.. 
FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
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) 
SENATE 
S.BILLNO. 2142 
, 
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Introduced by Senator Ralph G. Recto 
Explanatory Note 
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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. Jobs created could 
not even represent I % of our total employment levels. We are lagging behind our neighbors in terms of 
foreign direct investments despite our generous incentives package. We could not even recoup half of our 
foregone revenues ofP 282.76 billion as we are only getting $ 2.9 billion in foreign investments. 
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 form of income tax holidays and VAT 
exemptions, are enough to build 8,737 elementary and secondary school buildings of the basic one-
classroom type, pave 10,000 kilometers of national roads, pay for the increase of the basic pay of 1.4 
million lOWly-paid government workers, and even wipe out tuberculosis. 
This bill will also streamline the administration of fiscal incentives. At present there are about 
147 laws which created a myriad of incentive-providing authorities. It aims (0 consolidate all Investment 
Promoting Agencies (I PAs) into one centralized agency. Thus, the Board of Investments (BOI) and 
Philippine Economic Zone Authority (P'EZA) will be merged to form the Philippine Investment 
Promoting Agency (PIPA). 
This would then prevent locators from cherry-picking incentives by 
registering with different IPAs to avail themselves ofthe best possible incentives package. 
Under this proposal, incentives are given to registered domestic enterprises (hat locate in any of 
the 30 poorest provinces, bring in investments of P500 million and above, or generate at least 200 jobs. 
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 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 from 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 (han 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 ofthis administration to raise additional revenues for 
better government services without imposing new taxes. 
In view of the foregoing, immediate approval of this bi! 
requested. 


FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
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First Regular Session 
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JUL 27 An :42 
SENATE 
S. BILL NO. 2142 
Introduced by Senator Ralph G. Recto 
AN ACT 
HARMONIZING THE GRANT AND ADMINISTRATION OF FISCAL AND NON-
FISCAL INCENTIVES, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
1 
PRELIMINARY TITLE 
2 
TITLE AND DECLARATION OF POLICY 
3 
SECTION I. Title. - This Act shall be known as "The Consolidated Investments and 
4 
Incentives Code ofthe Philippines". 
5 
SEC. 2. Declaration of Investment Policies. - The national economy shall be developed 
6 
so as to enhance its competitiveness in the global economy and encourage investments that 
7 
promote countrywide development, generate employment and foreign exchange. Accordingly, 
8 
the following are declared policies ofthe State: 
9 
(I) 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-hound and whose perfonnance 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 
1 


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expenditures arising from the provision of incentives and shall ensure that concerned government 
2 
agencies are well-informed of these developments. 
3 
(4) In the granting of fiscal incentives, the State will make efforts to ascertain that the 
4 
incentives are not redundant: that the investments they benefit require and are truly motivated by 
5 
the incentives or that the incentives, as much as possible, are not given to investors who would 
6 
have made the investments even in the absence of incentives. 
7 
(5) The State shall vigorously promote investments in basic infrastructure such as, but not 
8 
limited to power, roads, airports, water ports and housing. 
9 
(6) The State recognizes that industrial peace is essential to attracting investments. 
10 
(7) The State shall undertake investment promotion activities. 
11 
TITLE I 
12 
DEFINITION OF TERMS 
13 
SEC. 3. Definition of Terms. - As used herein, the following shall mean: 
14 
(a) "PIPA" is the Philippine Investment Promotion Administration created under this Act. 
15 
(b) "Investment Promotion Agencles (IPAs)" shall include the Philippine Investment Promotion 
16 
Administration (PIPA), Bases Conversion and Development Authority (BCDA), Subic 
17 
Bay Metropolitan Authority (SBMA), Clark Development Corporation (CDC), John Hay 
18 
Management Corporation (JHMC), Poro Point Management Corporation (PPMC), 
19 
Bataan Technology Park Inc. (BTPI), Cagayan Economic Zone Authority (CEZA), 
20 
Zamboanga City Special Economic Zone Authority (ZCSEZA), and PHIVIDEC 
21 
Industrial Authority (PIA). 
22 
(c) "Registered enterprise" is any individual, partnership, corporation, Philippine branch of a 
23 
foreign corporation or other entity incorporated and/or organized and existing under 
24 
Philippine laws and registered with any of the IPAs, in accordance with this Act: 
25 
PrOVided, however, That the term "registered enterprise" shall not include commercial 
26 
banks, savings and mortgage banks, rural banks, savings and loan associations, building 
27 
and loan associations, developmental banks, trust companies, investment banks, finance 
28 
companies, brokers and dealers in securities, consumers cooperatives and credit unions, 
29 
and other business organizations whose principal purpose or principal source of income is 
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to receive deposits, lend or borrow money, buy and sell or otherwise deal, trade or invest 
2 
in common or preferred stocks, debentures, bonds or other marketable instruments 
3 
generally recognized as securities, or discharge other similar intermediary, trust or 
4 
fiduciary functions. 
5 
(d) "Gross income earned" is the gross sales or gross revenues derived by the registered 
6 
enterprise from its registered business activity net of sales discounts, sales returns and 
7 
allowances minus cost of sales or direct costs 
but before any deductions for 
8 
administrative, marketing, selling, operating expenses or incidental losses during a given 
9 
taxable year. 
10 
(e) "Export sales" is the sales values and/or revenues paid for in freely convertible foreign 
11 
currency, determined from invoices, bills of lading, inward letters of credit, landing 
12 
certificates, or other commercial documents, by a registered enterprise of its (I) products 
13 
shipped out of the country and sold in the territory of another country or (2) services 
14 
rendered to clients abroad such as but not limited to information technology (IT) 
15 
activities, application and/or installation of technology and systems in the project sites, 
16 
including but not limited to the fields of engineering and construction design and other 
17 
similar activities which may be approved by the Board, excluding mere deployment of 
18 
people or individual practice of profession abroad; or (3) logistics, repair and 
19 
maintenance, and other similar services rendered to international airlines/shipping 
20 
lines/military aircraft or seacraft even if rendered locally. 
21 
(f) "Tax refund" is any refund against taxes and/or duties equal to those actually paid by a 
22 
registered export enterprise and to be released by PIP A as provided for under Section 17 
23 
of this Act. 
24 
(g) "Information Technology Activities" are activities which involve the use of any IT software 
25 
and/or system for value addition, IT, being the collective term for various technologies 
26 
involved in processing and transmitting information which include computing, 
27 
multimedia, telecommunications, microelectronics and their interdependencies, including 
28 
the convergence of various information-based, broadcast and mass media communication 
29 
technologies. 
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(h) An "export enterprise" is a registered enterprise which is a manufacturer, processor or 
2 
service provider and whose export sale of its products or services is at least seventy 
3 
percent (70%) of its output. 
4 
(i) A "domestic enterprise" is a registered enterprise whose export sales is less than seventy 
5 
percent (70%) of its output, and is located in the thirty (30) poorest provinces 
as 
6 
determined by the Department of Finance (DOF): Provided, That such domestic 
7 
enterprise has a minimum investment of Five hundred million pesos (P500,000,000) or 
8 
can provide a minimum employment of two hundred (200) jobs: Provided, further, That 
9 
existing enterprises already located in the thirty (30) poorest provinces as determined by 
10 
the DOF before the effectivity of this Act and have satisfied the minimum investment of 
11 
Five hundred million pesos (P500,000,000) or minimum employment of two hundred 
• 
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(200) jobs are qualified to register and avail of the incentives provided in this Act. 
13 
G) "Capital Equipment" refers to machinery, spare parts, tools and dies, or those required for 
14 
pollution abatement and control, cleaner production and water reduction. 
15 
(k) "Source documents" are input materials and documents reasonably needed by IT and IT-
16 
enabled industries such as; but not limited to, books, directories, magazines, newspapers, 
17 
brochures, pamphlets, m~dical records/files, legal records/files, instruction materials, 
18 
drawings/blueprints/outlines. 
19 
(I) "Processing" is converting raw materials into marketable form through physical, mechanical, 
20 
chemical, electrical, biochemical, biological or other means, or by a special treatment or a 
21 
series of actions, such as slaughtering, milling, pasteurizing, drying or desiccating, quick 
22 
freezing, that results in a change in the nature or state of the products. Mere packing or 
23 
packaging shall not constitute processing. 
24 
(m) "Industrial Estate (IE)" refers to a tract of land subdivided and developed according to a 
25 
comprehensive plan under a unified continuous management and with provisions for 
26 
basic infrastructure and utilities, with or without pre-built standard factory buildings and 
27 
community facilities for the use of a community of industries. 
28 
(n) "Export Processing Zone (EPZ)" refers to a specialized industrial estate and predominantly 
29 
oriented to export production. 
4 


