered export enterprises shall 
be paid and remitted as follows: 
I. 
2. 
Sixty percent (60%) to the National Government; and 
Forty percent (40%) to the treasurer's office of the municipality or city 
where the enterprise is located. 
(i) Employment of Foreign Nationals. - Subject to the provisions of Section 29 of 
Commonwealth Act No. 613, as amended, a registered export enterprise may employ foreign 
nationals in supervisory, technical or advisory positious for a period no( exceeding five (5) years 
from its registration, extendible for limited periods at the discretion of the Board: Provided, 
however, That when the majority of the capital stock of a registered enterprise is owned by 
foreign investors, the positions of president, treasurer and general manager of their equivalents 
may be retained by foreign nationals beyond the period set forth within. 
Foreign nationals under employment contract within the purview of this incentive, their 
spouses and nnmarried children under twenty-one (21) years of age, who are not excluded by 
Section 29 of Commonwealth Act No. 613, as amended, shall be permitted to enter and reside in 
the Philippines during the period of employment of such foreign nationals. 
A registered export enterprise shall train Filipinos as understudies of foreign nationals in 
administrative, supervisory and technical skills and shall submit a1l1lual reports on such training to 
the Board: Provided, That employment of foreign nationals hired by registered export enterprises 
in a supervisory, technical or advisory capacity shall 'not exceed five percent (5%) of its 
workforce without the express authorization of the Secretary of DOLE. 
SEC. 15. Incentives to Registered Domestic Enterprises. 
(a) 
Reduced Tax Rates. -
Imposition of a preferential tax rate of fifteen percent 
(15%) of taxable income as defined under Section 31 of the National Internal Revenue Code of 
1997, as amended. 
(b) 
Net Operating Loss Carryover (NOLCO) - The net operating loss of the 
registered domestic enterprise during the first five (5) years from start of commercial operation 
which had not been previously offset as deduction from gross income shall be carried over as a 
deduction from gross income for the next five (5) years immediately following the year of such 
loss: Provided, That after the availment of NOLCO of registered domestic enterprises under this 
provision, (he pertinent provisions under the National Internal Revenue Code of 1997, as 
amended, shall apply. 
(c) 
Accelerated Depreciation. - Accelerated depreciation of plant, machinery, and 
equipment that are reasonably needed and actually nsed for the production and transport of goods 
and services may be depreciated using a rate not exceeding twice the rate which would have been 
used had the annual allowance been computed in accordance with the rules and regulations 
Page 11 of 21 


1 
prescribed by the Secretary of Finance and the provisions of the National Internal Revenue Code 
2 
of 1997, as amended. 
3 
Except as otherwise provided in Sections 14 and IS of this Act, no other fiscal incentives shall be 
4 
granted by PIP A. PIP A shall equip itself with sufficient personnel to ensure that: (1) investments 
5 
acquiring incentives under this Act abide by the strict investment location or employment conditions 
6 
stipulated in Section 3(i) of this Act; and (2) violators will be meted appropriate penalties. 
7 
SEC. 16. Incentives to Investors. 
8 
(a) A foreign national who invests an amount of at least US$150,000 either in cash and/or 
9 
equipment, in a registered enterprise shall be entitled to an Investor's Visa: Provided, That: 
10 
(I) He is at least eighteen (18) years of age; 
11 
(2) He has not been convicted of a crime involving moral turpitude; 
12 
(3) He is not afflicted with any loathsome, dangerous or contagious disease; and 
13 
(4) He has' not been institutionalized for any mental disorder or disability; 
14 
Provided,fitrther, That as a holder of the Investor's Visa, an alien shall be entitled to reside in the 
15 
Philippines while his investment subsists. For this purpose, he should submit an annual report, in the form 
16 
duly prescribed by the Board for the purpose, to prove that he has maintained his investment in the 
17 
country. Should said alien withdraw his investments from the Philippines, then the Investor's Visa issued 
18 
to him shall automatically expire. 
19 
(b) Foreign persons receiving dividends, interests and royalties from BOI-registered 
20 
enterprises subject to reduced income tax rates under existing income tax treaties, shall after the 
21 
merger of BOI and PEZA by this Act, be entitled to the reduced rates until the expiration of the 
22 
enterprises' registration certificates with the BOI and after such enterprises registered with PIPA: 
23 
Provided, That a favorable ruling is secured from the BIR for this purpose. 
