Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
Nineteenth Congress
Second Regular Session
'HouseBil|No.      8968
Introduced by Representative JOEY SARTE SALCEDA
ANACT
HNHANCING PHILIPPINH TAX INCENTIVES POLICY AND ADMINISTRATION,
AMENDING FOR THE PURPOSE SECTIONS 112, 294, 295, 301, 309, AND 311 0F
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR 0THHR
PURPOSES
EXPLANATORY NOTE
The  Corporate  Recovery  and  Tax  Incentives  for  Enteaprises  or  CREATE Act  was
enacted on  February  3,  2021  to  end tax uncertainty,  provide tax relief to  enterprises under
distress due to the COVID-19 pandemic,  and rationalize the country's arcane and disjointed
tax incentives system.
With the passage of the law,  despite headwinds  and the then-ongoing global health
emergency, the country recorded its highest ever foreign direct investment (FDI) performance
of USD  10.5  billion.  However, because of adverse global  economic  conditions  and  a steep
interest rate hike regime by the US Federal Reserve, the Philippines' FDI performance shnmk
to USD 9.2 billion, a 23% year-on-year decline.
While unfavorable global conditions were the key factor for declining FDI, uncertainty
over the implementation of VAT and tax administration provisions of the CREATE Act has
dampened investor sentiment and has made doing business more difficult.
Additionally,  the  failure  to  carry out  the heart  of the  refom,  the  "mix-and-match"
provision  of CREATE  which  allows  the  President  to  customize  the  tax  incentives  regime,
meant that the most potent instrument of investment promotion in the law was not utilized.
In view of this, this proposal undertakes the following:
1.   Mandates the establishment of a simplifled VAT refund system for registered business
enterprises, and institutionalizes risk-based audit by COA for tax refunds;
2.   Mandates the collection of local goverrment unit (LGU) share of 5% SCIT through the
investment promotion agencies (IPAs) instead of direct remittance to LGUs;
3.    Sets the tax rate for Enhanced Deduction Regime at 20% of taxable income;
4.   Provides  a further deduction  of 50%  for power  expense  for the next  five years,  in
addition to existing additional deduction of 50%;
5.   Clarifies the VAT regime for registered business enterprises as follows:


Sales to  and sales by a registered business enteaprise located in a freeport or
special economic zone and pursuing purely registered activity within that zone
shall be VAT-exempt;
ii.       Sales  to  registered  export  enterprises  by  suppliers  whose  sales  to  registered
export  enterprises  exceed  seventy percent  (70°/o)  of their total  sales  shall be
V.
V1.
VAT-exempt;
Sales to registered export enterprises by suppliers shall be subject to zero-rating;
Sales by registered export enterprises currently availing of income tax holiday
shall to registered export enterprises be subject to zero-rating;
Sales by registered business enterprises, whether domestic or export, currently
availing of the special corporate income tax rate to registered export enterprises
shall be subject to VAT-exempt;
Sales   by   registered   business   entexprises   of  vat-exempt   imported   capital
equipment,  raw  materials,  spare  parts,  and  accessories  to  registered  export
enterprises shall be VAT-exempt;
vii.       Sales  by   suppliers   within   customs  territory  to   existing  registered   export
enterprises shall be subject to zero-rating; and
viii.       All other purchases by registered business enterprise used for their registered
project or activity shall be subject to zero-rating."
6.    Defines the Power of the President to grant incentives further to allow 777ofw proprz.o
grant of incentives package.  FIRB  is mandated to prescribe an application form and
process for the customized incentives package;
7.   Allows BPOs registered with ecozones, Sol, and RBOI to undertake work-from-home
schemes, with a minimum on-site workforce of 30%;
8.   Clarifies that the transition period for the 5% GIE benefit includes the "in lieu of all
national and local taxes" benefit;
9.   Gives retroactive effect to the clarifications to the transition period but specifies that no
tax refund or credit shall be given in the case of taxes already paid.
