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Republic of the Philippines
House of Representatives
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILLNo__5538

Introduced by Representative ERICO ARISTOTLE C. AUMENTADO

EXPLANATORY NOTE

This bill seeks to establish the Northern Bohol Special Economic Zone Authority in the
Municipalities of Ubay, Talibon, Buenavista and Getafe, Bohol.

Section 20, Article II of the 1987 Constitution provides:

“The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed
investments.”

The towns of Ubay, Talibon, Buenavista and Getafe is located at the northern part of Bohol,
bounded by Camotes Sea to the North, Bien Unido to East, Inabanga on the West and Talibon on
the Northwest side of Bohol.

Ubay, Talibon, Buenavista and Getafe offers investors, local residents and foreigners a
plethora of opportunities in tourism, business and other trade investments.

This proposed measure seeks to develop the municipalities of Ubay, Talibon,Buenavista
and Getafe into a decentralized, self-reliant and self-sustaining agro-industrial, commercial,
financial, investment and tourist center by attracting legitimate and productive local and foreign
investments. Further, it seeks to generate multiplier industries to augment local government
revenues. It will also afford employment opportunities for the local residents and its neighboring
municipalities and city. With the establishment of the Northern Bohol Ecozone , the vision for
Ubay, Talibon, Buenavista and Getafe to become a more progressive agro-industrial, tourist haven
and globally competitive local government unit will soon be realized.

In view of the foregoing, immediate approval of this bill is earnestly sought.

<i
GaRISTOTLE CAI

ERIC NTADO



Republic of the Philippines
House of Representatives
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 5538

Introduced by Representative ERICO ARISTOTLE C. AUMENTADO

AN ACT
ESTABLISHING A SPECIAL ECONOMIC ZONE IN THE PROVINCE OF
BOHOL, CREATING FOR THAT PURPOSE THE NORTHERN BOHOL
SPECIAL ECONOMIC ZONE AUTHORITY, APPROPRIATING FUNDS
THEREFOR AND FOR OTHER PURPOSES

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

CHAPTER 1
GENERAL PROVISIONS

Section 1. Short Title. - This Act shall be known as the “Northern Bohol Special
Economic Zone Act.”

Section 2. Declaration of Policy. — It is hereby declared the policy of the State to
actively encourage, promote, induce and accelerate the sound and balanced industrial,
economic and social development of the country in order to provide jobs to the people
especially those in the rural areas, increase productivity and individual and family income,
and thereby improve the level and quality of living conditions through the establishment,
among others, of special economic zones and freeport in suitable and strategic locations in
the country and through measures that will attract legitimate and productive foreign
investments.


CHAPTER IL
CREATION OF THE ECOZONE

Section 3. Creation of the Special Economic Zone. ~ In pursuit of the foregoing
declared policy and subject to the concurrence of the concerned local government units
(LGUs) of Bohol affected by the zone, there is hereby established a special economic zone
in the Municipalities of Ubay, Buenavista, Talibon and Getafe to be known as the Northern
Bohol Special Economic Zone, hereinafter referred to as the Northern Bohol Ecozone. The
specific metes and bounds of the Northen Bohol Ecozone shall be more particularly
defined in a presidential proclamation that shall be issued for this purpose.

Section 4. Governing Principles. — The Northern Bohol Ecozone shall be managed
and operated by the Northern Bohol Special Economic Zone Authority, hereinafter referred
to as the NBEZA created under Section 5 of this Act, under the following principles:

(a) Within the framework and limitations of the Constitution and the applicable
provisions of the Local Government Code, the Northern Bohol Ecozone shall be developed.
into and operated as a decentralized, self-reliant and self- sustaining industrial,
commercial/trading, agro-industrial, tourism, banking, financial and investment center
with suitable residential areas;

(b) The Northern Bohol Ecozone shall be provided with transportation,
telecommunications and other facilities needed to attract legitimate and productive
investments, generate linkage industries and employment opportunities for the people of
the Province of Bohol and its neighboring towns and city;

(c) The Northern Bohol Ecozone may establish mutually beneficial economic relations
with other entities or enterprises within the country or, subject to the administrative
guidance of the Department of Foreign Affairs (DFA), the Philippine Economic Zone
Authority (PEZA) or the Department of Trade and Industry (DT!), with foreign entities or
enterprises;

(@) Foreign citizens and companies owned by non-Filipinos in whatever proportion
may set up enterprises in the Northern Bohol Ecozone, either by themselves or in joint
venture with Filipinos in any sector of industry, international trade and commerce within
the Northern Bohol Ecozone;


(e) Goods and capital equipment including spare parts are subject to the tax incentives
provided in this Act;