24 
SEC. 17. Refund o/Value Added Tax (VA1) Paid on Importation o/Goods. - In order to facilitate 
25 
the immediate processing, clearance and release of VAT refunds as provided in this Act, a Trust Liability 
26 
Account (TLA) is hereby authorized to be established in the Bureau of Treasury (BTr). 
All VAT 
27 
payments on the importation of registered export enterprises of capital equipment and raw materials shall 
28 
be deposited in the TLA for the purpose of funding valid VAT refund claims. The claims for VAT 
29 
refunds shall be made by the registered export enterprise to PIP A which, in turn, will process, approve 
30 
and release the V AT refund. 
31 
The VAT paid on imported capital equipment may be refunded provided that the capital 
32 
equipment is being used by the registered export enterprise pursuant to its registered activity. 
33 
The amount of V AT refund On a particular shipment of raw materials shall be equivalent to the 
34 
proportion of raw materials used in the production of the exported goods to the total raw materials 
35 
imported multiplied by ti,e amount of VAT paid on such importation. No claim for refund shall be 
36 
a1\owed on V AT paid on raw materials which are not or no longer intended to be used in the registered 
37 
export activity. 
38 
A registered export enterprise sha1\ file a claim for VAT refund within two (2) years after the 
39 
payment was made. All amounts paid but no longer allowed for refund shall immediately accrue to the 
40 
general fund ofthe National Govermnent. 
Page 12 of21 


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All applications for V AT refund shall be processed and acted upon within thirty (30) days after 
2 
submission of complete documents. The refund shall be in a fonn of cash or managers/cashiers check 
3 
payable to the registered export enterprise. 
4 
In cases of dispute under the VAT refund mechanism provided in this section, the pertinent 
5 
provisions of the National Internal Revenue Code of 1997, as amended, shall apply. 
6 
The Implementing Rules and Regulations for this Section shall be fonnulated by PIP A DOF, 
7 
BIR, BOC, BTr and the Department of Budget and Management (DBM), subject to the approval of the 
8 
Board. 
9 
TITLE IV 
10 
REGISTRATION OF ENTERPRISES 
11 
SEC. 18. Qualifications of a Registered Enterprise. - Other than the qualifications specified 
12 
under Section 3(h) and (i) of this Act, an applicant must also satisfy the following conditions to be 
13 
registered and avail of the incentives provided in this Act: 
14 
(a) He is a citizen of the Philippines, in case the applicant is a natural person, or in case of 
15 
a corporation or partnership or any other association, regardless of nationality, organized and/or 
16 
registered and existing under Philippine laws or Philippine branch of a foreign corporation and it 
17 
must comply with all the qualifications provided under this Act: Provided, however, That for 
18 
purposes of this Act and any law to the contrary notwithstanding, a natural-born ASEAN citizen 
19 
or a corporation effectively controlled by ASEAN citizens shall be considered as a Philippine 
20 
investor: Provided, further, That the investment is made in an activity where the Constitution 
21 
does not specifically require Filipino participation; 
22 
(b) That the activity it will engage in is not within the activities reserved by the 
23 
Constitution to Philippine citizens or corporations owned and controlled by Philippine citizens; 
24 
(c) That if the applicant is engaged or proposes to engage in undertakings or activities 
25 
other than the registered activities, it shall install an accounting system adequate to identify the 
26 
investments, revenues, costs, and profits or losses of each registered activity undertaken by the 
27 
enterprise separately from the aggregate investment, revenues, costs and profits or losses of the 
28 
whole enterprise, or to establish a separate corporation for each registered activity ifPIPA should 
29 
so require to facilitate proper implementation' of this Act; and 
30 
(d) That if the applicant is already registered in any other IPAs, such registration shall 
31 
ipsofacto be cancelled upon registration with PIPA. 