In view of the foregoing, the approval of this bill is urgently sought.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
Nineteenth Congress
Second Regular Session
4 t  HouseBi||No.    8968
Introduced by Representative JOEY SARTE SALCEDA
ANACT
ENHANCING PHILIPPINE TAX INCENTIVES POLICY AND ADMINISTRATION,
AMHNDING FOR THE PURPOSE SECTIONS 112, 294, 295, 301, 309, AND 3110F
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER
PURPOSES
Be it resolved by the House Of Representatives and the Senate, in Congress assembled,
Section 1. Sfeor/ 7?//e. - This Act shall also be known as the "Corporate Recovery and
Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy" or
"CREATE MORE Act."
Section  2.  Dec/czrcz/I.o7t  o/Po/z.ey.  -It  is  hereby  declared  the  policy  of the  State  to
develop the national economy towards global competitiveness by implementing tax policies
instrumental   in   attracting   investments,   which  will   result   in  productivity   enhancement,
employment generation,  countrywide development,  and a more inclusive economic growth,
while at the same time maintaining fiscal prudence and stability.
To achieve these objectives, the State shall:
(a) Improve the equity and efficiency of the coaporate tax system by lowering the rate,
widening the tax base, and reducing tax distortions and leakages;
(b)  Develop,  subject  to  the  provisions  of this Act,  a  more  responsive  and  globally
competitive  tax  incentives  regime  that  is  performance-based,  targeted,  time-bound,   and
transparent, and can be customized to optimize economic opportunities and trends;
(c)  Provide  support to business  in their recovery from unforeseen events  such as  an
outbreak of communicable diseases or a global pandemic, and strengthen the nation's capability
for similar circumstances in the future; and
(d) Create a simpler, fairer, and more equitable tax incentive system that will allow for
inclusive growth and generation of jobs and opportunities in all the regions of the country, and


ensure  access  and  ease  in  the  grant  of these  incentives  especially  for  applicants  in  least
developed areas.
Section 3.  Section  112 of the National Internal Revenue Code, 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 (8)(1) and (2), the acceptable foreign currency
exchange proceeds thereof had been duly accounted for in accordance with
the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided,
further, That where the taxpayer is engaged in zero-rated or effectively zero-
rated  sale  and  also  in  taxable  or  exempt  sale  of goods  of properties  or
services, and the amount of creditable input tax due or paid cannot be directly
and  entirely attributed to  any one of the transactions,  it  shall be allocated
proportionately on the basis of the volume of sales. Provided, finally, That
for a person making sales that are zero-rated under Section  108(8) (6), the
input taxes shall be allocated ratably between his zero-rated and non-zero-
rated sales.
(8) Cancellation of VAT Registration.  -A person whose registration
has been cancelled due to retirement from or cessation of business, or due to
changes  in or cessation of status under Section  106(C)  of this  Code may,
within two (2) years from the date of cancellation, apply for the issuance of
a tax credit certificate for any unused input tax which may be used in payment
of his other internal revenue taxes.
(C) Period within which Refund or Tax Credit of Input Taxes shall be
Made. - In proper cases, the Commissioner shall grant a refund for creditable
input taxes within ninety (90) days from the date of submission of the official
receipts or invoices and other documents in support of the application filed
in accordance with Subsections (A)  and (8) hereof:  Provided, That should
the   Commissioner   find   that   the   grant   of  refund   is   not   proper,   the
Commissioner must state in writing the legal and factual basis for the denial.
In case of full or partial denial of the claim for tax refund, the taxpayer
affected may, within thirty (30) days from the receipt of the decision denying
the  claim,  appeal  the  decision  with  the  Court  of Tax  Appeals:  Provided,
however, That failure on the part of any offlcial, agent, or employee of the
BIR  to  act  on  the  application  within  ninety  (90)  days  period  shall  be
punishable under Section 269 of this Code.


(D)  Manner  of  Giving  Refund.  -.  Refunds  shall  be  made  upon
warrants drawn by the Commissioner or by his duly authorized representative
without the necessity of being countersigned by the Chairman, Commission
on Audit, the provisions of the Administrative Code of 1987 to the contrary
notwithstanding: Provided, That refunds under this paragraph shall be subject
to  post  audit  by  the  Commission  on  Audit  UNDER  A  RISK-BASED
FRAMEWORK WHICH  TAKES  INTO  ACCOUNT  THE  SIZE  0F
THH TAX REFUND, THE TRACK RECORD OF THE TAXPAYER,
AND THE COMPLETENESS AND ADEQUACY IN FORM OF THE
REQulRED   SUBMlssloNS:   pRoy+DEB   Fc/RrflER,   THAT   A
SIMPLIFIED  AND  STREAMLINED  TAX REFUND  SYSTEM  FOR
REGISTERED BUSINESS  ENTERPRISES UNDER TITLH XIII OF
THIS ACT SHALL BE ESTABLISHED IN CONSULTATION WITH
THE COMMISSION 0N AUDIT.