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(0) "Special Economic Zones (SEZ)" hereinafter referred to as ecozones, are selected areas with 
2 
highly developed or which have the potential to be developed into agro-industrial, 
3 
industrial, information technology, tourist/recreational centers. An ecozone may contain 
4 
any or all of the following: industrial estates (lEs), export processing zones (EPZs), IT 
5 
parks and centers, and tourism estates. 
6 
(p) 
"Tourism Estate" is a tract of land with defined boundaries, suitable for development into 
7 
an integrated resort complex, with prescribed carrying capacities, of tourist facilities and 
8 
activities, such as, but not limited to, sport and recreation centers, accommodations, 
9 
convention and cultural facilities, food and beverage outlets, commercial establishments 
10 
and other special interest and attraction activities/establishments, and provided with 
11 
roads, water supply facilities, power distribution facilities, drainage and sewage systems, 
12 
and other necessary infrastructures and facilities. A tourism estate shall be under unified 
13 
and continuous management, and can either be a component of an ecozone or the whole 
14 
ecozone itself. 
15 
(q) "Freeport" is an isolated and policed area adjacent to a port of entry as defined by Section 
16 
3519 of the Tariff and Customs Code, which shall be operated and managed as a separate 
17 
customs territory to ensure free flow or movement of goods, except those expressly 
18 
prohibited by law, within, into and exported out in the freeport zone where imported 
19 
goods may be unloaded for immediate transshipment or stored, repacked, sorted, mixed, 
• 
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or otherwise manipulated without being subject to import duties. However,movement of 
21 
these imported goods from the free-trade area to a non-free-trade area in the country shall 
22 
be subject to import duties and taxes. 
23 
TITLE II 
24 
CREATION OF THE PHILIPPINE INVESTMENT PROMOTION ADMINISTRATION 
25 
(PIPA) 
26 
SEC. 4. Creation of The Philippine Investment Promotion Administration (PIPA) The 
27 
Board of Investments (BOI) created under Executive Order No. 226, Series of 1987, as 
28 
amended, and the Philippine Economic Zone Authority (PEZA) created under Republic Act No. 
29 
7916, as amended, are hereby merged, renamed, and reorganized as the Philippine Investment 
5 


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Promotion Administration (PIP A), attached to the Department of Trade and Industry (DTI), and 
2 
which shall implement the provisions of this Act except as otherwise provided herein. The 
3 
unexpended appropriations, assets and properties of BOI and the assets and properties of PEZA 
4 
are here by transferred to PIP A. 
5 
The personnel ofPEZA and BOI shall be absorbed by PIPA or DTL For this purpose, the 
6 
Board shall determine the personnel to be absorbed by PIP A. Those who will not be absorbed 
7 
due to either the inability to meet the qualification standards and selection criteria or the non-
8 
existence of a suitable position in PIP A or DTI shall be deemed separated from the service: 
9 
Provided, That those who will not be absorbed by PIPA or DTI, including those who will opt to 
10 
retire from government service shall be entitled to all gratuities and benefits under existing laws. 
11 
Existing Conventions or Agreements for the Avoidance of Double Taxation and the 
12 
Prevention of Fiscal Evasion with Respect to Taxes on Income (income tax treaties) that grant 
13 
reduced income tax rates on dividends, interests and royalties paid by BOI-registered enterprises 
14 
to foreign persons shall, after the merger of BOI and PEZA' by virtue of this Act, continue to 
15 
grant the reduced rates to foreign persons until the expiration of the enterprises' registration 
16 
certificates with BOland after such enterprises registered with PIP A. 
17 
SEC. 5. General Powers and Functions of the Administration. -
PIP A shall have the 
18 
following powers and functions: 
19 
1. To establish, operate, administer, manage and develop 
the ecozones and freeports 
20 
according to the principles and provisions set forth in this Act; 
21 
2. To register, regulate and supervise the enterprises in the ecozones and freeports in an 
22 
efficient and decentralized manner; 
23 
3. To register, regulate and supervise qualified enterprises outside the ecozones and 
24 
freeports; 
25 
4. To coordinate with local government units and exercise general supervision over the 
26 
development, plans, activities and operations of ecozones, industrial estates, export 
27 
processing zones, free trade zones, and the like; 
28 
5. To regulate and undertake the establishment, operation and maintenance of utilities, other 
29 
services and infrastructure in the ecozones, such as heat, light and power, water supply, 
6 