32 
SEC. 19. Application. - Applications shall be filed with PIP A and recorded in a registration 
33 
book. The date appearing therein and stamped on the application shall be considered the date of official 
34 
acceptance. In the event that an enterprise shall transfer to another IP A or govermnent assets enjoying 
35 
incentives will be privatized, only the remaining unutilized incentives shall be enjoyed by the enterprise 
36 
or the transferee, vendee or assignee of the government corporation. All applications and their supporting 
37 
documents filed under this Act shall be confidential and shall not be disclosed to any person except with 
38 
the consent of the applicant or upon an order of a court of competent jurisdiction. 
39 
SEC. 20. Criteria Evaluation of Application. - The following criteria will be considered in the 
40 
evaluation of applications for registration: 
41 
(a) hnpact ofthe activity on the overall economy and fiscal sustainability; 
42 
(b) Overall viability of the activity; 
Page 13 of 21 


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(c) Extent to which investment incentives are redundant· , 
2 
(d) The extent of employment and skills and foreign exchange generation; 
3 
(e) The extent to which technological advances are applied and adapted to local 
4 
conditions; 
5 
(f) Extent to which the output of the applicant supports national export objectives; 
6 
(g) Extent to which incentives contribute to the reduction of poverty and inequality; and 
7 
(h) The extent to which incentives promote investments that help improve the quality of 
8 
the environment. 
9 
SEC. 21. Approval and Registration Procedures. - The Board shall adopt rules and regulations to 
10 
facilitate action on applications filed with it; prescribe other criteria it may deem necessary for the 
11 
evaluation of applications; devise standard forms for the use of applicants and delegate to the regional 
12 
offices o[ the PIP A the authority to receive and process applications for enterprises to be located in their 
13 
respective regions. Applications filed shall be considered automatically approved if not acted upon by the 
14 
Board within fifteen (15) working days from official acceptance thereof. Deferment by the Board shall be 
15 
considered as an official action: Provided, however, That the Board may defer action on a specific 
16 
application not more than twice and: Provided, .finally, That the Board shall act upon the application 
17 
within ten (10) working days from compliance with the cause of the last deferment. 
18 
TITLE V 
19 
BASIC RIGHTS AND GUARANTEES OF REGISTERED ENTERPRISES 
20 
SEC. 22. Protection of Investments. - All investors and registered enterprises are entitled to the 
21 
basic rights and guarantees provided in the Constitution. Among other rights recognized by the 
22 
Government ofthe Philippines are the following: 
23 
(a) Repatriation of Investments. - In the case of foreign investments, the right to 
24 
repatriate the entire proceeds of the liquidation of the investment in the currency in which the 
25 
investment was originally made and at the exchange rate prevailing at the time of repatriation, 
26 
subject to the provisions of Section 74 of Republic Act No. 265, as amended. For investments 
27 
made pursuant to Executive Order No. 32, series of 1986 and its implementing rules and 
28 
regulations, remittability shall be as provided therein; 
29 
(b) Remittance of Earnings. - In the case of foreign investments, the right to remit 
30 
earnings [rom the investment in the currency in which the investment was originally made and at 
31 
the exchange rate prevailing at the time of remittance, subject to the provisions of Section 74 of 
32 
Republic Act No. 265, as amended; 
33 
(c) Foreign Loans and Contracts. - The right to remit at the exchange rate prevailing at 
34 
the time of remittance such sums as may be necessary to meet the payments of interest and 
35 
principal on foreign loans and foreign obligations arising from technological assistance contracts, 
36 
subject to the provisions of Section 74 of Republic Act No. 265, as amended; 
37 
(d) Freedom from Expropriation. - There shall be no expropriation by the government of 
38 
the property represented by investments or of the property of the enterprise except for public use 
39 
or in the interest of national welfare or defense and upon payment of just compensation. In such 
40 
cases, foreign investors or enterprises shall have the right to remit sums received as compensation 
41 
for the expropriated property in the currency in which the investment was originally made and at 
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the exchange rate at the time of remittance, subject to the provisions of Section 74 of Republic 
Act No. 265, as amended; and 
(e) Requisition ofInvestment. - There shall be no requisition of the property represented 
by the investment or of the property of enterprises, except in the event of war or national 
emergency and only for the duration thereof. Just compensation shall be determined and paid 
either at the time of requisition or immediately after cessation of the state of war or national 
emergency. Payments received as compensation for the requisitioned property may be remitted in 
the currency in which the investment was originally made and at the exchange rate prevailing at 
the time of remittance, subject to the provisions of Section 74 of Republic Act No. 265, as 
amended. 