Section 4. Section 294 of the National Intemal Revenue Code, as amended, is hereby
further amended to read as follows:
"SEC.   294.   Incentives.   -   Subject  to  the  condition  and  period  of
availment in  Sections  295  and 296, respectively,  the following types  of tax
incentives may be granted to registered projects or activities:
"(A) Income Tax Holiday (ITH);
"(8)   Special   Corporate   Income   Tax   (SCIT)   Rate   -   For   export
entexprise,  domestic  market  enterprise  with  a  minimum  investment
capital of Five hundred million pesos (P500,000,000.00), and domestic
market enterprise under the Strategic Investment Priority Plan engaged
in activities that are classified as 'critical', a tax rate equivalent to five
percent (5%) effective July 1, 2020, based on the gross income earned,
in lieu of all national and local taxes.
"The   domestic  market   enterprise  under  the   Strategic   Investment
Priority Plan engaged in activities that are classified as 'critical' shall
refer  to  those  enterprises  belonging  to  industries  identified  by  the
National   Economic   and   Development  Authority  to  be   crucial   to
national development.
"The period of availment of the Special Corporate Income Tax shall be
subject to the conditions set under paragraphs (A) and (8) of Section
296 of this Act:
"Provided, That the national goverrment share shall be three percent
(3%)  of the  gross  income  earned  effective  July  1,  2020:  Provided,
further, That, if applicable, the shares of the local government units and
the Investment Promotion Agencies under the special laws governing
the latter shall be observed  and shall not result in the diminution of


their respective  shares:  Provided,  finally, That the  share of the local
government unit which has jurisdiction over the place of the registered
activity   of  registered   business   enterprise   outside   ecozones   and
freeports shall be two percent (2%) and shall be COLLECTED BY
THE  CONCERNED  INVESTMENT  PROMOTION  AGENCY
AND  REMITTED   [directly  remitted  by  the  registered  business
enterprise I to such local government units."
"(C)   Enhanced   Deductions   (ED)   REGIME   -   [For]   AN   export
enterprise,  domestic  market  enterprise,  [and]  OR  critical  domestic
market    entexprise[,]    MAY    ELECT    T0    BE    UNDER    THE
ENHANCED DEDUCTIONS REGIME, UNDER WHICH A TAX
RATE  EQUIVALENT  T0  TWHNTY  PERCENT  (20%)  UPON
THE    TAXABLE    INCOME    DERIVED    DURING    EACH
TAXABLE   YEAR   FROM   REGISTERED   PROJECTS   0R
ACTIVITIES,  AND  WHERE  the  following  may  be  allowed  as
deductions:
"(1)  Depreciation  allowance  of the  assets  acquired  for  the
entity's  production  of goods  and  services  (qualified  capital
expenditure) -additional ten percent (10%) for buildings; and
additional    twenty    percent    (20%)    for    machineries    and
equipment;
"(2)  Fifty  percent  (50%)  additional  deduction  on  the  labor
expense incurred in the taxable year;
"(3)  One  hundred  percent  (100%)  additional  deduction  on
research and development expense incurred in the taxable year;
"(4)  One  hundred  percent  (100%)  additional  deduction  on
training expense incurred in the taxable year;
"(5)  Fifty  percent  (50%)  additional  deduction  on  domestic
input expense incurred in taxable year;
"(6)   Fifty   percent   (50%)   additional   deduction   on   power
expense  incurred  in  the  taxable  year  AND  A  FURTHER
FIFTY  PERCENT  (50%)  ADDITIONAL  DEDUCTION
0N POWER EXPHNSE INCURRED FROM JANUARY 1,
2024 T0 DECEMBER 31, 2028: Pj[OytDED, THAT THE
PRESIDENT MAY EXTEND THE PERIOD OF GRANT
0F  THE   FURTHER   DEDUCTION   FOR  ANOTHER
FIVE YEARS;


"(7)  Deduction  for reinvestment allowance to  manufacturing
industry - When a manufacturing registered business enterprise
reinvests its undistributed profit or surplus in any of the proj ects
or activities listed in the Strategic Investment Priority Plan, the
amount reinvested to a maximum of flfty 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; and
"(8)  Enhanced  Net  Operating  Loss  Cany-Over  (NOLCO).  -
The  net  operating  loss  of the  registered  project  or  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."