telecommunications, transport, toll roads and bridges, port services, and others, and to fix 
2 
just, reasonable and competitive rates, charges, and fees therefor: Provided, That the 
3 
appropriate government regulatory agencies shall regulate the operation, maintenance 
4 
and services of utilities such as heat, light, power, water supply, telecommunications, . 
5 
transport, toll roads and bridges, port services, and others based inside the ecozones 
6 
insofar as such services are rendered outside the ecozones. 
7 
6. To construct, acquire, own, lease, operate and maintain on its own or ilirough contract, 
8 
franchise, license, bulk purchase from the private sector and build-operate-transfer 
9 
scheme or joint venture, adequate facilities and infrastructure, such as light and power 
10 
systems, water supply and distribution systems, telecommunication and transportation, 
11 
buildings, structures, warehouses, roads, bridges, ports and other facilities for the 
12 
operation and development of the ecozones and freeports, in coordination with the local 
13 
government units concerned and appropriate agencies,; 
14 
7. To create, operate andlor contract to operate such agencies and functional units or offices 
15 
and or subsidiaries of PIP A on its own or jointly with any private individual or entity as it 
16 
may deem necessary and provide funds therefor; 
17 
8. To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise dispose 
18 
of personal and real property; sue and be sued; and otherwise carry out its duties and 
19 
functions as provided for in this Act; 
20 
9. To coordinate the formulation and preparation of the development plans of the qualified 
21 
enterprises; 
22 
10. To formulate and implement industrial development plans and programs; 
23 
11. To formulate and coordinate investments promotion activities; 
24 
12. To establish an investments one-stop-action-center; 
25 
13. To formulate positions and strategies on bilateral, regional or multilateral investments 
26 
agreements or arrangements; 
27 
14. To coordinate with the National Economic and Development Authority, Department of 
28 
Trade and Industry, Department of Science and Technology, and the local government 
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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. 
SEC. 6. The Board. - PIPA shall be governed by a Board created under this Act, 
hereinafter referred to as the "Board". 
SEC. 7. Composition of the Board. - The Board shall be composed of thirteen (13) 
members as follows: the Secretary of the Department of Trade and Industry (DTI) as Chairman; 
the Director-General of PIP A as Vice-Chairman; an undersecretary of the Department of 
Finance (DOF), Department of Labor and Employment (DOLE), Department of Environment 
and Natural Resources (DENR), Department of Public Works and Highways (DPWH), 
Department of Science and Technology (DOST), and Department of Energy (DOE); the Deputy 
Director-General of the National Economic and Development Authority (NEDA); the 
Commissioner of Bureau of Internal Revenue (BIR); the Commissioner of Bureau of Customs 
(BOC); one (I) representative from the labor sector; and one (l) representative from the 
investors/business sector. The representatives from the labor and investorslbusiness sectors shall 
be appointed by the President from the nominees of their respective sectors and from among the 
enterprises registered with PIP A. In case of the unavailability ofthe Secretary of DTI to attend a 
particular Board meeting, the Director-General of PIP A shall act as chairman. 
SEC. 8. Powers and Duties of the Board. - The Board shall be responsible for the 
regulation and promotion of investments. It shall meet as often as necessary. Notice of regular 
and special meetings shall be given to all members of the Board. The presence of seven (7) 
members of the Board shall constitute a' quorum and the affirmative vote of seven (7) members 
of the Board in a meeting validly held shall be necessary to exercise its powers and perform its 
duties, which shall include but not be limited to the following: 
(1) Set the general policies on the establishment and operations of the ecozones, industrial 
estates, export processing zones, free trade zones, and the like; 
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(2) Promulgate rules and regulations to implement the purposes of this Act and such other 
laws as the Board is mandated to implement; 
(3) Formulate investment promotion policies under a 'one country approach'; 
(4) 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 PIPA-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, further, 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; 
(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; 
9 


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(8) Monitor and coordinate investment promotion activities of all IP As; 
2 
(9) Formulate position for bilateral, regional or multilateral investments and investment-
3 
related trade agreements and/or arrangements; 
4 
(10) Formulate industrial programs on economic development including those relating to the 
5 
implementation of international trade, investments and trade, and investment-related 
6 
environmental agreements and protocols; 
7 
(11) Formulate industry and sectoral development programs, the National Plan for 
8 
Investment Promotions (NPIP) and gather and compile data required for the effective 
9 
implementation of this act; 
10 
(12) Recommend to the President, subject to constitutional limitations and other 
11 
nationalization laws, the suspension of the nationality requirement provided for in this 
12 
Act in cases involving bilateral or regional investments or trading agreements of the 
13 
Philippines with other countries or when the existing laws of another country where the 
14 
investor comes from provides no nationality restrictions for Filipino investors or provides 
15 
for reciprocal nationality accommodations; 
16 
(13) Establish offices in the Philippines and abroad, as needed; 
17 
(14) Within four (4) months after the close of the fiscal year, submit an annual report to the 
18 
President and Congress on the Board's administration of this Act, including 
19 
recommendations on investment policies; 
20 
(15) Formulate policies that will stimulate investments in the most poverty-stricken are!'lS of 
21 
the country, and reduce regional and social inequality; 
22 
(16) Enter into agreements with gther agencies for the simplification of systems and 
23 
procedures involved in the promotion of investments, operation of economic zones and 
24 
registered enterprises, and other activities necessary for the effective implementation of 
25 
this Act; and 
26 
(17) In general, exercise all powers necessary or incidental to attain the purposes of this Act 
27 
and other laws vesting additional functions on the Board. 
28 
SEC. 9. Powers and Duties of the Chairman. - The Chairman shall have the following 
29 
powers and duties: 
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(1) Preside over the meetings of the Board; 
2 
(2) Sign annual and special reports to the President and Congress; 
3 
(3) Act as liaison between investors seeking joint venture arrangements; 
4 
(4) Recommend to the Board policies and measures necessary to carry out the objectives of 
5 
this Act; and 
6 
(5) Generally exercise other powers and perform other duties as may be directed by the 
7 
Board. 
8 
SEC. 10. The Director-General. - PIP A shall have a Director-General with the rank of a 
9 
department undersecretary who shall be appointed by the President. The Director-General shall 
10 
be at least forty (40) years of age, of proven probity and integrity, and a degree holder in any of 
11 
the following fields: economics, busiq.ess, public administration, law, management or their 
12 
equivalent, and with at least ten (10) years of relevant working experience preferably in the field 
13 
of management or public administration. 
14 
The Director-General shall be assisted by six (6) Deputy Directors-General each for policy 
15 
and planning, administration, operations, investment promotion, industry development, and 
16 
Investments One-Stop-Action-Center (OSAC), who shall be appointed by the Board, upon the 
17 
recommendation of the Director-General. The Deputy Directors-General shall be at least thirty-
18 
five (35) years old, with proven probity and integrity, and a degree holder in any of the folloy.ring 
19 
fields: economics, business, public administration, law, management or their equivalent. 
20 
SEC. 11. Powers and Duties of the Director-General - The Director-General shall have 
21 
the following powers and duties: 
22 
(1) Execute all acts of administration; 
23 
(2) Prepare and recommend to the Board the staffing pattern and personnel complement of 
24 
PIPA and establish regional offices, when necessary, subject to the approval of the Board. 
25 
(3) Prepare the agenda for the meetings of the Board and submit for its consideration and 
26 
approval the policies and measures which the Chairman deems necessary and proper to 
27 
carry out the provisions of this Act; 
28 
(4) Preside over the meetings of the Board in the absence of the Chairman; 
11 


