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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

1571

HOUSE BILL NO.

Introduced by Congressman Alfredo D. Vargas Ill

EXPLANATORY NOTE

In the recent times, the local arts and entertainment industry in the country has slowly
been declining in terms of viewer statistics and income. Hollywood films have surpassed its
local counter parts in the mainstream movie industry. In fact, there would only be less than
twenty (20) films which are of good quality and can be showcased internationally.

It is also noteworthy that movies and such art forms are tools in shaping public
opinion. These art forms affect the socio-economic and socio-political spheres of the society.

In this measure, we are encouraging producers, film makers and entertainment
professionals to venture deeper in the industry which serves as a vitrine of our centuries-old
culture. Alongside its economic and commercial benefits, we also aim to integrate social
relevance and foster creativity in this bill. Through the enactment of this bill, we can see the
industry transform to something that is supportive of the needs of the people and is leaning
on indigenous culture.

Having said these, the passage of this bill is sincerely pursued.

LFREDO D. VARGAS III

TATIVES



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

1571

HOUSE BILL NO.

Introduced by Congressman Alfredo D. Vargas II

AN ACT
PROMOTING LOCAL ARTS AND ENTERTAINMENT INDUSTRY BY PROVIDING THE LOCAL
MOVIE AND FILM INDUSTRY CORPORATE TAX BREAKS AND EXEMPTING VENUE
OPERATORS FROM THE PAYMENT OF AMUSEMENT TAX WHEN SHOWING LOCALLY
PRODUCED FILMS AND MUSIC EVENTS FEATURING FILIPINO ARTISTS

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

Section 1. Short Title. - This Act shall be referred to as “Local Arts and Entertainment
Industry Promotions Act.”

Section 2. Declaration of Policy. - It is hereby declared policy of the State to protect
the local arts and entertainment industry and raise its competitiveness in the international
marketplace, as well as keep the industry afloat despite the threat of digital piracy by
providing them the necessary income tax breaks, and exempting exhibitors from the payment
of amusement tax thus assisting produces, film companies, and local artists in reducing their
costs, improving the quality of their craft and making their product more competitive in the
global marketplace.

Section 3. Tax Exemption. - Any local producer of a film or movie utilizing one
hundred per centum (100%) local staff may claim the total expenses incurred in the
execution, production and showing of the film: Provided, that the claim for exemption shall be
allowed as deduction from the company’s gross income for the same taxable year: Provided
farther, that the total amount of the claimed tax exemption shall be included in their gross
income or revenues and shall be subject to proper documentation and to the provisions on
allowable deductions covered by Chapter IX of the National Internal Revenue Code (NIRC), as
amended.

Section 4. Section 140 of Republic Act No. 7160, otherwise known as the Local
Government Code of 1991 is hereby amended to read as follows:

“Section 140, Amusement Tax. - (a) The province may levy an amusement tax,
to be collected from the proprietors, lessees, or operators of theaters, cinemas,
concert halls, circuses boxing studios and other places SHOWCASING VARIOUS


FORMS OF AMUSEMENT AND ENTERTAINMENT AT A RATE OF NOT MORE
THAN THIRTY PER CENTUM (30%) OF THE GROSS RECEIPTS FROM
ADMISSION FEES, PROVIDED, THAT THIS IMPOSITION SHALL NOT APPLY TO
LOCALLY PRODUCED FILMS THAT FEATURE A PREDOMINANTLY FILIPINO
CAST OF AT LEAST 80 PER CENTUM (80%) THAT HAVE BEEN CLASSIFIED BY
THE MOVIDE AND TELEVISION REVIEW AND CLASSIFICATION BOARD
(MTRCB) AS FIT FOR COMMERCIAL VIEWING.

XXX

(c) The holding of LOCALLY PRODUCED operas, concerts, dramas, recitals,
painting and art exhibition, flower shows, musical programs, literary and
oratorical presentations [(except) INCLUDING pop, rock or similar concerts 0]
FEATURING FILIPINO ARTISTS shall be exempt from the tax herein imposed.”

Section 5. Section 109 of Republic Act No. 8424, otherwise known as the National
Internal Revenue Code, as amended by Republic Act No. 9337, is hereby amended to read as
follows:

“Section 109. Exempt Transactions. - (1) Subject to the provisions of
subsection (2) hereof the following transactions shall be exempt from the value-
added tax:

IMPORTATION OF RAW MATERIALS AND EQUIPMENT BY PERSONS ENGAGED
IN THE BUSINESS OF MAKING FILMS AND OTHER CINMEATOGRAPHIC WORK,
PRODUCING MUSIC ALBUMS, THEATRICAL PLAYS, RECITALS AND OTHER
SIMILAR ARTISTIC CREATIONS, FOR USE IN PRODUCING SUCH, INCLUDING
BUT NOT LIMITED TO DIGITAL MEDIA, PROVDED, THAT THE BUREAU OF
INTERNAL REVENUE (BIR) SHALL HAVE THE EXCLUSIVE RIGHT TO
DETERMINE, AFTER PRIOR CONSULTATION WITH MEMBERS OF THE FILM
INDUSTRY, THE RAW MATERIALS AND EQUIPMENT THAT SHALL BE EXEMPT
FROM VALUE ADDED TAX.”

Section 6. Implementing Rules and Regulations. - The Chairpersons of the MTRCB
and the National Commission for Culture and the Arts, in consultation with two accredited
performing arts organization and one film producers organization of the Philippines and the
BIR, within sixty (60) days from the effectivity of this Act, issue the necessary rules and
regulations governing this Act.

Section 7. Repealing Clause. - All laws, decreed executive orders, proclamations, rules
and regulations, and other issuances, or parts thereof, which are inconsistent with the
provisions of this Act are hereby repealed and modified accordingly.

Section 8. Effectivity. - This Act shall take effect (15) days after publication in the
Official Gazette and in one (1) national newspaper of general circulation.

Approved,