Section 5.  Section 295 of the National Internal Revenue Code, as amended, is hereby
further amended to read as follows:
"SEC.   295.  Conditions  of Availment.   -  The  tax  incentives  in  the
preceding Section shall be governed by the following rules:
"(A)  The   income  tax   holiday   shall   be   followed  by  the   Special
Corporate Income Tax rate or Enhanced Deductions REGIME.
"(8)  At  the  option  of the  export  enterprise,  the  domestic  market
enteaprise with a minimum investment capital of Five hundred million
pesos (P500,000,000.00), and the domestic market enterprise engaged
in  activities  that  are  classified  as  'critical,'  the  Special  Corporate
Income Tax rate or enhanced deductions  shall be granted:  Provided,
That    in   no    case    shall    the    enhanced    deductions   be    granted
simultaneously with the Special Corporate Income Tax.
"The   following   conditions   for   the   availment   of  each   enhanced
deductions shall complied with:
"(1) The depreciation allowance of the assets acquired for the
entity's  production  of goods  and  services  (qualified  capital
expenditure) shall be allowed for assets that are directly related
to the registered entexprise's production of goods and services
other than administrative and other support services.
"(2) The  additional  deduction on the labor expense  shall not
include  salaries,  wages,  benefits,  and  other  personnel  costs
incurred  for  managerial,  administrative,  indirect,  labor,  and
support services.


"(3)  The  additional  deduction  on  research  and  development
expense shall only apply to research and development directly
related to the registered project or activity of the entity and shall
be limited to local expenditure incurred for salaries of Filipino
employees  and  consumables  and payments  of local  research
and development organizations.
"(4) The  additional  deduction on the labor expense  shall  not
include  salaries,  wages,  benefits,  and  other  personnel  costs
incurred  for  managerial,  administrative,  indirect  labor,  and
support services.
"(5) The additional deduction on domestic input expense shall
only  apply  to  domestic  input that  are  directly related to  and
actually used in the registered export project or activity of the
registered business enterprise.
"(6)  The  additional  AND  FURTHER  deductions  on  power
expense  shall  only apply to power utilized  for the registered
project or activity.
"(7)     The     deduction     for     reinvestment     allowance     to
manufacturing  industry  shall  be  determined  in  the  Strategic
Investment Priority Plan.
"(D) The VAT exemption on importation and VAT zero-rating on local
purchases   shall   [only   apply   to   goods   and   services   directly   and
exclusively used in the registered projects or activity by a registered
business   entexprise.]   BE   SUBJECT   TO   THE   FOLLOWING
CONDITIONS:
(1)   SALES   T0   AND   SALES   BY   A   RHGISTERED
BUSINESS ENTERPRISE LOCATED IN A FREEPORT
OR   SPECIAL  ECONOMIC   ZONH  AND   PURSUING
PURELY   REGISTERED   ACTIVITY   WITHIN   THAT
ZONH SHALL BE VAT-EXEMPT;
(2) SALES T0 REGISTERED EXPORT ENTERPRISES
BY  SUPPLIHRS  WHOSE   SALES   T0   REGISTERED
EXPORT       ENTERPRISE S       EXCEHD       SEVENTY
PERCENT (70%) OF THEIR TOTAL SALES SHALL BE
VAT-HXEMPT;


(3) SALES TO REGISTERED EXPORT ENTERPRISES
BY   SUPPLIHRS   SHALL   BE   SUBJECT   TO   ZHRO-
RATING;
(4) SALES BY REGISTERED EXPORT ENTERPRISES
CURRENTLY AVAILING 0F INCOME TAX HOLIDAY
SHALL T0 REGISTERED EXPORT ENTERPRISES BE
SUBJECT TO ZERO-RATING;
(5)         SALES         BY        REGISTERED        BUSINES S
ENTERPRISES, WHETHER DOMESTIC 0R EXPORT,
CURRENTLY      AVAILING      OF      THE      SPHCIAL
CORPORATE INCOME TAX RATE TO RHGISTERED
HXPORT ENTHRPRISES SHALL BH SUBJHCT T0 VAT-
EXEMPT;
(6) SALES BY REGISTERED BUSINHSS HNTHRPRISHS
OF VAT-EXEMPT IMPORTED CAPITAL EQUIPMENT,
RAW        MAT E RIAL S ,        S PARE        PART S ,        AND
ACCESSORIES        TO        REGISTERED        EXPORT
ENTERPRISES SHALL BE VAT-HXEMPT;
(7)    SALES    BY    SUPPLIERS    WITHIN    CUSTOMS
TERRITORY  T0  EXISTING  REGISTERED  EXPORT
ENTERPRISES    SHALL   BE    SUBJHCT   TO    ZERO-
RATING; AND
(8)   ALL   OTHER   PURCHASES    BY   REGISTERED
BUSINESS      ENTERPRISE      USED      FOR      THEIR
REGISTERED  PROJECT  0R  ACTIVITY  SHALL  BE
SUBJECT T0 ZERO-RATING."