(f) The areas comprising the Northern Bohol Ecozone may be expanded or reduced
when necessary. For this purpose, the Northem Bohol Ecozone, in consultation with the
LGUs, shall have the power to acquire either by purchase, negotiation or condemnation
proceedings, any private land within or adjacent to the Northern Bohol Ecozone for the
following purposes: (1) consolidation of lands for the Northern Bohol Ecozone
development; (2) acquisition of right-of-way to the Northern Bohol Ecozone; and (3) the
protection of watershed areas and natural assets valuable to the prosperity of the Northern
Bohol Ecozone;

(g) Goods manufactured by a Northern Bohol Ecozone enterprise shall be made
available for immediate retail sale in the domestic market, subject to the payment of
corresponding taxes on raw materials and other regulations that may be formulated by the
NBEZA, together with the PEZA, the Bureau of Customs (BoC) and the DTI in accordance
with the NIRC of 1997, as amended, and the Tariff and Customs Code of the Philippines,
as amended. However, in order to protect domestic industries, a Negative List of industries
shall be drawn up and regularly updated by the PEZA. Enterprises engaged in industries
included in such Negative List shall not be allowed to sell their products locally; and

(h) The defense of the Northern Bohol Ecozone and the security of its perimeter fence
shall be the responsibility of the national government in coordination with the Northern
Bohol Ecozone and the LGUs. For this purpose, a special defense team shall be organized

to define its power, duties and responsibilities.

CHAPTER II
GOVERNING STRUCTURES
Section 5. Creation of the Northern Bohol Spe
— There is hereby created a body corporate to be known as the Northern Bohol Special
Economic Zone Authority, hereinafter referred to as the NBEZA, which shall manage and
operate the Northern Bohol Ecozone in accordance with the provisions of this Act. This

Economic Zone Authority.

corporate franchise shall expire in fifty (50) years counted from the first year after the


effectivity of this Act, unless otherwise extended by Congress. It shall be organized within
‘one hundred eighty (180) days after the effectivity of this Act.

Section 6. Capitalization. The NBEZA shall have an authorized capital stock of
‘two billion (2,000,000,000) no- par shares with a minimum issue of Ten Pesos (P10.00)
each, the majority shares of which shall be subscribed and paid for by the national
government and the LGUs embracing the Northern Bohol Ecozone. The Board of
Directors of the NBEZA may, with the written concurrence of the Secretary of Finance,
sell shares, representing not more than forty per centum (40%) of the capital stock of the
NBEZA to the general public under such policy as the Board and the Secretary of Finance
may determine. The national government and the LGUs shall, in no case, own less than
sixty per centum (60%) of the total issued and outstanding capital of the NBEZA.

The amount necessary to subscribe and pay for the shares of the national government
to the capital stock of the NBEZA shall be included in the annual General Appropriations
Act. For LGUs, the funds shall be taken from their internal revenue allotment and other
local funds.

Section 7. Principal Office of the Northern Bohol Special Economic Zone
Authority. - The NBEZA shall maintain its principal office in the Municipality of Ubay,
Bohol, but it may establish branches within the Philippines as may be necessary for the
proper conduct of its business.

Section 8. Powers and Functions of the Northern Bohol Special Economic
Zone Authority. - The NBEZA shall have the following functions:

(a) Operate, administer, manage and develop the Northern Bohol Ecozone according
to the principles and provisions set forth in this Act;

(b) Recommend to the President of the Philippines the issuance of a proclamation to
fix and delimit the site of the Northern Bohol Ecozone;

(c) Register, regulate and supervise the enterprises in the Northern Bohol Ecozone in
an efficient and decentralized manner, subject to existing laws;

(d) Coordinate with LGUs and exercise general supervision over the development
plans, activities and operations of the Northern Bohol Ecozone;

(©) Authorize or undertake, on its own or through others, and regulate the
establishment, operation and maintenance of public utilities, services, and infrastructure

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in the Northern Bohol Special Economic Zone such as shipping, barging, stevedoring,
cargo handling, hauling, warehousing, storage of cargo, port services or concessions, piers,
wharves, bulkheads, bulk terminals, mooring areas, storage areas, roads, bridges, terminals,
conveyors, water supply and storage, sewerage, drainage, airport operations in
coordination with the Civil Aeronautics Board, and such other services or concessions or
infrastructure necessary or incidental to the accomplishment of the objectives of this Act:
Provided, however, That the private investors in the Northern Bohol Ecozone shall be given
priority in the awarding of contracts, franchises, licenses, or permits for the establishment,
operation and maintenance of utilities, services and infrastructure in the Northern Bohol
Ecozone;