TITLE VI 
ADMINISTRATION OF INCENTIVES 
SEC. 23. Certificate of Registration. - A PIP A-registered enterprise shall be issued a certificate 
of registration under the seal of PIP A and the signature of its Director-General and/or snch other officer 
or employee of PIP A as the Board may designate and empower for the purpose. The certificate shall be 
in snch form and style as the Board may determine. 
SEC. 24. Validity of Registration. - The certificate of registration issued under this Act shall be 
valid for a period of twenty (20) years from the start of commercial operation. 
SEC. 25. Extension of Period of Availment. - The availment period of the incentives provided 
herein may be extended by PIP A, in the event that the registered enterprise has suffered operational force 
majeure that has impaired its viability, equivalent for the period thereto. 
SEC. 26. Duties and Responsibilities of Other IPAs. -
The following are the duties and 
responsibilities of the other IPAs under this Act: 
(a) Adopt uniform and consistent procedures of administering incentives, monitoring the 
recipients and to coordinate efforts in this regard; 
(b) Adopt and implement systems and procedures affecting trade and customs policies in 
accordance with the requirements established by the DOF; 
(c) Submit data and information to PIP A and DOF as required by any of these agencies 
to ascertain consistency of investments policies and incentives, including their implementation as 
provided in paragraph (a), and to ensure the proper implementation of systems and procedures 
affecting trade and customs policies as provided in paragraph (b); and 
(d) Perform all other duties and responsibilities as may be required by the President. 
SEC. 27. Administration, Implementation qnd MonitorilJg of Incentives. - The IPAs shan be 
responsible for the administration and implementation of the incentives granted to their respective 
registered enterprises. The IP As shall submit to PIP A and DOF their respective armual tax expenditures 
based on the computed costs in terms of revenue foregone on the tax incentives granted to their registered 
enterprises. For proper monitoring, PIP A shall create a single database of all incentives provided by all 
IP As and all information thereto. Double entry accounting shall be done in recording all incentives 
granted by the government for transparency purposes. The DTI, DOF, NEDA and IP As shall meet 
regularly to monitor and review the investments and incentives granted and submit an annual report to the 
President and Congress. 
Page 15 of21 


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SEC. 28. Payment in Philippine Peso or Foreign Currencies. - PIPA may receive Philippine 
2 
peso or freely convertible foreign currencies as payment of application fees, fines and penalties. 
3 
TITLE VII 
4 
SPECIAL ECONOMIC ZONES (ECOZONES) 
5 
SEC. 29. Establishment of Ecozones. - The metes and bounds of each ecozone are to be 
6 
delineated and more particularly described in a proclamation to be issued by the President of the 
7 
Philippines, upon the recommendation of the Board in coordination with municipal and/or city council, 
8 
the National Land Use Coordinating Committee and/or the Regional Land Use Committee. 
9 
The ecozones shall be developed through any of the following schemes: 
10 
11 
12 
1) 
2) 
3) 
Private initiative; 
Local government initiative with the assistance ofthe national government; and 
National Government initiative. 
13 
Areas to be established as ecozones shall be subject to the evaluation and recommendation of the 
14 
Board, based on a detailed feasibility and engineering study which must conform with the following 
15 
criteria: 
16 
(a) 
The proposed area must be identified as a regional growth center in the 
17 
Philippine Development Plan (PDP) or by the Regional Development Council; 
18 
19 
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(b) 
The existence of required infrastructure in the proposed ecozone, such as roads, 
railways, telephones, ports, airports, etc., and the suitability and capacity of the proposed site to 
absorb such improvements; 
(cl. 
(d) 
The availability of water source and electric power supply for use of the ecozone; 
the extent of vacant lands available for industrial and commercial development 
and futnre expansion of the ecOZOne as well as of lands adjacent to the ecozone available for 
development of residential areas for the ecozone employees; 
(e) 
The availability of skilled, semi-skilled and non-skilled trainable labor force in 
and around the ecozone; 
(f) 
The area must have a significant incremental advantage over the existing 
economic zones and its potential profitability can be established; 
(g) 
The area must be strategically located; and 
(h) 
The area must be situated where controls can easily be established to curtail 
smuggling activities. 