Section 6.  Section 301  of the National Internal Revenue Code, as amended, is hereby
further amended to read as follows:
SEC. 301. Power o/ffee Presz.de7!f fo Grcz#/ J7tce#/z.veg. -Notwithstanding
the provisions of Sections 295 and 296, the President may, in the interest of
national  economic  development,  MOTU  PROPRIO  [and]  OR  upon  the
recommendation  of the  Fiscal  Incentives  Review  Board,  modify  the  mix,
period or manner of availment of incentives provided under this Code or craft
the appropriate financial support package for a highly desirable project or a
specific  industrial   activity  based  on  defined  development  strategies   for
creating  high-value  jobs,  building  new  industries  to  diversify  economic
activities,    and   attracting   significant   foreign   and   domestic   capital   or
investment,  and the fiscal requirements of the activity or project,  subject to
maximum  incentive  levels  recommended  by  the  Fiscal  Incentives  Review
Board: Provz.c7ec7, That the grant of income tax holiday shall not exceed eight


(8) years and thereafter,  a special corporate income tax rate of five percent
(5%)  may  be  granted: Provz.c7ed, /wrffocr,  That the  total  period  of incentive
availment shall not exceed forty (40) years.
The Fiscal Incentives Review Board shall determine whether the benefits
that  the   Government  may   derive   from   such   investment   are   clear   and
convincing  and  far outweigh the  cost of incentives  that will be  granted  in
determining whether a project or activity is highly desirable.
The exercise by the President of his powers under this  Section shall be
based on a positive recommendation from the Fiscal Incentives Review Board
upon its determination that the following conditions are satisfied:
(1) The project has a comprehensive sustainable development plan with
clear  inclusive  business  approaches,  and  high  level  of  sophistication  and
irmovation; and
(2)      Minimum      investment      capital      of     Fifty      billion      pesos
(P50,000,000,000.00)  or its  equivalent  in US  dollars,  or a minimum  direct
local employment generation of at least ten thousand ( 10,000) within three (3)
years from the issuance of the certificate of entitlement.
Provz.did, That the threshold shall be subject to a periodic review by the
Fiscal    Incentives    Review    Board    every   three   (3)    years,    taking    into
consideration international standards or other economic indicators: Provz.dec7,
/wr/feer, That if the project fails to substantially meet the projected impact on
the economy and agreed performance targets, the Fiscal  Incentives Review
Board shall recommend to the President the cancellation of the tax incentive
or financial support package or the modified period or manner of availment of
incentives,  after  due  hearing  and  an  adequate  opportunity  to  substantially
comply with the agreed performance targets and outputs.
For  this  puxpose,  financial  support  includes  utilization  of government
resources   such   as   land   use,   water   appropriation,   power  provision,   and
budgetary support provision under the annual General Appropriations Act.