(f) Regulate and undertake the establishment, operation and maintenance of
utilities, other services and infrastructure in the Northern Bohol Ecozone such as, but
not limited to, heat, light and power, water supply, telecommunications, transport, toll
roads and bridges, port services, etc. and to fix just, reasonable and competitive rates,
fares, charges and prices thereof;

(g) Construct, acquire, own, lease, operate and maintain on its own or through
contracts, franchise, licenses, bulk purchase from the private sector or permits under any
of the schemes allowed in Republic Act No. 6957 (the Build-Operate-Transfer Law, as
amended), or joint venture, adequate facilities and infrastructure required or needed for the
operation and development of the Northern Bohol Ecozone, in coordination with
appropriate national and local government authorities and in conformity with applicable
laws thereon;

(h) Operate on its own, either directly or through licenses to others, tourism-related
activities and sports facilities, such as golf courses and others, under priorities and
standards set by NBEZA;

(i) Subject to the approval of the President of the Philippines and the Monetary
Board of the Bangko Sentral ng Pilipinas (BSP), upon the recommendation of the
Department of Finance (DOF), to raise or borrow adequate and necessary funds from local
or foreign sources to finance its projects and programs under this Act and for that purpose,

to issue bonds, promissory notes and other forms of securities, and to secure the same by a


guarantee, pledge, mortgage, deed of trust or an assignment of all or part of its property or
assets;

(j) Provide security for the Northern Bohol Ecozone in coordination with the
national and local governments. Military forces sent by the national government for the
purpose of defense shall not interfere in the internal affairs of the Northem Bohol Ecozone
and expenditures for these military forces shall be borne by the national government. For
this purpose, the NBEZA may establish and maintain its security forces and firefighting
capability or hire others to provide the same;

(k) Protect, preserve, maintain and develop the forests, beaches, coral and coral
reefs, and maintain ecological balance within the Northern Bohol Ecozone;

(1) Create, operate and/or contract to operate such functional units or offices of the
NBEZA as it may deem necessary;

(m) Adopt, alter and use a corporate seal; contract, lease, buy, acquire, own or
otherwise dispose of personal and/or real property of whatever nature; sue and be sued;
and otherwise carry out its functions and duties as provided for in this Act;

(n) Issue certificates of origin for products manufactured or processed in the Northern
Bohol Ecozone in accordance with prevailing rules of origin and the pertinent regulations
of the PEZA, the DTI and/or the DOF;

(0) Issue working visas renewable every two (2) years to foreign executives and
foreign technicians with highly specialized skills which no Filipino possesses, as certified
by the Department of Labor and Employment (DOLE);

(p) Report to the Bureau of Immigration (BI) the names of the foreigners who have
been granted permanent resident status and working visas within thirty (30) days after
issuance of such grant;

(q) Exercise such powers as may be essential, necessary or incidental to the powers
granted to it hereunder, as well as those that shall enable it to carry out, implement and
accomplish the purposes, objectives and policies of this Act; and

(r) Issue rules and regulations consistent with the provisions of this Act as may be
necessary to accomplish and implement the purposes, objectives and policies provided
herein.


Section 9. Applicability Clause. - The provisions of Sections 30 to 41 of Republic
Act No. 7916 (The Special Economic Zone Act of 1995), as amended, on leases of lands
and buildings, land conversion, shipping and shipping register, protection of environment,
termination of business, registration of business enterprises, one-stop shop center and on
industrial harmony in the ecozones shall apply to the NBEZA.

Section 10. Tax Exemptions. — The NBEZA is hereby declared exempt from the
payment of all taxes, duties, fees, imports, charges, costs, and service fees in any court or
administrative proceedings in which it may be a party.

The foregoing exemptions may, however, be entirely or partially lifted by the
President of the Philippines upon the recommendation of the Secretary of Finance, not
earlier than five (5) years from the effectivity of this Act, if the President shall find the
NBEZA to be self-sustaining and financially capable by then to pay such taxes, customs
duties, fees and other charges after providing for debt service requirements of the NBEZA
and of its projected capital and operating expenditures.

Furthermore, all donations made by any person or entity in favor of the NBEZA
shall be exempt from the payment of the donor’s tax and the same shall be considered as
deductible from the gross income of the donor, pursuant to the NIRC of 1997, as amended.

Section 11. Admi

istration, Implementation and Monitoring of Incentives. - The
NBEZA shall be responsible for the administration and implementation of the incentives
granted to its respective registered enterprises: Provided, That any incentive policy
adopted by the BOI for incentives common to all registered enterprises shall be uniformly
applied by the NBEZA.