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(5) Assist registered enterprises and prospective investors to expedite processing of papers 
2 
required by all government offices, agencies, instrumentalities and financial institutions; 
3 
and in addition he shall have the following specific powers and responsibilities: 
4 
(A) To safeguard all the lands, buildings, records, monies, credits and other 
5 
properties and rights of the ecozones under their jurisdictions; 
6 
(B) To ensure that all revenues of the ecozones are collected and applied in 
7 
accordance with its budget; 
8 
(C) To ensure that the investors/firms and employees of the ecozones are properly 
9 
discharging their respective duties; 
10 
(D) To give such information and recommend such measures to the Board, as he 
11 
shall deem advantageous to the ecozone; 
12 
(E) To submit to the Board the ongoing and proposed projects, work and 
13 
financial program, annual budget of receipts, and expenditures of the ecozones; 
14 
(F) To represent the administration in all its business matters and sign on its 
15 
behalf after approval of the Board, all its bonds, borrowings, contracts, agreements and 
16 
obligations made in accordance with this Act; 
17 
(G) To acquire jurisdiction, as he may deem proper, over the protests, complaints, 
18 
and claims of the residents and enterprises in the ecozone concerning administrative 
19 
matters; 
20 
(H) To recommend to the Board the grant, approval, refusal, amendment or 
21 
termination of franchises, licenses, permits, contracts, and agreements within the 
22 
ecozones in accordance with the policies set by the Board; 
23 
(I) To require owners of houses, buildings or other structures constructed without 
24 
the necessary permit whether constructed on public or private lands, to remove or 
25 
demolish such houses, buildings, structures within sixty (60) days after notice and upon 
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failure of such owner to remove or demolish such houses, building or structure within 
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said period. The Director-General or his authorized representative may summarily cause 
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their removal or demolition at the expense of the owner, any existing law, decree, 
29 
executive order and other issuances or part thereof to the contrary notwithstanding; 
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(1) To take such emergency measures as may be necessary to avoid fires, floods, 
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and mitigate the effects of storms and other natural or public calamities; 
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(K) To prepare and make out plans for the physical and economic development of 
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the economic zone, including zoning and land subdivision, and issue such rules and 
5 
regulations which shall be submitted to the Board for its approval; and 
6 
(L) To perform such other duties and exercise such powers as may be prescribed 
7 
by the Board, and to implement policies, rules and regulations set by the Board. 
8 
SEC. 12. Appointment of Personnel. - The Board shall provide for an organization of 
9 
officers and employees of PIP A, and upon recommendation of the Director-General, appoint and 
10 
fix the remunerations and other emoluments: Provided, That the Board shall have exclusive and 
11 
final authority to promote, transfer, assign or reassign officers and other personnel subject to 
12 
civil service laws, rules and regulations. 
13 
All positions in PIP A shall be governed by a compensation and position classification 
14 
system and qualification standards approved by the Board based on a comprehensive job 
15 
analysis and audit of actual duties and responsibilities. 
The compensation plan shall be 
16 
comparable with the prevailing compensation plans in the SBMA, CDC, BCDA and the private 
17 
sector, and shall be subject to periodic review by the Board no more than once every two (2) 
18 
years without prejudice to yearly merit reviews or increases based on productivity and 
19 
profitability. PIP A shall therefore be exempt from existing laws, rules and regulations on 
20 
compensation and position classification standards. It shall endeavor to make its system conform 
21 
as closely as possible with the principles under Republic Act No. 6758, otherwise known as the 
22 
Salary Standardization Law. 
23 
TITLE III 
24 
INCENTIVES TO REGISTERED ENTERPRISES 
25 
SEC. 13. Qualified Enterprises. - The following may register with PIPA to avail of the 
26 
incentives provided in this Act: 
27 
(a) export enterprises; or 
28 
(b) domestic enterprises 
13 


, 
SEC. 14. Incentives to Registered Export Enterprises. -
PIPA shall make the following 
2 
incentives available to registered export enterprises: 
3 
(a) Reduced Tax Rates. - Imposition of a preferential tax rate of fifteen percent (15%) of taxable 
4 
income as defined under Section 31 of the National Internal Revenue Code of 1997, as 
5 
amended. 
6 
(b) Net Operating Loss Carryover (NOLCO) - The net operating loss of the registered export 
7 
enterprise during the first five (5) years from start of commercial operation which had not 
8 
been previously offset as deduction from gross income shall be carried over as a 
9 
deduction from gross income for the next ten (l0) years immediately following the year 
10 
of such loss: 
Provided, That after the availment of NOLCO of registered export 
11 
enterprises under this provision, the pertinent provisions under the National Internal 
12 
Revenue Code of 1997, as amended, shall apply. 
13 
(c) Accelerated Depreciation. - Accelerated depreciation of plant, machinery, and equipment that 
14 
are reasonably needed and actually used for the production and transport of goods and 
15 
services may be depreciated using a rate not exceeding twice the rate which would have 
16 
been used had the annual allowance been computed in accordance with the rules and 
I 
17 
regulations prescribed by, the Secretary of Finance and the provisions of the National 
• 
18 
Internal Revenue Code of 1997, as amended. 
19 
(d) Capital Equipment Incentives. - Importations of capital equipment, including consignment 
20 
thereof by registered export enterprises upon the effectivity of this Act, shall be exempt 
21 
from customs duties: Provided, That the importation thereof, shall be used exclusively by 
22 
the registered export enterprise in its registered activity. Ifthe capital equipment shall be 
23 
used by the registered export enterprise other than for its registered activity, the availment 
24 
of incentives under this paragraph shall be subject to the rules and regulations to be 
25 
promulgated by PIP A: Provided, further, That for export enterprises, value-added tax 
26 
paid on imported capital equipment shall be refunded upon proof of exportation of their 
27 
products under the mechanism and guidelines provided in Section 17 of this Act. 
28 
(e) Raw Material Incentives. - Every registered export enterprise shall be entitled to duty-free 
29 
importation of raw materials which are used in the manufacture, processing as defined in 
14 


Section 3 of this Act, or production of its export products: Provided, That value-added 
2 
tax shall be refunded upon presentation of proof of exportation of their products under the 
3 
mechanism provided in Section 17 of this Act. 
4 
(f) Duty-free importation of source documents by IT registered export enterprises. 
5 
(g) Exemption from Wharfage Dues. - The provisions of law to the contrary notwithstanding, 
6 
exports by a registered export enterprise shall be exempted from wharfage dues. 
7 
(h) Registered export enterprises shall have an option between the preferential tax rate of fifteen 
8 
percent (15%) as provided in Section 14 (a) of this Act, or the five percent (5%) of the 
9 
gross income earned in lieu of all national and local taxes, except value-added tax (VAT) 
10 
and real property tax on land. Once a registered export enterprise has made an option 
11 
provided in this paragraph, such option shall be irrevocable for the duration of its 
12 
registration. 
13 
The five percent (5%) of the gross income earned by registered export enterprises 
14 
shall be paid and remitted as follows: 
15 
1. Sixty percent (60%) to the National Government; and 
16 
2. Forty percent (40%) to the treasurer's office of the municipality or city where the 
17 
enterprise is located. 
18 
(i) Employment of Foreign Nationals. -
Subject to the provisions of Section 29 of 
19 
Commonwealth Act No. 613, as amended, a registered export enterprise may employ 
20 
21 
22 
23 
24 
25 
26 
27 
28 
foreign nationals in supervisory, technical or advisory 
positions for a period not 
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 unmarried 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 
15 


1 
to enter and reside in the Philippines during the period of employment of such foreign 
2 
nationals. 
3 
A registered export enterprise shall train Filipinos as understudies of foreign 
4 
nationals in administrative, supervisory and technical skills and shall submit annual 
5 
reports on such training to the Board: Provided, That employment of foreign nationals 
6 
hired by registered export enterprises in a supervisory, technical or advisory capacity 
7 
shall not exceed five percent (5%) of its workforce without the express authorization of 
8 
the Secretary of DOLE. 
9 
SEC. 15. Incentives to Registered Domestic Enterprises. 
10 
(a) Reduced Tax Rates. - Imposition of a preferential tax rate of fifteen percent (15%) of taxable 
11 
income as defined under Section 31 of the National Internal Revenue Code of 1997, as 
12 
amended. 
13 
(b) Net Operating Loss Carryover (NOLCO) - The net operating loss of the registered domestic 
14 
enterprise during the first five (5) years from start of commercial operation which had not 
15 
been previously offset as deduction from gross income shall be carried over as a 
16 
deduction from gross income for the next five (5) years immediately following the year 
17 
of such loss: Provided, That after the availment of NOLCO of registered domestic 
18 
enterprises under this provision, the pertinent provisions under the National Internal 
19 
Revenue Code of 1997, as amended, shall apply. 
20 
(c) Accelerated Depreciation. - Accelerated depreciation of plant, machinery, and equipment 
21 
that are reasonably needed and actually used for the production and transport of goods 
22 
and services may be depreciated using a rate not exceeding twice the rate which would 
23 
have been used had the armual allowance been computed in accordance with the rules and 
24 
regulations prescribed by the Secretary of Finance and the provisions of the National 
25 
Internal Revenue Code of 1997, as amended. 
26 
Except as otherwise provided in Sections 14 and 15 of this Act, no other fiscal incentives 
27 
shall be granted by PIP A. PIP A shall equip itself with sufficient personnel to ensure that: (I) 
28 
investments acquiring incentives under this Act abide by the strict investment location or 
16 