ANY  PROJECT  0R  ENTERPRISE  WHICH  SATISFIES  THE
FOREGOING     CONDITIONS     MAY     SUBMIT     A     WRITTEN
APPLICATION   TO   THE   PRESIDHNT   0R   T0   THE   FISCAL
INCENTIVES REVIEW BOARD IN SUCH FORM AND WITH SUCH
PARTICULARS     AS     MAY     BE     PRESCRIBED     BY     FISCAL
INCENTIVES REVIEW BOARD.
WHERE    THH    PRESIDENT    IS    SATISFIED    THAT    IT    IS
EXPEDIENT   IN   THE   PUBLIC   INTEREST   TO   GRANT   THE
APPLICATION, THH PRESIDENT MAY APPROVE THAT PROJECT
OR ENTERPRISE'S REQUEST FOR INCHNTIVES IN PART OR IN
FULL,  SUBJECT  T0  SUCH  CONDITIONS  AS  THE  PRESIDENT
DEEMS  FIT,  UPON  THE  RECOMMENDATION  0F  THE  FISCAL
INCENTIVES REVIEW BOARD.


This power of the President, in as far as it commands additional public
sector expenditures in support of investors,  is suspended during fiscal years
when, an [unimaginable] UNMANAGEABLE fiscal deficit is declared by the
President on the advice of the Development Budget Coordination Committee
with  a  consequence that  even  core budgetary obligations,  such as,  but not
limited  to,  mandatory  revenue  allotments  for  local  government  units  and
budget for the National Economic and Development Authority's core public
investments program, cannot be fully financed.
Notwithstanding the provisions in the preceding paragraphs, tax and duty
incentives granted through legislative franchises  shall be excepted from the
foregoing powers of the President to review, withdraw, suspend, or cancel tax
incentives and subsidies.
Section 7.  Section 309 of the National Intemal Revenue Code, as amended, is hereby
further amended to read as follows:
"SEC. 309. Prohibition on Registered Activities. -EXCEPT THOSE
REGISTHRED      PROJECTS      OR      ACTIVITIES      PRIMARILY
ENGAGED    IN    THE    PROVISION    OF    SERVICES    SUCH    AS
INFORMATION   TECHNOLOGY   (IT)   OR   BUSINESS   PROCESS
0UTSOURCING,   A   qualified  registered  project   or  activity  under   an
Investment Promotion Agency administering an  economic zone or freeport
shall be exclusively conducted or operated within the geographical boundaries
of the  zone  or  freeport  being  administered  by  the  Investment  Promotion
Agency  in  which  the  project  or  activity  is  registered:  Provz.ded,  That  a
registered business enterprise may conduct or operate more than one qualified
registered project or activity within the same zone or freeport under the same
Investment Promotion Agency: Provz.c7ed, /wrffeer, That any project or activity
conducted or performed outside the geographical boundaries of the zone or
freeport shall not be entitled to the incentives provided in this Act, unless such
project   or  activity   is   conducted   or  operated   under   another   Investment
Promotion Agency.
A    QUALIFIED    PROJECT    0R   ACTIVITY   PRIMARILY
ENGAGED    IN    THE    PROVISION    OF    SERVICES    SUCH    AS
INFORMATION   TECHNOLOGY   (IT)   OR   BUSINESS   PROCESS
OUTSOURCING SHALL BE ALLOWED TO CONDUCT BUSINHSS
UNDER   ALTHRNATIVE   WORK   ARRANGEMENTS,   SUCH   AS
THOSE PROVIDED FOR BY REPUBLIC ACT NO.  11165, OR THE
"TEILECOMMUTING ACT:" PROPTDED,  THAT IN THE  CASE  OF
QUALIFIED      PROJECTS      OR      ACTIVITIES      UNDER      AN
INVESTMENT    PROMOTION    AGENCY    ADMINISTERING    AN
ECONOMIC   ZONH   0R   FREEPORT,   EMPLOYEES   WORKING
WITHIN THE GEOGRAPHICAL B0UNDARIHS 0F THE ZONE OR
FRHEPORT, AT ANY GIVEN TIME, SHALL NOT BE LESS THAN
THIRTY PERCENT (30%) OF THE  TOTAL WORKFORCE OF THE


QUALIFIED   PROJECT   oR   ACTIVITY:   pRor+DEB   FLrR7HEj[,
THAT  IN  THE  CASE  0F  QUALIFIED  PROJECT  0R  ACTIVITY
PRIMARILY ENGAGED IN THE PROVISION 0F SERVICES SUCH
AS  INFORMATION  TECHNOLOGY  (IT)  OR BUSINESS  PROCESS
OUTSOURCING      REGISTERED      WITH     THE      BOARD      0F
INVESTMENTS  0R THE  REGIONAL BOARD  0F INVESTMENTS
OF  THE  BANGSAMOR0  AUTONOMOUS  REGION  OF  MUSLIM
MINDANAO, EMPLOYEES WORKING WITHIN THE REGISTHRED
PLACES   OF   BUSINESS   0F   THE   QUALIFIED   PROJECT   OR
ACTIVITY SHALL NOT BE LESS THAN THIRTY PHRCENT (30%)
OF THE TOTAL WORKFORCE OF THE QUALIFIED PROJECT 0R
ACTIVITY.