The following are the duties and responsibilities of the NBEZA in the administration
of incentives:

(a) Adopt consistent procedures of administering incentives in accordance with the
guidelines established by the BOI and to amend the same when necessary;

(b) Adopt and implement systems and procedures affecting trade and customs
policies in accordance with the requirements established by the DOF and the BOI and to
amend the same when necessary;

(c) Submit data and information to the DOF and the BOI as required by any of these

agencies to ascertain consistency of investment policies and incentives, including their


implementation as provided in (a) and to ensure proper implementation of systems and
procedures affecting trade and customs policies as provided in (b); and

(d) Perform all other duties and responsibilities as may be required by the President
of the Philippines

For proper monitoring, the BOI shall create a single database of all incentives
provided by all incentives-granting agencies, including the NBEZA and all information
thereto. Double-entry accounting shall be done by the BOI in recording all incentives
granted by the government for transparency purposes.

Section 12. Board of Directors. - The powers of the NBEZA shall be vested in and
exercised by a board of directors, hereinafter referred to as the Board, which shall be
composed of the following:

(a)The chairperson who shall, at the same time, be the administrator of the NBEZA;

(©) A vice chairperson who shall come from among the members of the Board;

(©) The members who shall consist of:

1. The governor of the Province of Bohol,
‘The mayors of the municipalities of Ubay, Buenavista, Talibon and Getafe;
One (2) representative from the domestic investors;
One (1) representative from the foreign investors; and

yeep

One (1) labor representative from among the workers in the Northern Bohol
Ecozone.

The governor and the mayors of the municipalities of Ubay, Buenavista, Talibon
and Getafe shall serve as ex officio members of the Board, whose terms in the Board
correspond to their terms of office.

The chairperson and the members of the Board, except the ex officio members, shall
be appointed by the President of the Philippines to serve for a term of six (6) years unless
sooner removed for cause or dies or resigns voluntarily. In case of death, resignation or
removal for cause, the replacement shall serve only the unexpired portion of the term.

Except for the representatives of the business and labor sectors, no person shall be
appointed by the President of the Philippines as a member of the Board unless he is a
Filipino citizen, of good moral character, of proven probity and integrity, and a degree
holder in any of the following fields: economics, business, public administration, law,


management or their equivalent, and with at least ten (10) years relevant working
experience preferably in the field of management or public administration.

The members of the Board shall each receive per diem at rates to be determined by
the Department of Budget and Management (DBM) in accordance with existing rules and
regulations: Provided, however, That the total per diem collected each month shall not
exceed the equivalent per diem for four (4) meetings. Unless and until the President of the
Philippines has fixed a higher per diem for the members of the Board, such per diem shall
not be more than Ten Thousand Pesos (P10,000.00) for every Board meeting,

Section 13. Powers and Duties of the Chairperson-Administrator. The
chairperson-administrator shall have the following powers and duties:

(a) Direct and manage the affairs of the NBEZA in accordance with the policies of
the Board;

(b) Establish the internal organization of the NBEZA under such conditions that
the Board may prescribe;

(c) Submit an annual budget and necessary supplemental budget to the Board for
its approval;

(d) Submit within thirty (30) days after the close of each fiscal year an annual report
to the Board and such other reports as may be required;

(ce) Submit to the Board for its approval policies, systems, procedures, rules and
regulations that are essential to the operation of the Northern Bohol Ecozone;

(f) Create a mechanism in coordination with relevant agencies for the promotion
of industrial peace, the protection of the environment and the advancement of the quality
of life; and

(g) Perform such other duties as may be assigned to him/her by the Board or which
are necessary or incidental to his/her office.

Section 14. Organization and Personnel. — The Board of Directors of the NBEZA
shall provide for its organization and staff. Upon the recommendation of the chairperson-
administrator, the Board shall appoint and fix the remuneration and other emoluments of
its officers and employees in accordance with existing laws on compensation and position
classification: Provided, That the Board shall have exclusive and final authority to

promote, transfer, assign or reassign officers of the NBEZA, any provision of existing law

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to the contrary notwithstanding: Provided, further, That the chairperson-administrator may
carry out removal of such officers and employees.

The officers and employees of the NBEZA, including all members of the Board,
shall not engage directly or indirectly in partisan activities nor take part in any election,
except to vote.

No officer or employee of the NBEZA, subject to civil service laws and regulations,
shall be removed or suspended except for cause, as provided by law.

Section 15. General Manager. — The Board of Directors of the NBEZA shall
appoint a full-time professional and competent chief executive officer for the NBEZA
whose compensation shall be determined by its Board of Directors and shall be in
accordance with the revised compensation and position classification system. The general
manager as chief executive officer of NBEZA shall be responsible to the Board and to the
President of the Philippines for the efficient management and operation of the NBEZA.

Section 16. Legal Counsel. — The NBEZA shall have its own internal legal counsel
under the supervision of the government corporate counsel. When the exigencies of its
businesses and operations demand it, the NBEZA may engage the services of an outside

counsel either on a case to case or on a fixed retainer basis.