Other areas which do not meet the foregoing criteria may be established as ecozones: Provided, 
That the said area shall be developed only through local government and/or private sector initiative, and 
without any financial exposure on the part of the National Government: Provided, further, That the area 
can be easily secured to curtail smuggling activities: Provided, finally, That after five (5) years, the area 
must have attained a substantial degree of development, the indicators of which shall be formulated by 
PIPA. 
SEC. 30. Ecozone to be a Decentralized Agro-Industrial, Industrial, Commercial/Trading, 
Tourist, Investment and Financial Community. - Within the framework of the constitution, the interest of 
national sovereignty and territorial integrity of the Republic, the ecozone shall be developed, as much as 
possible, into a decentralized, self-reliant and self-sustaining industrial, commercial/trading, agro-
industrial, tourist center with minimum government intervention. Each ecozone shall be provided with 
Page 16 of21 


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transportation, telecommunications, and other facilities needed to generate linkage with industries and 
employment opportunities for its own inhabitants and those of nearby towns and cities. 
SEC. 31. D~rense and Security. -
The defeuse of the ecozone and the security of its perimeter 
shall be the responsibility of the National Government in coordination with PIP A. Military forces sent by 
the National Government for the purpose of defense shall not interfere in the internal affairs in any of the 
ecozone and expenditure for these military forces shaH be borne by the National Governmeut. The PIP A 
7 
may provide and establish the ecozones' internal security and firefighting forces. 
8 
SEC. 32. Relationship oj PIPA to Privately-Owned Industrial Estates. -
Privately-owned 
9 
industrial estates shall retain their .autonomy and independence and shall be monitored by PIP A for the 
10 
implementation of incentives. 
11 
SEC. 33. Administration oj the National Building Code Inside the Ecozones. 
12 
The administration and enforcement of the provisons of PD No. 1096, the National Building 
13 
Code of the Philippines (NBCP) in aH ecozones and areas owned and administered by PIP A shall be 
14 
vested in the Director-General or his duly authorized representative. He shall appoint such qualified 
15 
personnel as may be necessary to act as building official who shall be charged with the duty of issuing 
16 
building permits in the different zones. All fees and dues collected by the building official under the 
17 
NBCP shall accrue to PIP A. 
18 
TITLE VIII 
19 
FINAL PROVISIONS 
20 
SEC. 34. Protection oj the Environment. - PIP A, in coordination with the appropriate agencies, 
21 
shall take concrete and appropriate steps to enact the proper measures for the protection of the 
22 
environment, and shall coordinate with the Environmental Management Bureau of DENR to avoid undue 
23 
delay in the issuance of the required Environmental Compliance Certificate (ECC): Provided, however, 
24 
That applications for environmental clearances, permits, and/or licenses of registered enterprises shall be 
25 
acted upon by the appropriate government agency within forty (40) days from date of official acceptance. 
26 
In the event that the appropriate government agency failed to act within the aforementioned date, the 
27 
application for the said environmental requirement shall be deemed complied with for purposes of 
28 
operation of the registered enterprise: Provided, finally, That the Board may withdraw the certificate of 
29 
registration issued to the enterprise should the appropriate government agency eventually deny the 
30 
application. 
31 
SEC. 35. Suspension and Forfeiture of Incentives oj Registered Enterprises, ReJund and 
32 
Penalties. - When there is probable cause to believe that the registered enterprise has violated its 
33 
registration telms and conditions, the Board may suspend its availment of incentives after due notice and 
34 
hearing. The Board may impose fines and penalties andlor forfeit the incentives granted to the registered 
35 
enterprise whenever there are violations of the registration terms and conditions by the latter, without 
36 
prejudice to the cancellation of the registration of said enterprise: Provided, however, That the Board may 
37 
cancel or abate only the imposition of fines. In case of cancellation of the certificate of registration 
. 
.... 
. 
