NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES )
Second Regular Session 
)
SENATE 
S. no.2654
oftiKC i-pi' • '
24 MAY-6 P12 29
ftl:.CEiVtD QV:
/
Introduced by SEN. WIN GATCHALIAN
AN ACT
ENHANCING PHILIPPINE TAX INCENTIVES, AMENDING FOR THE 
PURPOSE SECTIONS 112, 293, 294, 295, 296, 297, 300, 301, 309, 310, 
AND 311 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS 
AMENDED, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Republic Act No. 11534, otherwise known as the "Corporate Recovery and Tax 
Incentives for Enterprises (CREATE) Act", was enacted on February 3, 2021 to help 
our country become more competitive with its peers in the region by lowering 
corporate income tax rates and rationalizing fiscal incentives granted to registered 
business enterprises (RBE), making the fiscal incentives regime time-bound, 
performance-based, targeted, and transparent. Based on the data from Department 
of Finance, a total of 910 projects with total investments of PhP 1.02 trillion varying 
across priority sectors listed in the Strategic Investment Priority Plan (SIPP) have been 
approved under the CREATE Act as of October 2023.1
However, after three years from its passage, investors and industry groups 
noted the lack of clarity and consistency in the implementing rules and regulations of 
CREATE Act which leads to the vagueness on the tax liabilities of RBEs. Major concerns 
in the implementation of the CREATE Act include the entitlement to the VAT zero­
rating on local purchases incentive which requires the taxpayer to prove that such 
purchases are "directly and exclusively" used in their registered activities. This gives
1 Gonzales, A., Philippine News Agency: "CREATE law attracts more than Pl-Tinvestments" available 
at: https://www.pna.gov.ph/articles/1216347 dated January 4, 2024 (Date last accessed: May 2, 
2024).


the Bureau of Internal Revenue (BIR) a wide discretion on what to consider "direct" 
and "exclusive", resulting to the imposition of 12% VAT on local purchases. Another 
major issue is the denial of the requests to allow work-from-home arrangements for 
RBEs in the information technology and business process management (U-BPM) 
sector, which was crucial during the pandemic when the mobility of the employees 
was limited, and which was also seen to be helpful in terms of employee attraction 
and retention.2 Corporations are also facing delays in receiving VAT refunds "with the 
situation growing so dire that some companies are considering withdrawing from the 
market. Even after submitting the proper paperwork, the BIR continues to deny the 
rebates by citing rules not clearly written in the tax laws or other laws and regulations. 
Many companies are giving up on the VAT rebate due to the time, labor, and costs of 
dealing with the BIR."3 These issues that hound the implementation of CREATE Act 
"may have a crippling consequence on the parts localization initiatives of exporters 
and particularly affect their local suppliers who will be more at risk should they lose 
their market."4
In order to address the foregoing issues, this bill carries the following key 
features:
1. Amends the applicability of duty exemption, VAT exemption on importation of 
capital equipment, raw materials, spare parts, or accessories and VAT zero­
rating on local purchases from "directly and exclusively used" in registered 
project or activity to "directly attributable";
2. Allows RBEs in the IT-BPM sector to institute a telecommuting program 
pursuant to the Telecommuting Act, including work-from-home arrangements
2 Basilio, K., BusinessWorld: "CREATE MORE's WFH features seen attracting talent to IT-BPM 
industry" available at: https://www.bworldonline.eom/economy/2024/03/31/584809/create-mores- 
wfh-features-seen-attracting-talent-to-it-bpm-industry/ dated March 31, 2024 (Date last accessed: 
May 2, 2024)
3 Shiga, Y., Nikkei Asia: "Philippines risks losing foreign investment over delayed tax rebates", 
available at: https://asia.nikkei.com/Politics/Philippines-risks-losing-foreign-investment-over-delayed- 
tax-rebates dated October 6, 2023 (Date last accessed: May 6, 2024)
4Taburada K. and Moncada, L., Colliers: "CREATE-ing MORE opportunities: Proposed amendments to 
the CREATE Law", available at: https://www.colliers.com/en-ph/news/create-more-bill-proposed- 
amendments-certified-urgent dated January 17, 2024 (Date last accessed: May 2, 2024)