CHAPTER IV
INCENTIVES TO ECOZONE ENTERPRISES/INVESTORS

Section 17. Incentives to Registered Enterprises. The NBEZA shall provide the
following incentives to the registered enterprises located therein to the extent of the
activity/project:

(a) Income Tax Holiday (ITH) ~ Registered enterprises shall be entitled to a
maximum of six (6) years ITH depending on BOI classification of the firm.

Enterprises registered with the NBEZA are required to share in the special
development fund of the BOI for investment promotion projects of the government
equivalent to one percent (1%) of the ITH granted for every application.

The Bureau of Internal Revenue (BIR) shall require a registered enterprise availing
of the ITH or the net operating loss carryover (NOLCO) to secure a certificate of eligibility

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from the NBEZA before submitting its income tax return (ITR) with the NBEZA for
validation,

Failure to secure certification and/or to file the ITH or the NOLCO availment for
validation by the NBEZA within forty-five (45) days from the last day of statutory filing
date for ITR shall cause the forfeiture of the availment for the taxable period.

(6) NOLCO- The net operating loss of the business or enterprise during the first three
(3) years from the start of commercial operations which have not been previously offset as
a deduction from the gross income shall be carried over as a deduction from the gross
income for the next five (5) consecutive years immediately following the year of such loss:
Provided, however, That operating loss resulting from the availment of incentives provided
in this Code shall not be entitled to NOLCO.

Registered enterprises availing of the ITH as herein provided shall not be entitled to
avail of the NOLCO.

(©) Imposition of a Tax Rate of Five Percent (5%) on Gross Income Eamed (GIE) —
Except for real property tax on land, no local and national taxes, as prescribed under
Republic Act No. 8424, also known as “the National Internal Revenue Code of 1997, as
Amended”, such as the income tax, the excise tax and the franchise taxes shall be imposed
on business establishments operating within the Northen Bohol Ecozone. In lieu thereof,
there shall be imposed a tax rate of five percent (5%) of the gross income earned by all the
business enterprises with the NBEZA and remitted as follows:

(1) Three per cent (3%) to the National Government; and

(2) Two per cent (2%) which shall be directly remitted by the business
establishments to the treasurer’s office of the municipality or city where the enterprise is
located. Alll persons and service establishments in the Northern Bohol Ecozone that are not
covered by Section 17 hereof shall be subject to national and local taxes under the NIRC
of 1997, as amended, and the Local Government Code.

(d) Accelerated Depreciation - Accelerated depreciation of plant, machinery and
equipment that are reasonably needed and actually used for the production and transport of
goods and services may be allowed using a rate not exceeding twice the rate which would
have been used had the annual allowance been computed in accordance with the rules and


regulations prescribed by the Secretary of Finance and the provisions of the NIRC of 1997,
as amended.

(©) Capital Equipment Incentives ~ Importations of capital equipment, spare parts,
tools and dye, or those required for pollution abatement and control, cleaner production
and waste reduction including consignment thereof by registered enterprises upon the
effectivity of this Act shall be exempted to the extent of one hundred percent (100%) of
the taxes and customs duties: Provided, That the importation thereof shall be used
exclusively by the registered enterprise in its registered activity within the Northem Bohol
Ecozone: Provided, further, That the importation of machinery and equipment and
accompanying parts shall comply with the following conditions

(1) These are not manufactured domestically in sufficient quantity, of
comparable quality and at reasonable prices;

(2) These are reasonably needed and will be used exclusively by the registered
enterprise in the manufacture of its products, unless prior approval of the
NBEZA is secured for the part-time utilization of said equipment in a non-
registered activity to maximize usage thereof or the proportionate taxes and
duties are paid on a specific equipment and machinery being permanently
used for non-registered activities; and

(3) Approval of the NBEZA was obtained by the registered enterprise for the
importation of such machinery, equipment and spare parts

Approval of the NBEZA must be secured before any sale, transfer or disposition of
the imported capital equipment, machinery or spare parts is made: Provided, That if such
sale, transfer or disposition is made within the first five (5) years from the date of
importation, any of the following conditions must be present:

(i) If'made to another enterprise enjoying tax and duty exemption on imported
capital equipment;

(ii) If made to another enterprise not covered by part (i), upon payment of the
taxes and duties on the net book value of the capital equipment to be sold;

(iii)If exportation of the capital equipment, machinery, spare parts or source
documents are required for pollution abatement and control; and

(iv)For reasons of proven technical obsolescence.