, 
1 
employment conditions stipulated in Section 3(i) of this Act; and (2) violators will be meted 
2 
appropriate penalties. 
3 
SEC. 16. Incentives to Investors. 
4 
(a) A foreign national who invest's an amount of at least US$150,000 either in cash and/or 
5 
equipment, in a registered enterprise shall be entitled to an Investor's Visa: Provided, That: 
6 
(1) He is at least eighteen (18) years of age; 
7 
(2) He has not been convicted of a crime involving moral turpitude; 
8 
(3) He is not afflicted with any loathsome, dangerous or contagious disease; 
9 
(4) He has not been institutionalized for any mental disorder or disability; 
10 
Provided, further, That as a holder of the Investor's Visa, an alien shall be entitled to 
11 
reside in the Philippines while his investment subsists. For this purpose, he should submit an 
12 
annual report, in the form duly prescribed by the Board for the purpose, to prove that he has 
13 
maintained his investment in the country. Should said alien withdraw his investments from the 
14 
Philippines, then the Investor's Visa issued to him shall automatically expire. 
15 
(b) Foreign persons receiving dividends, interests and royalties from BOI-registered 
16 
enterprises subject to reduced income tax rates under existing income tax treaties, shall after the 
17 
merger of BOI and PEZA by this Act, be entitled to the reduced rates until the expiration of the 
18 
enterprises' registration certificates with the BOI and after such enterprises registered with PIP A: 
19 
Provided, That a favorable ruling is secured from the BIR for this purpose. 
20 
SEC. 17. Refond of Value Added Tax (VAT) Paid on Importation of Goods. - In order to 
21 
facilitate the immediate processing, clearance and release of V AT refunds as provided in this 
22 
Act, a Trust Liability Account (TLA) is hereby authorized to be established in the Bureau of 
23 
Treasury (BTr). All V AT payments on lhe importation of registered export enterprises of capital 
24 
equipment and raw materials shall be deposited in the TLA for the purpose of funding valid VAT 
25 
refund claims. The claims for VAT refunds shall be madeby the registered export enterprise to 
26 
PIP A which, in turn, will process, approve and release the V AT refund. 
27 
The VAT paid on imported capital equipment may be refunded provided that the capital 
28 
equipment is being used by the registered export enterprise pursuant to its registered activity. 
17 


1 
The amount of V AT refund on a particular shipment of raw materials shalI be equivalent 
2 
to the proportion of raw materials used in the production of the exported goods to the total raw 
3 
materials imported multiplied by the amount of V AT paid on such importation. No claim for 
4 
refund shall be allowed on VAT paid on raw materials which are not or no longer intended to be 
5 
used in the registered export activity. 
6 
A registered export enterprise shall file a claim for VAT refund within two (2) years after 
7 
the payment was made. 
AlI amoilnts paid but no longer alIowed for refund shall immediately 
8 
accrue to the general fund of the National Government. 
9 
All applications for VAT refund shall be processed and acted upon within thirty (30) days 
10 
after submission of complete documents. 
The refund shall be in a form of cash or 
11 
managers/cashiers check payable to the registered export enterprise. 
, 
12 
In cases of dispute under the NAT refund mechanism provided in this section, the 
13 
pertinent provisions of the National Internal Revenue Code of 1997, as amended, shall apply. 
14 
The Implementing Rules and Regulations for this Section shall be formulated by PIP A 
15 
DOF, BIR, BOC, BTr and the Department of Budget and Management (DBM), subject to the 
16 
approval of the Board. 
17 
TITLE IV 
18 
REGISTRATION OF ENTERPRISES 
19 
SEC. 18. Qualifications of a Registered Enterprise.· - Other than the qualifications 
20 
specified under Section 3(h) and (i) of this Act, an applicant must also satisfY the following 
21 
conditions to be registered and avail of the incentives provided in this Act: 
22 
(a) He is a citizen of the Philippines, in case the applicant is a natural person, or in case of a 
23 
corporation or partnership or any other association, regardless of nationality, organized 
24 
and/or registered and existing under Philippine laws or Philippine branch of a foreign 
25 
corporation and it must comply with all the qualifications provided under this Act: 
26 
Provided, however, That for purposes of this Act and any law to the contrary 
27 
notwithstanding, a natural~born ASEAN citizen or a corporation effectively controlled by 
28 
ASEAN citizens shall be considered as a Philippine investor; Provided, forther, That the 
18 


j 
investment is made in an activi,ty where the Constitution does not specifically require 
2 
Filipino participation; 
3 
(b) That the activity it will engage in is not within the activities reserved by the Constitution to 
4 
Philippine citizens or corporations owned and controlled by Philippine citizens; and 
5 
(c) That if the applicant is engaged or proposes to engage in undertakings or activities other than 
6 
the registered activities, it shall install an accounting system adequate to identify the 
7 
investments, revenues, costs, and profits or losses of each registered activity undertaken 
8 
by the enterprise separately from the aggregate investment, revenues, costs and profits or 
9 
losses of the whole enterprise, or to establish a separate corporation for each registered 
10 
activity ifPIPA should so require to facilitate proper implementation of this Act. 
j 1 
(d) That if the applicant is already registered in any other IPAs, such registration shall ipso facto 
12 
be cancelled upon registration with PIP A. 
13 
SEC. 19. Application. - Applications shall be filed with PIP A and recorded in a 
14 
registration book. The date appearing therein and stamped on the application shall be considered 
15 
the date of official acceptance. In the event that an enterprise shall transfer to another IP A or 
16 
government assets enjoying incentives will be privatized, only the remaining unutilized 
17 
incentives shall be enjoyed by the enterprise or the transferee, vendee or assignee of the 
18 
government corporation. All applications and their supporting documents filed under this Act 
19 
shall be confidential and shall not be disclosed to any person except with the consent of the 
20 
applicant or upon an order of a court of competent jurisdiction . 
• 
21 
SEC. 20. Criteria Evaluation of Application. - The following criteria will be considered 
22 
in the evaluation of applications for registration: 
23 
(a) Impact of the activity on the overall economy and fiscal sustainability; 
24 
(b) Overall viability of the activity; 
25 
(c) Extent to which investment incentives are redundant; 
26 
(d) The extent of employment and skills and foreign exchange generation; 
27 
(e) The extent to which technological advances axe applied and adapted to local 
28 
conditions; 
I 
I 
29 
Cf) Extent to which the output of the applicant supports national export objectives; 
19 


