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13TH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
First Regular Session 
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Introduced bv Senator Raloh G. Recto 
Explanatory Note 
The country's real GDP grew by 4.4% in 2002. In terms of per capita GDP, a 
better growth rate of 2.4% was registered. 
These notable improvements were brought 
about by the robust performance of services, the upsurge of the indusuy sector particularly 
in mining and quarrying and the reswrgence of agriculmre, fishery and forestry. All major 
induseies of the three major sectors posted positive growth at the end of the year.' 
However, these gains could lead to naught as we struggle to keep at pace with the 
problems besetting our country today. In fact, a review of the statistics as of August 6, 2003 
indicates a Balance of Payments (BOP) deficit of US$557 million for the first quarter of 
2003. This represents a marked decline from the US$2.157 billion BOP surplus registered 
in the same period of 2002. * 
In the light 'of our growing population, problems of unemploymenr, and threats to 
national security and global terrorism, it is imperative for government to rethink its policies 
and seek domestic sources of growth. 
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With the abiculture sector holding the strongest potential for the counmy to 
withstand the possible effects of an economic recession, more incentives for OUT farmers and 
agri-based industries are in order. 
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This biU is geared towards that end. It seeks to exempt all types of agriculture and 
fisheries inputs, equipment and machinery from the coverage of the value-added tax (VAT. 
It is a twin measure1 to another bill which provides for the exemption of the same from the 
payment of tariff and duties. 
Republic ACt No. 8435 or the Agriculture and Fisheries Modernization Act of 
1997does exempt a; types of agriculture and fisheries inputs but it is a half-baked incentive 
since importers still have to pay VAT. With the removal of said items from the coverage of 
VAT as'proposed ?nder this bill, more and more farmers and fishermen will be able to 
modernize productibn and increase productivity. It wiU boost investments and lower the 
costs of doing busdess in the countryside. Ultimately, it will lead to job creation and an 
In view oft 1 '  
e foregoing, immediate 
increase in the purc asing capacity of our countrymen. 
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his bill is earnestly sought. 
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MRC/SB 1775 VATAFMA.doc 
The National Expenditure Program for FY 2004: An Overview, LBRMO, Oct, 2,2003 
National Statistical Coordination Board (NSCB) 
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13TH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
1 
First Regular Session 
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S E N A T E  
1. 
LL I Y W .  
Introduced bv Senator Raloh G. Recto 
AN ACT 
AGRICULTURE P
D
 
FISHERIES INPUTS, EQUIPMENT AND MACHINERY 
FROM THE CO ERAGE OF THE VALUE-ADDED TAX (VAT) 
Be tt enacted & the Senate and House of Rpwentatzves ofthe Phtlppznes zn Congress assembled 
EXEMPTING  HE SALE AND IMPORTATION 
OF ALL TYPES OF 
Y 
SECTION 1. Sectton 109 of the Nauonal Internal Revenue Code, as amended, is 
hereby further amended to read as follows: 
"SEC. 109. -The following shall be exempt from the value-added tax: 
"X x X 
(AA) SALE OR IMPORTATION OF ALL TYPES OF AGRICULTURE 
AND FISHERIES INPUTS, EQUIPMENT AND MACHINERY SUCH AS, BUT 
NOT LIMITED TO, INSECTICIDE, PESTICIDE, TRACTOR, TRAILERS, 
TRUCKS, 
FARM IMPLEMENTS AND MACHINERY, 
IHARVESTERS, 
THRESHERS, 
GENETIC 
MATERIALS, 
SPRAYERS, 
PACKAGING 
MACHINERY AND MATERIALS, BULKHANDLING FACILITES SUCH AS 
CONVEYORS AND MINI LOADERS, WEIGHING SCALES, HARVESTING 
EQUIPMENT, SPARE PARTS OF ALL AGRICULTURAL EQUIPMENT, AND 
RENEWABLE ENERGY SYSTEMS SUCH AS SOLAR PANELS. 
"X I x X." 
SEC. 2. Im,blementing Rdes and Regulations. -- The Secretary of Finance, upon 
recommendation ofl the Commissioner of Internal Revenue, shdmpromulgate the necessary 
rules and regulations for the effective implementation of the provisions of this Act. 
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Approued, 
SEC. 3. Repealing Ciasm. -- All laws, acts, presidential decrees, executive orders, 
proclamation and/or administrative regulations that are inconsistent with the provisions of 
this Act, are hereby amended, modified, superseded or repealed accordingly. 
SEC. 4. Effectiuizj. 
-- This Act shall take effect fifteen (15) days after its publication in 
at least two (2) newspapers of general circulation.