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When the aforementioned sale, transfer or disposition is made under any of the
conditions provided for in the foregoing paragraphs other than paragraph (ii), the registered
firm shall not pay the taxes and duties waived on such items: Provided, further, That if the
registered enterprise sells, transfers or disposes the aforementioned imported items without
prior approval within five (5) years from the date of importation, the registered enterprise
and the vende, transferee or assignee shall be solidarily liable to pay twice the amount of
the tax and duty exemption given it: Provided, finally, That even if the sale, transfer or
disposition of the capital equipment, machinery or spare parts is approved after five (5)
years from the date of importation, the registered enterprise is still liable to pay the taxes
and duties based on the net book value of the capital equipment, machinery or spare parts
if it has violated any of its registration terms and conditions. Otherwise, it shall no longer
be subject to the payment of the taxes and duties waived thereon.

The purchase of machinery and capital equipment and raw materials, supplies, parts
and semi-finished products used in the fabrication of machinery and capital equipment by
a registered export-oriented enterprise from a domestic manufacturer shall be subject to
zero percent (0%) value-added tax.

The registered export-oriented enterprise shall be granted a tax credit equivalent to
the amount of duties that would have been waived on the machinery, capital equipment
and raw materials, supplies, parts and semi-finished products used in the fabrication of
machinery and capital equipment, had these items been imported, upon its submission to
the DOF of the bill of materials evidencing the transaction value of such and other pertinent
documents, for verification and proper endorsement.

The registered export-oriented enterprise availing of the incentives provided under
the immediately preceding two (2) paragraphs shall be subject to the following: (i) that
said capital equipment, machinery and spare parts will be used exclusively by the registered
enterprise in its registered activity; (ii) that the capital equipment or machinery where the
raw materials, supplies, parts and semi-finished products were used would have qualified
for tax-and duty-free importation; and (iii) that the approval of the NBEZA is obtained by
the registered enterprise. If the registered enterprise sells, transfers or disposes of these
machineries, capital equipment and spare parts, the provision in the preceding paragraphs
for such disposition shall apply.


This incentive shall be deemed waived if application for tax credit under this
subsection is not filed within one (1) year from the date of delivery.

(f) Tax-and Duty-Free Importation - The importation of source documents by
information technology-registered enterprises shall be eligible for tax-and duty-free
importation.

(g) Raw Material Incentives — Every registered export-oriented enterprise shall enjoy
a tax credit equivalent to the internal revenue taxes and customs duties paid on the supplies,
raw materials and semi-manufactured products: Provided, That the same are not sufficient
in quantity, quality or are not competitively priced which are used in the manufacture,
processing or production of its export products forming part thereof, exported directly and
indirectly by the registered export-oriented enterprise based on the actual taxes and duties
paid for such materials/supplies/semi-manufactured products by the registered enterprise.

This incentive shall be deemed waived if application for tax credit under this
subsection was not filed within one (1) year from the date of exportation of the final
product.

(h) Incentives on Breeding Stocks and Genetic Materials — Importation of breeding
stocks and genetic materials within ten (10) years from the date of registration of
commercial operation of the enterprise shall be exempt from alll taxes and duties: Provided,
That such breeding stocks and genetic materials are reasonably needed in the registered
activity and approved by the NBEZA.

The availment of the incentives by a registered enterprise shall be subject to the
following: (i) that said breeding stocks and genetic materials would have been qualified
for tax- and duty-free importation under the preceding paragraph; (ii) that the breeding
stocks and genetic materials are reasonably needed in the registered activity; (iii) that
approval of the NBEZA has been obtained by the registered enterprise; and (iv) that the
purchase is made within ten (10) years from the date of registration of commercial
operation of the registered enterprise.

This incentive shall be deemed waived if application for tax credit under this
subsection is not filed within one (1) year from the date of delivery.

(i) Exemption From Wharfage Dues - The provisions of law to the contrary
notwithstanding, exports by a registered enterprise shall be exempted from wharfage dues.

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() Deferred Imposition of the Minimum Corporate Income Tax ~ The minimum
corporate income tax (MCIT) of two percent (2%) of the gross income as of the end of the
taxable year shall be imposed when the MCIT is greater than the income tax computed
under the NIRC of 1997, as amended, for the taxable year: Provided, however, That said
MCIT shall be imposed only after the enterprise’s entitlement period to the income tax-
based incentives.

(k) Tax Treatment of Goods and Services in the Northern Bohol Ecozone. — The
treatment of goods and services in the NBEZA shall be as follows:

1) Tax Treatment of Merchandise - The free trade/freeport zone shall be

operated and managed as a separate customs territory ensuring free flow or

movement of goods within, into and exported out of the free trade/freeport zone.

Importations of raw materials and capital equipment are tax- and duty-free.