• 
(g) Extent to which incentives contribute to the reduction of poverty and inequality; and 
2 
(h) The extent to which incentives promote investments that help improve the quality of 
3 
the environment. 
4 
SEC. 21. Approval and Registration Procedures. - The Board shall adopt rules and 
5 
regulations to facilitate action on applications filed with it; prescribe other criteria it may deem 
6 
necessary for the evaluation of applications; devise standard forms for the use of applicants and 
7 
delegate to the regional offices of the PIP A the authority to receive and process applications for 
8 
enterprises to be located in their respective regions. Applications filed shall be considered 
9 
automatically approved if not acted upon by the Board within fifteen (15) working days from 
10 
official acceptance thereof. Deferment by the Board shall be considered as an official action: 
11 
Provided, however, That the Board may defer action on a specific application not more than 
12 
twice and: Provided, finally, That the Board shall act upon the application within ten (10) 
13 
working days from compliance with the cause of the last deferment. 
14 
TITLE V 
15 
BASIC RIGHTS AND GUARANTEES OF REGISTERED ENTERPRISES 
16 
SEC. 22. Protection of Investments. - All investors and registered enterprises are entitled 
17 
to the basic rights and guarantees provided in the Constitution. Among other rights recognized 
18 
by the Government of the Philippines are the following: 
19 
(a) Repatriation of Inve~tments. - In the case of foreign investments, the right to 
20 
repatriate the entire proceeds of the liquidation of the investment in the currency in which the 
21 
investment was originally made and at the exchange rate prevailing at the time of repatriation, 
22 
subject to the provisions of Section 74 of Republic Act No. 265, as amended. For investments 
23 
made pursuant to Executive Order No. 32, series of 1986 and its implementing rules and 
24 
regulations, remittability shall be as provided therein; 
25 
(b) Remittance of Earnings. - In the case of foreign investments, the right to remit 
26 
earnings from the investment in the currency in which the investment was originally made and at 
27 
the exchange rate prevailing at the time of remittance, subject to the provisions of Section 74 of 
28 
Republic Act No. 265, as amended; 
20 


1 
(c) Foreign Loans and Contracts. - The right to remit at the exchange rate prevailing at 
2 
the time of remittance such sums as may be necessary to meet the payments of interest and 
3 
principal on foreign loans and foreign obligations arising from technological assistance contracts, 
4 
subject to the provisions of Section 74 of Republic Act No. 265, as amended; 
5 
(d) Freedom from Expropriation. - There shall be no expropriation by the govermnent of 
6 
the property represented by investments or of the property of the enterprise except for public use 
7 
or in the interest of national welfare or defense and upon payment of just compensation. In such 
8 
cases, foreign investors or enterprises shall have the right to remit sums received as 
9 
compensation for the expropriated property in the currency in which the investment was 
10 
originally made and at the exchange rate at the time of remittance, subject to the provisions of 
11 
Section 74 of Republic Act No. 265, as amended; and 
12 
(e) Requisition of Investment. - There shaH be no requisition of the property represented 
13 
by the investment or of the property of enterprises, except in the event of war or national 
14 
emergency and only for the duration thereof. Just compensation shall be determined and paid 
15 
either at the time of requisition or immediately after cessation of the state of war or national 
16 
emergency. Payments received as compensation for the requisitioned property may be remitted 
17 
in the currency in which the investment was originaHy made and at the exchange rate prevailing 
18 
at the time of remittance, subject to the provisions of Section 74 of Republic Act No. 265, as 
19 
amended. 
20 
TITLE VI 
21 
ADMINISTRATION OF INCENTIVES 
22 
SEC. 23. Certificate of Registration. - A PIPA-registered enterprise shall be issued a 
23 
certificate of registration under the seal of PIP A and the signature of its Director-General and/or 
24 
such other officer or employee of PIPA as the Board may designate and empower for the 
25 
purpose. The certificate shaH be in such form and style as the Board may determine. 
26 
SEC. 24. Validity of Registration. - The certificate of registration issued under this Act 
27 
shall be valid for a period of twenty (20) years from the start of commercial operation. 
21 


• 
1 
SEC. 25. Extension of Period of Availment. - The availment period of the incentives 
2 
provided herein may be extended by PIP A, in the event that the registered enterprise has suffered 
3 
operational force majeure that has impaired its viability, equivalent for the period thereto. 
4 
SEC. 26. Duties and Responsibilities of Other IP As. - The following are the duties and 
5 
responsibilities of the other IP As under this Act: 
6 
( a) Adopt uniform and consistent procedures of administering incentives, monitoring the 
7 
recipients and to coordinate efforts in this regard; 
8 
(b) Adopt and implement systems and procedures affecting trade and customs policies in 
9 
accordance with the requirements established by the DOF; 
10 
(c) Submit data and information to PIPA and DOF as required by any of these agencies 
11 
to ascertain consistency of investments policies and incentives, including their implementation as 
12 
provided in paragraph ( a), and to ensure the proper implementation of systems and procedures 
13 
affecting trade and customs polici~s as provided in paragraph (b); and 
14 
(d) Perform all other duties and responsibilities as may be required by the President. 
15 
SEC. 27. Administration, Implementation and Monitoring of Incentives. - The IPAs shall 
16 
be responsible for the administration and implementation of the incentives granted to their 
17 
respective registered enterprises. The IPAs shall submit to PIP A and DOF their respective annual 
18 
tax expenditures based on the computed costs in terms of revenue foregone on the tax incentives 
19 
granted to their registered enterprises. For proper monitoring, PIP A shall create a single database 
20 
of all incentives provided by all IPAs and all information thereto. Double entry accounting shall 
21 
be done in recording all incentives granted by the government for transparency purposes. The 
22 
DTI, DOF, NEDA and IPAs shall meet regularly to monitor and review the investments and 
23 
incentives granted and submit an ~nnual report to the President and Congress. 
24 
SEC. 28. Payment in Philippine Peso or Foreign Currencies. - PIPA may receive 
25 
Philippine peso or freely convertible foreign currencies as payment of application fees, fines and 
26 
penalties. 
27 
TITLE VII 
28 
SPECIAL ECONOMIC ZONES (ECOZONES) 
22 


1 
SEC. 29. Establishment of Ecozones. - The metes and bounds of each ecozone are to be 
2 
delineated and more particularly described in a proclamation to be issued by the President of the 
3 
Philippines, upon the recommendation of the Board in coordination with municipal and/or city 
4 
council, the National Land Use Coordinating Committee and/or the Regional Land Use 
5 
Committee. 
6 
The ecozones shall be developed through any of the following schemes: 
Private initiative; 
7 
8 
9 
1) 
2) 
3) 
Local government initiative with the assistance of the national government; and 
National Government initiative .. 
10 
Areas to be established as ecozones shall be subject to the evaluation and 
11 
recommendation of the Board, based on a detailed feasibility and engineering study which must 
12 
conform with the following criteria: 
13 
(a) 
The proposed area must be identified as a regional growth center in the Medium-
14 
Term Philippine Development Plan (MTPDP) or by the Regional Development Council; 
15 
(b) 
The existence of required infrastructure in the proposed ecozone, such as roads, 
16 
railways, telephones, ports, airports, etc., and the suitability and capacity of the proposed site to 
17 
absorb such improvements; 
18 
19 
(c) 
(d) 
The availability of water source and electric power supply [or use of the ecozone; 
the extent of vacant lands available for industrial and commercial development 
20 
and future expansion of the ecozone as well as of lands adjacent to the ecozone available for 
21 
development of residential areas for the ecozone employees; 
22 
( e) 
The availability of skilled, semi-skilled and non-skilled trainable labor force in 
23 
and around the ecozone; 
24 
(f) 
The area must have a significant incremental advantage over the existing 
25 
economic zones and its potential profitability can be established; 
26 
(g) 
The area must be strategically located; and 
27 
(h) 
The area must be situated where controls can easily be established to curtail 
28 
smuggling activities. 
23 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
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 ~asily 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 PIP A. 
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 
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. Defense and Security. ,-
The defense of the ecozone and the security of its 
16 
perimeter shall be the responsibility of the National Government in coordination with PIPA. 
17 
Military forces sent by the National Government for the purpose of defense shall not interfere in 
18 
the internal affairs in any of the ecozone and expenditure for these military forces shall be borne 
19 
by the National Government. The PIPA may provide and establish the ecozones' internal 
20 
security and firefighting forces. 
21 
SEC. 32. Relationship of PIPA to Privately-Owned Industrial Estates. - Privately-owned 
22 
industrial estates shall retain their autonomy and independence and shall be monitored by PIP A 
23 
for the implementation of incentives. 
24 
SEC. 33. Administration of the National Building Code Inside the Ecozones. 
25 
The administration and enforcement of the provisons of PD No. 1096, the National 
26 
Building Code of the Philippines (NBCP) in all ecozones and areas owned and administered by 
27 
PIP A shall be vested in the Director-General or his duly authorized representative. He shall 
28 
appoint such qualified personnel as may be necessary to act as building official who shall be 
24 