, 
38 
granted under this Act, the Board may, in appropriate cases, require the refund of incentives availed of 
39 
and impose corresponding fines and penalties. 
40 
Any enterprise which violates any provision of this Act, its implementing rules and regnlations, 
41 
the terms and conditions of its registration or any lawful directive of the Board, or in the availment of 
42 
incentives, including all official reports required to be submitted to the Board, shall be subject to a fine 
Page 17 of 21 


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not to exceed One million pesos (P I ,000,000) hut without prejudice to the cancellation of its registration: 
2 
Provided, That any willful commission of fraudulent misrepresentation in its application for registration 
3 
or submission of reports or gross violation of this Act and its implementing rules and regulations, a fine of 
4 
at least One million pesos (PI,OOO,OOO) but not to exceed Ten million pesos (PIO,OOO,OOO) shall be 
5 
imposed, in addition to other penalties that may be imposed by the Board. 
6 
The Board shall prepare a schedule of fines and penalties to be imposed on erring registered 
7 
enterprises depending on the violation incurred, which may be reduced in exceptional cases. Responsible 
8 
officers of such enterprises, including duly appointed external consultants-agents who knowingly commit, 
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aid or abet the cOl1ll1lission of any of the acts mentioned above, shall be subject to a fine of not less than 
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One hundred thousand pesos (PIOO,OOO) but not more than Three hundred thousand pesos (P300,000). 
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Government officers and employees who participate directly or indirectly in the cOl1ll1lission of the 
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foregoing acts shall likewise be liable to a fine of not less than One hundred thousand pesos (PI 00,000) 
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but not more than Three hundred thousand pesos (P300,000), in addition to any criminal and 
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administrative penalties imposable under the Civil Service Law, Revised Penal Code, Republic Act No. 
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3019 (Anti-Graft And Corrupt Practices Act), Republic Act No. 6713 (Code Of Conduct And Ethical 
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Standards For Public Officials) and other applicable laws. If the offender is a foreign national, the 
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foregoing acts shall be grounds for his sUl1ll1lary deportation in addition to the imposable fines and 
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penalties above. 
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SEC. 36. Implementing Rules and Regulations (IRR). - The DTI, PIPA, DOF, NEDA, BIR and 
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BOC shall promulgate the implementing rules and regulations (IRR) within two (2) months from the 
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effectivity of this Act. 
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SEC. 37. Transitory Provisions. - The incentives already granted to enterprises registered with 
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BOI, PEZA, other IP As and under existing investment laws shall continue to be legally binding in 
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accordance with the tenus and conditions stated in their respective registration certificates. Existing 
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.enterprises registered with BOl, P)':ZA. and other IP As may opt to register with PIP A and be governed by 
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the provisions of this Act prior to the expiration of their existing contracts. For activities or entities, 
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whether government or private, whose tax and/or duty exemptions or preferential treatment under special 
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laws are withdrawn or repealed by this Act, the pertinent provisions of the National Internal Revenue 
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Code of 1997, as amended; the Tariff and Customs Code, as amended; and the Local Government Code 
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of 1991, shall apply. 
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In addition, dividends, interests and royalties subject to reduced income tax rates under existing 
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income tax treaties paid by BOI-registered enterprises to foreign persons shall, after the merger of BOI 
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and PEZA by virtue of this Act, be subject to the reduced rates until the expiration of the enterprises' 
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registration certificates with the BOr and after such enterprises registered with PIP A: Provided, That a 
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favorable ruling is secured from the BIR for this purpose. 
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SEC. 38. Revenue Gains or Savings from the Rationalization of Fiscal Incentives. - Revenue 
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gains or savings from the implementation of this Act shall be utilized exclusively for the following 
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purposes: fifty percent (50%) for infrastructure and fifty percent (50%) for education purposes. 
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Such allocations shall be segregated as separate trust funds by the National Treasury and shall be 
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over and above the annual appropriations for similar purposes. 
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SEC. 39. 
Separability Clause. -
If any provision of this Act is declared invalid and 
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unconstitutional, the other provisions which are not affected thereby shall remain in force and effect. 