However, exportations or removal of goods from the free trade/freeport zone to

the other parts of the Philippine territory shall be subject to customs and internal

revenue regulations:

(i) Except as otherwise provided in this Act, foreign and domestic merchandise,
raw materials, supplies, articles, equipment, machineries, spare parts and
wares of every description, except those prohibited by law, brought into the
zone to be sold, stored, broken up, repacked, assembled, installed, sorted,
cleaned, graded or otherwise processed, manufactured, mixed with foreign or
domestic merchandise, whether directly or indirectly related in such activity,
shall not be subject to customs and internal revenue laws and regulations nor
to local tax ordinances, any provision of law to the contrary notwithstanding;

(ii) Merchandise purchased by a registered Northern Bohol Ecozone enterprise,
from the customs territory and subsequently brought into the export
processing zone, shall be considered as export sales and exportation thereof
shall be entitled to the benefits allowed by law for such transaction;

(iii) Domestic merchandise sent from the Northern Bohol Ecozone to the
customs territory shall, whether or not combined with or made part of other
articles likewise of local origin or manufactured in the Philippines while in

the export processing zone, be subject to internal revenue laws of the

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Philippines as domestic goods sold, transferred or disposed of for local
‘consumption;

(iv)Merchandise sent from the Northern Bohol Ecozone to the customs territory
shall, whether or not combined with or made part of other articles while in the
zone, be subject to rules and regulations governing imported merchandise.
The duties and taxes shall be based on the value of said imported materials
(except when the final product is exempt);

(v) Domestic merchandise on which all internal revenue taxes have been paid, if
subject thereto, and foreign merchandise previously imported on which has
been paid, or which have been admitted free of duty and tax, may be taken
into the Northern Bohol Ecozone from the customs territory of the Philippines
and be brought back thereto free of quotas, duty or tax;

(vi)Subject to such regulations respecting identity and safeguarding of revenue
as the NBEZA may deem necessary, when the identity of an article entered
into the export processing zone under the immediately preceding paragraph
has been lost, such article when removed from the zone and taken to the
customs territory shall be treated as foreign merchandise entering the country
for the first time, under the provisions of the Tariff and Customs Code of the
Philippines, as amended;

(vii) Articles produced or manufactured in the Northern Bohol Ecozone and
exported therefrom shall, on subsequent importation into the customs
territory, be subject to the import laws applicable to like articles manufactured
ina foreign country; and

(viii) Unless the contrary is shown, merchandise taken out of the export
processing zone shall be considered for tax purposes to have been sent to
customs territory.

2) Tax Treatment of Services — (i) Sale of service by an entity from the customs

territory to a registered ecozone or free trade enterprise, or by a registered ecozone

or freeport enterprise to another ecozone or freeport enterprise shall be treated as
indirect export and, hence, entitled to the benefits allowed by law for such
transaction; and (ii) Sale or service by a registered ecozone or freeport enterprise

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er Ane enea

to the customs territory shall be subject to applicable internal revenue laws and
regulations.

() Bonded Warehousing System - Registered export-oriented enterprise shall have
access to the utilization of the bonded warehousing system in accordance with the rules
and regulations of the BoC.

(m) Employment of Foreign Nationals ~ Subject to the provisions of Section 29 of
Commonwealth Act No. 613 otherwise known as “The Philippine Immigration Act of
1940”, as amended, a registered enterprise may employ foreign nationals in supervisory or
technical positions for a period not exceeding ten (10) years from its registration: Provided,
‘That when the majority of the capital stock of a registered enterprise is owned by foreign
investors, the positions of the president, treasurer and general manager or their equivalents
may be retained by foreign nationals beyond the period set forth herein and such officer is
the owner or a stockholder owning at least ten percent (10%) of the outstanding capital
stock of the registered enterprise and he/she remains the owner or maintains his
stockholdings therein.

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 to
enter and reside in the Philippines during the period of employment of such foreign
nationals. They shall be issued multiple-entry visas, renewable every two (2) years, and
shall be allowed to enter and leave the Philippines without further documentary
requirements other than valid passports or other travel documents in the nature of passports.

The foreign nationals admitted herein, as well as their respective spouses and
dependents, shall be exempt from: (i) obtaining alien certificates of registration and
emigration clearance certificates; and (ii) securing the alien employment permits (AEP)
and all types of clearances, permits, licenses or their equivalents required by any
government department or agency.

Section 18, Extension of Period of Availment. — The availment period of the
incentives provided herein may be extended by the NBEZA in the event that the registered
enterprise suffers operational force majeure or any event equivalent thereto, impairing its

viability


Section 19, Duration of Incentives. — Enterprises registered with the NBEZA may
enjoy ITH, NOLCO and five percent (5%) Gross Income Earned (GIE) granted by the
BNEZA sequentially.