Section 8.  Section 311  of the National Intemal Revenue Code, as amended, is hereby
further amended to read as follows:
"SEC.   311.   Investments   Prior   to   the   Effectivity   of  This  Act.   -
Registered business enterprises with incentives granted prior to the effectivity
of this Act shall be subject to the following rules:
"(A) Registered business enterprises whose projects or activities were
granted only an income tax holiday prior to the effectivity of this Act
shall be allowed to continue with availment of the income tax holiday
for the remaining period of the income tax holiday as specified in the
terins and conditions of their registration: Provided, That for those that
have been granted the income tax holiday but have not yet availed of
the incentive upon the effectivity of this Act, they may use the income
tax holiday for the period specified in the terns and conditions of their
registration;
"(8) Registered business enterprises, whose projects or activities were
granted an income tax holiday prior to the effectivity of this Act and
that are entitled to the five percent (5%) tax on gross income earned
incentive after the income tax holiday, shall be allowed to avail of the
five percent (5%) tax on gross income earned incentive, INCLUDING
ALL   OF   ITS    CORRESPONDING   EXEMPTIONS    FROM
LOCAL AND NATIONAL TAXES, based on Subsection (C); and
"(C)  Registered  business  enterprises  currently  availing  of the  five
percent (5%) tax on gross income earned granted prior to the effectivity
of this Act shall be allowed to continue availing the said tax incentive
INCLUDING ALL 0F ITS CORRESPONDING EXEMPTIONS
FROM  LOCAL AND  NATIONAL  TAXES,  at  the  rate  of  five
percent (5%) for ten (10) years.


Section 9. rrcz7€sz./ory Provj.s'z.o#s. -The exemption from local and national taxes under
Section 8 of this Act shall have retroactive application. P7iovz.did,  that no tax refund or credit
shall  be  granted  to  registered business  enterprises  covered  by  Section  311  of the National
Internal Revenue Code, as amended, as a result of the exemption from local and national taxes.
Section  10. J#£p/eme7t/I.ng Act/es cz#c7 Regw/czfz.o#5'.  -Within ninety (90)  days  from the
effectivity of this Act, the Secretary of Finance, upon the recommendation of the Commissioner
of lntemal  Revenue,  shall  promulgate  the necessary rules  and  regulations  for its  effective
implementation: Provz.c7cc7, That for the provisions under title XIII, the Secretary of Finance
and  the  Secretary  of Trade  and  Industry  shall jointly  promulgate  the  necessary  rules  and
regulations thereof within the same period, after due consultations with the Commissioner of
Intemal Revenue, the Board of Investments, and other Investment Promotion Agencies, for its
effective implementation. Failure to promulgate the rules and regulations shall not prevent the
implementation of this Act upon its effectivity.
Section 11. Sepczrczbz./z.fy C/czwse. -If any portion or provision of this Act is subsequently
declared invalid or unconstitutional,  other provisions hereof which are not affected thereby
shall remain in full force and effect.
Section   12.   Repecz/I.ng   C/czwse.   -  Any   law,   decrees,   executive   orders,   rules   or
regulations, or parts thereof which are inconsistent with this Act is hereby repealed, amended
or modified accordingly.
Section  13. EJTjjlec/z.v!.fy. -This Act shall take effect fifteen (15) days after its complete
publication in the Official Gazette or in a newspaper of general circulation.
Approved,