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SEC. 40. Repealing Clauses. - The following laws or provisions of laws are hereby repealed: 
(J) Executive Order No. 226, series of 1987 - "The Omnibus Investments Code of 1987'" , 
(2) Republic Act No. 7888 - "An Act to Amend Article 7(13) of Executive Order No. 
226, otherwise known as the Omnibus Investment Code of 1987; 
(3) 
Republic Act No. 7916, otherwise known as the "Special Economic Zone Act of 
1995"; 
(4) Republic Act No. 8748, otherwise known as "An Act Amending Repuhlic Act No. 
7916"; 
(5) Presidential Decree No. 66 - "Creating the Export Processing Zone Authority and 
Revising Repuhlic Act No. 5490"; 
(6) Presidential Decree No. 529 - "Granting to Petroleum Exploration Concessionaires 
under the Petroleum Act of 1949 Exemption from Cnstoms Duty and Compensating Tax on 
ImpOltations of Machinery and Equipment, Spare Parts and Materials Required for their 
Exploration Operations"; 
(7) Section 8(d) of Repuhlic Act No. 5487, entitled "An Act to Regulate the Organization 
and Operation of Private Detective, Watchmen or Security Guard Agencies (The Private Security 
Agency Law)"; 
(8) Subparagraph (a)(2) and last sentence of subparagraph (b) of Section 8 and Section 14 
of Presidential Decree No. 269, entitled "Creating the National Electrification Administration as a 
Corporation, Prescribing its Powers and Activities, Appropriating the Necessary Funds Therefore 
and Declaring a National Policy Objective for the Total Electrification of the Philippines on an 
Area Coverage Service Basis, the Organization, Promotion and Development of Electric 
Cooperatives to Attain the Said Objective, Prescribing Terms and Conditions for Their 
Operations, The Repeal ofRepnblic Act No. 6038, and for Other Pnrposes; 
(9) Sections 8, 9 and \0 of Presidential Decree No. 538, entitled "Creating and 
Establishing the PHlVIDEC Industrial Authority and Making its Subsidiary Agency of the 
Philippine Veterans Investment Development Corporation Defining Its Powers, Functions and 
Responsibilities and for Other Purposes"; 
(10) Section 36(f) of Presidential Decree No. 705, otherwise known as the "Revised 
Forestry Code"; 
(J I) Section 25 of Presidential Decree No. 857, entitled "Providing for the 
Reorganization of Port Administration and Operation Fnnctions in the Philippines, Revising 
Presidential Decree No. 505 Dated July 11, 1974, Creating the Philippine Port Authority, by 
Substitution, and for Other Purposes"; 
(12) Section 16 (a), (b), and (c), and Section 17 (a), (b), (c), (d) and (e) of Presidential 
Decree No. 972, as amended, entitled "Promnlgating an Act to Promote an Accelerated 
Exploration, Development, Exploitation, Production and Utilization of Coal"; 
(13) First sentence of the second paragraph of Section 1 0 of Presidential Decree No. 972, 
as amended by Presidential Decree No. 1174, entitled "Amending PD No. 972, Otherwise Known 
as the Coal Development Act of 1976"; 
(14) Sections 2 .and 3 of Presidential Decree. No. 1362, entitled "Allowing Radio 
Broadcasting and Television Stations to Import Radio or Television Equipment, Spare Parts and 
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Allied Technical and Program Materials to be Used Exclusively in their Broadcast Operations 
Subject to Certain Conditions"; 
(15) Section 4 of Presidential Decree No. 1442, entitled "An Act to Promote the 
EXploration and Development of Geothermal Resources"; 
(16) Sections 18, 19,20 and 21 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 10 (I), (2), (3), (4), (5), and (6) of Republic Act No. 7156, entitled "An Act 
Granting Incentives to Mini-Hydro Electric Power Developers and For Other Purposes"; 
(18) Title 9, Section 21 of Republic Act No. 7306, entitled "An Act Providing tor the 
Establishment of the People's Television Network, Inc., Defining Its Powers and Functions, 
Providing for Its Sources of Funding and For Other Purposes"; 
(19) Section 14 of Republic Act No. 7354, entitled "An Act Creating the Philippine 
Postal Corporation, Defining Its Powers, Functions and Responsibilities, Providing for 
Regulation"; 
(20) Last sentence of Section 17 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"; 
(21) Section 16 (a), (b), (c), (d), (e) and Section 17 of Republic Act No. 7844, otherwise 
known as the "Export Development Act of 1994"; 
(22) Sections 83, 90, 91, 92 and 93 of Republic Act No. 7942, otherwise known as the 
"Philippine Mining Act of 1995"; 
(23) Section 18 of Republic Act No. 8044, entitled "An Act Creating the National Youth 
Commission, Establishing a National Comprehensive and Youth Development, Appropriating 
Funds Therefor, and for Other Purposes"; 
(24) Section 8 of Republic Act No. 8436, entitled "An Act Authorizing the Commission 