Fiscal incentives under this Act shall be terminated after a cumulative period of
twenty (20) years from the date of registration or the start of commercial operation,
whichever is applicable, except that it could be extended with regard to industries deemed
indispensable to national development as determined by NBEZA.

The industries exempted from this provision shall be recommended by the BOI,
with the concurrence of the secretaries of the DOF and the DTI.

Section 20. Incentive to Investors. ~ Any foreign national covered under subsection
(m) of Section 17 of this Act, who invests an amount of One Hundred Fifty Thousand US
Dollars (US$150,000.00), either in cash and/or equipment, in a registered enterprise shall
be entitled to an investor’s visa: Provided, That, the investor

(a) is at least eighteen (18) years of age;

(b) has not been convicted of a crime involving moral turpitude;

(©) is not afflicted with any loathsome, dangerous or contagious disease; and

(@) has not been institutionalized for any mental disorder or disability: Provided,
‘further, That in securing the investor’s visa, the alien-applicant shall be entitled to the same
privileges provided for under Section 17(m), last paragraph.

As a holder of an investor’s visa, an alien shall be entitled to reside in the
Philippines while his investment subsists. For this purpose, he shall submit an annual
report, in the form duly prescribed for the purpose, to prove that he has maintained his
investment in the country. Should said alien withdraw his investments from the

Philippines, then the investor’s visa issued to him shall automatically expire

Section 21. Banking Rules and Regulations. — Banks and financial institutions to
be established in the Northern Bohol Ecozone shall be under the supervision of the BSP
and shall be subject to existing banking laws, rules and regulations.

Section 22, Remittance of Earnings. In the case of foreign investments, a registered
enterprise in the NBEZA shall have the right to remit earnings from the investment in the
currency in which the investment was originally made and at the exchange rate prevailing

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at the time of remittance, subject to the provisions of Republic Act No. 7653, otherwise
known as the New Central Bank Act, as amended.

CHAPTER V
NATIONAL GOVERNMENT AND OTHER ENTITIES
Section 23. Interpretation/Construction. — The powers, authorities and functions
that are vested in the NBEZA are intended to decentralize governmental functions and
authority and promote an efficient and effective working relationship among the Northern
Bohol Ecozone, the national government and the LGUs.

Section 24. Supervision and Coordit

tion of Development Plans. ~ For
purposes of policy direction and coordination, the Northem Bohol Ecozone shall be under
the direct control and supervision of the Office of the President of the Philippines.

Section 25. Authority of the Bureau of Customs to Examine the Entry and
Exit of Imported Articles in the Northern Bohol Economic Zone. - The BoC, in
coordination with the appropriate government agencies such as, but not limited to, the
Departments of Trade and Industry, Agriculture, Transportation and Communications, and
Health shall have the authority to examine the entry and exit of imported articles in the
Northern Bohol Special Economic Zone for the purpose of determining: (i) the quantity
and description of subject imported articles, and (ii) the compliance with the sanitary and
agricultural requirements.

Section 26. Relationship with the Regional Development Council. — The
NBEZA shall determine the development goals for the Northern Bohol Ecozone within the
framework of national development plans, policies and goals. The administrator shall,
upon approval by the Board, submit the Northern Bohol Ecozone plans, programs and
projects to the Regional Development Council for inclusion and inputs to the overall
regional development plan.

Section 27. Relationship with LGUs. — Except as herein provided, the LGUs
comprising the Northern Bohol Ecozone shall retain their basic autonomy and identity.
‘The municipalities of Ubay, Talibon, Buenavista and Getafe shall operate and function in
accordance with the Local Government Code of 1991. In case of any conflict among the
NBEZA and the municipalities of Ubay, Buenavista, Talibon and Getafe on matters

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affecting the Northern Bohol Ecozone other than defense and security matters, the decision
of the NBEZA shall prevail.

Section 28. Auditing, - The Commission on Audit shall appoint a representative
who shall be a full-time auditor of the NBEZA and assign such number of personnel as
may be necessary to assist said representative in the performance of his/her duties. The
salaries and emoluments of the assigned auditor and personnel shall be in accordance with

pertinent laws, rules and regulations.

CHAPTER VI.
MISCELLANEOUS
Section 29. Separability Clause. — If any provision of this Act shall be held

unconstitutional or invalid, the other provisions not otherwise affected shall remain in full
force and effect.

Section 30. Repealing Clause. — All laws, executive orders or issuances, or any
part thereof which are inconsistent herewith are hereby repealed or amended accordingly.

Section 31. Effectivity Clause. — This Act shall take effect fifteen (15) days after
its publication in at least two (2) national newspapers of general circulation.

Approved,

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