, 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
charged with the duty of issuing building permits in the different zones. All fees and dues 
collected by the building official under the NBCP shall accrue to PIP A. 
TITLE VIII 
FINAL PROVISIONS 
SEC. 34. Protection of the Environment. - PIPA, in coordination with the appropriate 
agencies, shall take concrete and appropriate steps to enact the proper measures for the 
protection of the environment, and shall coordinate with the Environmental Management Bureau 
of DENR to avoid undue delay in the issuance of the required Environmental Compliance 
Certificate (ECC): Provided, however, That applications for environmental clearances, permits, 
and/or licenses of registered enterprises shall be acted upon by the appropriate government 
agency within one hundred twenty (120) days from date of official acceptance. In the event that 
the appropriate government agency fail'td to act within the aforementioned date, the application 
for the said environmental requirement shall be deemed complied with for purposes of operation 
of the registered enterprise: Provided, finally, That the Board may withdraw the certificate of 
registration issued to the enterprise should the appropriate government agency eventually deny 
the application. 
SEC. 35. SuspenSion and Forfeiture of Incentives of Registered Enterprises, Refund and 
Penalties. - When there is probable cause to believe that the registered enterprise has violated its 
registration terms and conditions, the Board may suspend its availment of incentives after due 
notice and hearing. The Board may impose fines and penalties andlor forfeit the incentives 
granted to the registered enterprise whenever there are violations of the registration terms and 
conditions by the latter, without prejudice to the cancellation of the registration of said 
enterprise: Provided, however, That the Board may cancel or.abate only the imposition of fines. 
In case of cancellation of the certificate of registration granted under this Act, the Board may, in 
appropriate cases, require the refund of incentives availed of and impose corresponding fines and 
penalties. 
Any enterprise which violates any provision of this Act, its implementing rules and 
regulations, the terms and conditions of its registration or any lawful directive of the Board, or in 
the availment of incentives, including all official reports required to be submitted to the Board, 
25 


.\ 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
, 
shall be subject to a fine not to exceed One million pesos (PI,OOO,OOO) but without prejudice to 
the cancellation of its registration: Provided, That any willful commission of fraudulent 
misrepresentation in its application for registration or submission of reports or gross violation of 
this Act and its implementing rules and regulations, a fine of at least One million pesos 
(Pl,OOO,OOO) but not to exceed Ten million pesos (PlO,OOO,OOO) shall be imposed, in addition to 
other penalties that may be imposed by the Board. 
The Board shall prepare a schedule of fines and penalties to be imposed on erring 
registered enterprises depending on the violation incurred, which may be reduced in exceptional 
cases. Responsible officers of such enterprises, including duly appointed external consultants-
agents who knowingly commit, aid or abet the commission of any of the acts mentioned above, 
shall be subject to a fine of not less than One hundred thousand pesos (PlOO,OOO) but not more 
than Three hundred thousand pesos (P300,000). Goverrunent officers and employees who 
participate directly or indirectly in the commission of the foregoing acts shall likewise be liable 
to a fine of not less than One hundred thousand pesos (PIOO,OOO) but not more than Three 
hundred thousand pesos (P300,OOO), in addition to any criminal and administrative penalties 
imposable under the Civil Service Law, Revised Penal Code, Republic Act No. 3019 (Anti-Graft 
And Corrupt Practices Act), Republic Act No. 6713 (Code Of Conduct And Ethical Standards 
For Public Officials) and other: applicable laws. If the offender is a foreign national, the 
foregoing acts shall be grounds (or his summary deportation in addition to the imposable fines 
and penalties above. 
SEC. 36. Implementing Rules and Regulations (IRR). - The OIl, PIPA, OOF, NEOA, 
BIR and BOC shall promulgate the implementing rules and regulations (IRR) within two (2) 
months from the effectivity of this Act. 
SEC. 37. Transitory Provisions. - The incentives already granted to enterprises registered 
with BOl, PEZA, other IP As and under existing investment laws shall continue to be legally 
binding in accordance with the terms and conditions stated in their respective registration 
certificates. Existing enterprises registered with BOl, PEZA and other IP As may opt to register 
with PIP A and be governed by the provisions of this Act prior to the expiration of their existing 
contracts. For activities or entities, whether government or private, whose tax and/or duty 
26 


" 
- ' 
~ 
1 
exemptions or preferential treatment under special laws are withdrawn or repealed by this Act, 
2 
the pertinent provisions of the National Internal Revenue Code of 1997, as amended; the Tariff 
3 
and Customs Code, as amended; and the Local Government Code of 1991, shall apply. 
4 
In addition, dividends, interests and royalties subject to reduced income tax rates under 
5 
existing income tax treaties paid by BOI-registered enterprises to foreign persons shall, after the 
6 
merger of BOI and PEZA by virtue of this Act, be subject to the reduced rates until the 
7 
expiration of the enterprises' registration certificates with the BOI and after such enterprises 
8 
registered with PIP A: Provided, That a favorable ruling is secured from the BIR for this purpose. 
9 
SEC. 38. Revenue Gains or Savings from the Rationalization of Fiscal Incentives. -
• 
10 
Revenue gains or savings from the implementation of this Act shall be utilized exclusively for 
11 
the following purposes: fifty percent (50%) for infrastructure and fifty percent (50%) for 
12 
education purposes. 
13 
Such allocations shall be segregated as separate trust funds by the National Treasury and 
14 
shall be over and above the annual appropriations for similar purposes. 
15 
SEC. 39. Separability Clause. - If any provision of this Act is declared invalid and 
16 
unconstitutional, the other provisions which are not affected thereby shall remain in force and 
17 
effect. 
18 
SEC. 40. Repealing Clauses. - The following laws or provisions of laws are hereby 
19 
repealed: 
20 
(1) Executive Order No. 226, series of 1987 - "The Omnibus Investments Code of 1987"; 
21 
(2) Republic Act No. 7888 - "An Act to Amend Article 7(13) of Executive Order No. 226, 
22 
otherwise known as the Omnibus Investment Code of 1987; 
23 
(3) Republic Act No. 7916, otherwise known as the "Special Economic Zone Act of 1995"; 
24 
(4) Republic Act No. 8748, otherwise known as "An Act Amending Republic Act No. 7916"; 
25 
(5) Presidential Decree No. 66 - "Creating the Export Processing Zone Authority and Revising 
26 
Republic Act No. 5490"; 
27 
(6) Presidential Decree No. 529 - "Granting to Petroleum Exploration Concessionaires under the 
28 
Petroleum Act of 1949 Exemption from Customs Duty and Compensating Tax on 
27 