on Elections to Use an Automated Election System in the May 11, 1998 National or Local 
Elections and in Subsequent National or Local Electoral Exercises, Providing Funds Therefor and 
for Other Purposes"; 
(25) Section 9 of Republic Act No. 8479, otherwise known as the "Downstream Oil 
Deregulation Act of 1998"; 
(26) Section 3 a), b), c), d), and h) of Republic Act No. 8502, entitled "An Act to 
Promote the Development of the Jewelry Manufacturing Industry, Providing Incentives Therefor 
and For Other Purposes"; 
(27) Section 35 (h), (c) and (d) of Republic Act No. 8550, otherwise known as the 
"Philippine Fisheries Code of 1998"; 
(28) Section 26 (AI, Al.1, Al.2) of Republic Act No. 9275, entitled "The Philippine 
Clean Water Act of 2004"; 
(29) Section I of Republic Act No. 9281, entitled "An Act to Strengthen Agriculture and 
Fisheries Modernization in the Philippines by Extending the Effectivity of Tax Incentives and its 
Mandated Funding Support, Amending for this Purpose Sections 109 and 112 of Republic Act 
No. 8435"; 
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(30) Section 3 of Republic Act No. 9290, entitled "An Act Promoting the Development 
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of the Footwear, Leather Goods and Tannery Industries, Providing Incentives Therefor and for 
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Other Purposes" 
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(31) Section 5 of Executive Order No. 80, Series of 1993 -
"Authorizing the 
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Establishment of the Clark Development Corporation as the Implementing Ann of the Bases 
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Conversion and Development Authority for the Clark Special Economic Zone, and Directing All 
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Heads of Departments, Bureaus, Offices, Agencies and Instrumentalities of Government to 
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Support the Program"; 
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(32) Section 5 of Proclamation 216, Series of 1993 - "Creating the Poro Point Special 
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Economic Zone Pursuant to Republic Act No. 7227"; 
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(33) Section 3 of Proclamation No. 420, Series of 1994 - "Creating and Designating a 
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Portion of the Area Covered by the Former Camp John Hay Special Economic Zone Pursuant to 
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Republic Act No. 7227"; 
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(34) Section 6 of Proclamation 984, Series of 1997 - "Creating the Morong Special 
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Economic Zone Pursuant to Republic Act No. 7227"; 
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(35) Executive Order No. 313, series of 2004, as amended by Executive Order 528, 
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Series. of 2006. - "ModifYing the Rates of Duty on Capital Equipment, Spare Parts and 
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Accessories Imported by BOI-Registered New and Expanding Enterprises"; and 
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(36) Section 7 of Republic Act No 9282, entitled "An Act Expanding the Jurisdiction of 
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the Court of Tax Appeals (CTA), Elevating Its Rank to the Level of A Collegiate Court With 
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Special Jurisdiction and Enlarging Its Membership, Amending for the Purpose Certain Sections 
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of RepubJic Act No. 1125, as amended, Otherwise Known as the Law Creating the Court of Tax 
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Appeals, and for Other Purposes" is modified accordingly to include in its jurisdiction cases 
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involving the decisions or actions of PIP A in its VAT refund mechanism; 
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All other laws, acts, decrees, orders and issuances or provisions thereof inconsistent with any of 
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the provisions ofthis Act are hereby repealed or modified accordingly. 
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SEC. 41. Effectivity. - This Act shall take effect fifteen (15) days from the date of publication in 
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the Official Gazette or in at least two (2) newspapers of general circulation. 
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Approved, 
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