" 
1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
29 
< 
Importations of Machinery and Equipment, Spare Parts and Materials Required for their 
Exploration Operations"; 
(7) Section 8(d) of Republic 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 of Republic Act No. 6038, and for Other 
Purposes; 
(9) Sections 8, 9 and 10 of Presidential Decree No. 538, entitled "Creating and Establishing the 
PHIVIDEC 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(t) of Presidential Decree No. 705, otherwise known as the "Revised Forestry 
Code"; 
(11) Section 25 of Presidential Decree No. 857, entitled "Providing for the Reorganization of 
Port Administration and Operation Functions in the Philippines, Revising Presidential Decree 
No. 505 Dated July 11, 1974, Creating the Philippine Port Authority, by Substitution, and for 
Other Purposes"; 
(12) Section 16 (a), (b), and (c), and Section 17 (a), (b), (c), (d) and (e) of Presidential Decree 
No. 972, as amended, entitled "Promulgating an Act to Promote an Accelerated Exploration, 
Development, Exploitation, Production and Utilization of Coal"; 
(13) First sentence of the second paragraph of Section 10 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"; 
28 


• 
1 
(14) Sections 2 and 3 of Presidential Decree No. 1362, entitled "Allowing Radio Broadcasting 
2 
and Television Stations to Import Radio or Television Equipment, Spare Parts and Allied 
3 
Technical and Program Materials to be Used Exclusively in tbeir Broadcast Operations 
4 
Subject to Certain Conditions"; 
5 
(15) Section 4 of Presidential Decree No. 1442, entitled "An Act to Promote the Exploration and 
6 
Development of Geothermal Resources"; 
• 
7 
(16) Sections 18, 19, 20 and 21 of Republic Act No. 6847, entitled "An Act Creating and 
8 
Establishing the Philippine Sports Commission, Defining its Powers, Functions and 
9 
Responsibilities Appropriating Funds Therefor, and for Other Purposes"; 
10 
(17) Section 10 (1), (2), (3), (4), (5), and (6) of Republic Act No. 7156, entitled "An Act 
11 
Granting Incentives to Mini-Hydro Electric Power Developers and For Other Purposes"; 
12 
(18) Title 9, Section 21 of Republic Act No. 7306, entitled 
"An Act Providing for the 
13 
Establishment of the People's Television Network, Inc., Defining Its Powers and Functions, 
14 
Providing for Its Sources of Funding and For Other Pnrposes"; 
15 
(19) Section 14 of Republic Act No. 7354, entitled "An Act Creating the Philippine Postal 
16 
Corporation, Defining Its Powers, Functions and Responsibilities, Providing for Regulation"; 
17 
(20) Last sentence of Section 17 of Republic Act No. 7820, entitled "An Act Creating the Partido 
18 
Development Administration,Defining Its Powers and Functions, Providing Funds Therefor, 
19 
and for Other Pnrposes"; 
20 
(21) Section 16 (a), (b), (c), (d), (e) and Section 17 of Republic Act No. 7844, otherwise known 
21 
as the "Export Development Act of 1994"; 
22 
(22) Sections 83, 90, 91, 92 and 93 of Republic Act No. 7942, otberwise known as the 
23 
"Philippine Mining Act of 1995"; 
24 
(23) Section 18 of RepUblic Act No. 8044, entitled "An Act Creating the National Youth 
25 
Commission, 
Establishing 
a 
National 
Comprehensive 
and 
Youth 
Development, 
• 
26 
Appropriating Funds Therefor, and for Otber Purposes"; 
27 
(24) Section 8 of Republic Act No. 8436, entitled "An Act Authorizing the Commission on 
28 
Elections to Use an Automated Election System in tbe May 11, 1998 National or Local 
29 


Elections and in Subsequent National or Local Electoral Exercises, Providing Funds Therefor 
2 
and for Other Purposes"; 
3 
(25) Section 9 of Republic Act No. 8479, otherwise known as the "Downstream Oil Deregulation 
4 
Act of1998"; 
5 
(26) Section 3 a), b), c), d), and h) of Republic Act No. 8502, entitled "An Act to Promote the 
6 
Development of the Jewelry Manufacturing Industry, Providing Incentives Therefor and For 
7 
Other Purposes"; 
8 
(27) Section 35 (b), ( c) and (d) of Republic Act No. 8550, otherwise known as the "Philippine 
9 
Fisheries Code of 1998"; 
10 
(28) Section 26 (A.1, A.1.l, A.1!2) of Republic Act No. 9275, entitled "The Philippine Clean 
11 
Water Act of 2004"; 
12 
(29) Section I of Republic Act No. 9281, entitled "An Act to Strengthen Agriculture and 
13 
Fisheries Modernization in the Philippines by Extending the Effectivity of Tax Incentives 
14 
and its Mandated Funding Sl1pport, Amending for this Purpose Sections 109 and 112 of 
15 
Republic Act No. 8435"; 
16 
(30) Section 3 of Republic Act No. 9290, entitled "An Act Promoting the Development of the 
17 
Footwear, Leather Goods and Tannery Industries, Providing Incentives Therefor and for 
18 
Other Purposes" 
19 
(31) Section 5 of Executive Order No. 80, Series of 1993 - "Authorizing the Establishment of 
20 
the Clark Development Corporation as the Implementing Ann of the Bases Conversion and 
21 
Development Authority for the Clark Special Economic Zone, and Directing All Heads of 
22 
Departments, Bureaus, Offices, Agencies and Instrumentalities of Government to Support the 
23 
Program"; 
24 
(32) Section 5 of Proclamation 216, Series of 1993 - "Creating the Poro Point Special Economic 
25 
Zone Pursuant to Republic Act No. 7227"; 
26 
(33) Section 3 of Proclamation No. 420, Series of 1994 - "Creating and Designating a Portion of 
27 
the Area Covered by the Former Camp John Hay Special Economic Zone Pursuant to 
28 
Republic Act No. 7227"; 
30 


• 
.> 
.. 
1 
(34) Section 6 of Proclamation 984, Series of 1997 - "Creating the Morong Special Economic 
2 
Zone Pursuant to Republic Act No. 7227"; 
3 
(35) Executive Order No. 313, series of 2004, as amended by Executive Order 528, Series of 
4 
2006 - "Modifying the Rates' of Duty on Capital Equipment, Spare Parts and Accessories 
5 
Imported by BOI-Registered New and Exp~ding Enterprises"; and 
6 
(36) Section 7 of Republic Act No 9282, entitled "An Act Expanding the Jurisdiction of the 
7 
Court of Tax Appeals (CTA), Elevating Its Rank to the Level of A Collegiate Court With 
8 
Special Jurisdiction and Enlarging Its Membership, Amending for the Purpose Certain 
9 
Sections of Republic Act No.·1125, as amended, Otherwise Known as the Law Creating the 
10 
Court of Tax Appeals, and for Other Purj:lOses" is modified accordingly to include in its 
11 
jurisdiction cases involving the decisions or actions of PIP A in its VAT refund mechanism; 
12 
, 
I 
All other laws, acts, decrees, orders and issuances or provisions thereof inconsistent with 
13 
any of the provisions of this Act are hereby repealed or modified accordingly. 
, 
14 
SEC. 41. Effectivity. -
This Act shall take effect fifteen (15) days following its 
15 
publication in a newspaper of general circulation in the Philippines. 
Approved, 
31