exclusively within the geographical boundaries of the economic zone or freeport 
not more than 50% of the total workforce;
3. Transfers the mandate to process VAT refund claims from the BIR to the 
Revenue Operations Group under the Department of Finance;
4. Imposes two percent (2%) RBE local tax (RBELT) based on gross sales in lieu 
of all local taxes for RBEs availing the enhanced deductions regime;
5. Allows RBEs to elect an enhanced deductions regime after the entitlement to 
income tax holiday;
6. Grants one hundred percent (100%) additional deduction for power cost, to 
make us competitive with other countries in the region with lower power rates;
7. Amends the application period of the net operating loss carryover to five (5) 
years after the end of the income tax holiday period; and
8. Exempts donation of capital equipment, raw materials, spare parts, or 
accessories by RBEs to government agencies and political subdivisions.
Once enacted, this bill will clarify the rules and policies on the administration of 
the fiscal incentives regimes, paving the way to a more stable investment climate and 
attracting new investors to come and old investors to stay in our country.
In view of the foregoing, the passage of this measuft rnestly sought
ATCHALIAN


NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
Second Regular Session
SENATE
S. No. 2654
i©ffitP cf 111? fe'-ci
24 may-6
R2 :29
Introduced by Senator Win Gatchalian
AN ACT
ENHANCING PHILIPPINE TAX INCENTIVES, AMENDING FOR THE 
PURPOSE SECTIONS 112, 293, 294, 295, 296, 297, 300, 301, 309, 310, 
AND 311 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS 
AMENDED, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
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SECTION 1. Section 112 of the National Internal Revenue Code of 1997, as
2 
amended, is hereby further amended to read as follows:
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"SEC. 112. Refunds of Input Tax. -
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"(A) Zero-rated or Effectively Zero-rated Sales. - xxx
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"(B) Cancellation of VAT Registration. - xxx
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"(C) Period within which-Refund of Input Taxes shall be Made. - In
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proper cases, the [CommiGSioner] SECRETARY OF FINANCE shall grant
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a refund for creditable input taxes within ninety (90) days from the date
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of submission of the official receipts or invoices and other documents
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SPECIFICALLY PRESCRIBED BY THE SECRETARY, WHICH SHALL
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BE DEEMED EXHAUSTIVE in support of the application filed in
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accordance with Subsections (A) and (B) hereof: Provided, That for this
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purpose, the VAT refund claims SHALL BE PROCESSED BY THE
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REVENUE OPERATIONS GROUP UNDER THE DEPARTMENT OF
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FINANCE AND THE CLAIMS shall be classified into low-, medium-, and


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high-risk claims, with the risk classification based on amount of VAT refund
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claim, tax compliance history, frequency of filing VAT refund claims,
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among others: Provided, further, That medium- and high-risk claims shall
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be subject to audit or other verification processes in accordance with the
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Bureau of Internal Revenue's national audit program for the relevant year:
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Provided, fmaiiy, That should the [Gemmissionor] SECRETARY find that
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the grant of refund is not proper, the [Commissioner] SECRETARY must
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state in writing the legal and factual basis for the denial within the ninety
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(90)-day period.
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"In case of full or partial denial of the claim for tax refund, or the
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failure on the part of the [Commissioner] SECRETARY to act on the
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application within the period prescribed above, the taxpayer affected may,
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within thirty (30) days from the receipt of the decision denying the claim,
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or after the expiration of the ninety (90)-day period, appeal the decision
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with the Court of Tax Appeals: Provided, however. That failure on the part
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of any official, agent, or employee of the [Bureau of Internal-Revenue]
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DEPARTMENT OF FINANCE to act on the application within ninety (90)
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days period shall be punishable under Section 269 of this Code.
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"(D) Manner of Giving Refund. - Refunds shall be made upon
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warrants drawn by the [Commissioner] SECRETARY or by his duly
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authorized representative without the necessity of being countersigned by
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the Chairperson, Commission on Audit, the provisions of the Administrative
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Code of 1987 to the contrary notwithstanding: Provided, That refunds
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under this paragraph shall be subject to post audit by the Commission on
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Audit following the risk-based classification above-described: Provided,
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further. That in case of disallowance by the Commission on Audit, only the
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taxpayer shall be liable for the disallowed amount without prejudice to any
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administrative liability on the part of any employee of the [Bureau of
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Internal Revenue] DEPARTMENT OF FINANCE who may be found to be
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grossly negligent in the grant of refund."
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SEC. 2. Section 293 of the National Internal Revenue Code of 1997, as
32 
amended, is hereby further amended to read as follows:


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"SEC. 293. Definitions. - When used in this Title:
"(A) Capital equipment refers to machinery, equipment, major 
components thereof, tools, devices, applications or apparatus, which are 
directly [or reasonably needed in] ATTRIBUTABLE TO the registered project 
or activity of the registered enterprise;
"x X X
"(F) Freeport zones reler to [aft] isolated and policed areaS adjacent to 
a port of entry, which shall be operated and managed as a separate customs 
territory to ensure free flow or movement of goods, except those expressly 
prohibited by law, within, into, and exported out of the freeport zone where 
imported goods may be unloaded for immediate transshipment or stored, 
repacked, sorted, mixed, or otherwise manipulated without being subject to 
import duties. However, movement of these imported goods from the free- 
trade area to a non-free trade area in the country shall be subject to all 
applicable internal revenue taxes and duties: Provided, That for the freeport to 
qualify as a separate customs territory, a freeport shall have a permanent 
customs control or customs office at its perimeter: PROVIDED, FURTHER, 
THAT POINTS OF EXIT OF GOODS FROM THE TERRITORY OF THE 
FREEPORT ZONES TO THE OTHER PARTS OF THE PHILIPPINE 
TERRITORY SHALL BE CONSIDERED PORTS OF ENTRY AND POLICED 
AS SUCH;
"x X X
"(H) Investment Promotion Agencies refer to government entities 
created by law, executive order, decree, or other issuances, in charge of 
promoting investments, granting and administering tax and non-tax incentives, 
and overseeing the operations of the different economic zones and freeports 
in accordance with their respective special laws. These include the Board of 
Investments (BOI), [Regional Board of Investments—Autonomous Region in
Muslim Mindanao (RBOI-------- ARMM)] BANGSAMORO BOARD OF
INVESTMENTS (BBOI), BANGSAMORO ECONOMIC ZONE AUTHORITY 
(BEZA), Philippine Economic Zone Authority (PEZA), Bases Conversion and 
Development Authority (BCDA), Subic Bay Metropolitan Authority (SBMA),


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Clark Development Corporation (CDC), John Hay Management Corporation
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(JHMC), Poro Point Management Corporation (PPMC), Cagayan Special
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Economic Zone Authority (CEZA), Zamboanga City Special Economic Zone and
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Freeport Authority (ZCSEZA), PHIVIDEC Industrial Authority (PIA), Aurora
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Pacific Economic Zone Authority (APECO), Authority of the Freeport Area of
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Bataan (AFAB), Tourism Infrastructure and Enterprise Zone Authority (TIEZA),
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and all other similar existing authorities or that may be created by law unless
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otherwise specifically exempted from the coverage of this Code."
9 
”X X X
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"(S) TECHNICAL OBSOLESCENCE MEANS THE DESIGN OR
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SPECIFICATION OF THE ASSET NO LONGER FULFILLS THE FUNCTION
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FOR WHICH IT WAS ORIGINALLY DESIGNED AND/OR THE
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MACHINERY, EQUIPMENT, SPARE PARTS AND/OR MATERIALS HAS
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DIMINISHED IN VALUE CAUSED BY CHANGES IN TECHNOLOGY AND
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NEW INVENTIONS RENDERING IT LESS DESIRABLE IN THE
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INDUSTRY, INCLUDING A DECLINE IN VALUE DUE TO IMPROVED
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ALTERNATIVES BECOMING AVAILABLE THAT ARE MORE COST
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EFFECTIVE, AS MAY BE VERIFIED AND APPROVED BY THE
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INVESTMENT PROMOTION AGENCY."
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SEC. 3. Section 294 of the National Internal Revenue Code of 1997, as
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amended, is hereby further amended to read as follows:
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"SEC. 294. Incentives. - Subject to the conditions and period of
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availment in Sections 295 and 296, respectively, the following types of tax
24 
incentives may be granted to registered projects or activities:
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"(A) Income Tax Holiday (ITH))
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"(B) Special Corporate Income Tax (SCTT) Rate. - xxx
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"(C) Enhanced Deductions (ED) REGIME. - [Fer] A [export
28 
enterprise, and domestie-market enterprise,] REGISTERED BUSINESS
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ENTERPRISE MAY ELECT TO BE 
UNDER THE 
ENHANCED
30 
DEDUCTIONS REGIME, WHEREIN the following may be allowed as
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deductions:


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"(1) Depreciation allowance of the assets acquired for the 
entity's production of goods and services (qualified capital 
expenditure) - additional ten percent (10%) for buildings; and 
additional twenty percent (20%) for machineries and equipment;
"(2) Fifty percent (50%) additional deduction on the labor 
expense incurred in the taxable year;
"(3) One hundred percent (100%) additional deduction on 
research and development expense incurred in the taxable year;
"(4) One hundred percent (100%) additional deduction on 
training expense incurred in the taxable year;
"(5) Fifty percent (50%) additional deduction on domestic 
input expense incurred in taxable year;
"(6) ONE HUNDRED PERCENT [Fifty—percent] 
([5]100%) additional deduction on power expense incurred in the 
taxable year;
"(7) Deduction for reinvestment allowance to manufacturing 
industry. - When a manufacturing registered business enterprise 
reinvests its undistributed profit or surplus in any of the projects or 
activities listed in the Strategic Investment Priority Plan, the 
amount reinvested to a maximum of fifty percent (50%) shall be 
allowed as a deduction from its taxable income within a period of 
five (5) years from the time of such reinvestment; and
"(8) Enhanced Net Operating Loss Carry-Over (NOLCO). - 
The net operating loss of the registered project or activity during 
the first three (3) years from the start of commercial operation, 
which had not been previously offset as deduction from gross 
income, may be carried over as deduction from gross income within 
the next five (5) consecutive taxable years immediately following 
the LAST year of [such loss] THE INCOME TAX HOLIDAY 
ENTITLEMENT PERIOD OF THE PROJECT.
"(D) Duty exemption on importation of capital equipment, raw 
materials, spare parts, or accessories; [and]


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"(E) Value-Added Tax (VAT) exemption on importation and VAT
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zero-rating on local purchases[7]; AND
3 
"(F) REGISTERED BUSINESS ENTERPRISE LOCAL TAX. - IN
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LIEU OF ALL LOCAL TAXES IMPOSED BY THE LOCAL
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GOVERNMENT UNIT, THERE SHALL BE IMPOSED A REGISTERED
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BUSINESS ENTERPRISE LOCAL TAX AT THE RATE NOT
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EXCEEDING TWO PERCENT (2%) OF GROSS SALES FOR
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REGISTERED BUSINESS ENTERPRISES AVAILING OF THE
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ENHANCED DEDUCTION REGIME AS PROVIDED UNDER SECTION
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294(C) OF THIS CODE.
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SEC. 4. Section 295 of the National Internal Revenue Code of 1997, as
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amended, is hereby further amended to read as follows:
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"SEC. 295. Conditions of Avaiiment - The tax incentives in the
14 
preceding Section shall be governed by the following rules:
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"(A) The income tax holiday shall be followed by the Special
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Corporate Income Tax Rate or Enhanced Deductions REGIME.
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"(B) At the option of the export enterprise, the Special Corporate
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Income Tax rate or enhanced deductions shall be granted: Provided, That
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in no case shall the enhanced deductions be granted simultaneously with
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the Special Corporate Income Tax.
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"The following conditions for the avaiiment of each enhanced
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deduction[s] shall be complied with:
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"(1) XXX
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"(2) XXX
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"(3) XXX
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"(4) XXX
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"(5) XXX
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"(6) The additional AND deductions on power expense shall only
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apply to power utilized for the registered project or activity.
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"(7) XXX.
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"(C) The duty exemption shall only apply to the importation of
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capital equipment, raw materials, spare parts, or accessories directly [aftd


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exclusively used in] ATTRIBUTABLE TO the registered project or activity 
by registered business enterprises FOR THE DURATION OF THE 
PERIOD OF REGISTRATION OF SUCH PROJECT OR ACTIVITY 
WITH THE INVESTMENT PROMOTION AGENCY: Provided, That the 
following conditions are complied with:
"(1) The capital equipment, raw materials, spare parts, or 
accessories are directly [and reasonably needed and will be used 
exclusively in and as part of the direct cost of] ATTRIBUTABLE TO the 
registered project or activity of the registered business enterprise, and are 
not produced or manufactured domestically in sufficient quantity or of 
comparable quality and at reasonable prices. Prior approval of the 
Investment Promotion Agency may be secured for the part-time utilization 
of said capital equipment, raw materials, spare parts, or accessories in a 
non-registered project or activity to maximize usage thereof: Provided, 
That the proportionate taxes and duties are paid on a specific capital 
equipment, raw materials, spare parts, or accessories in proportion to the 
utilization for non-registered projects or activities. In the event that the 
capital equipment, raw materials, spare parts, or accessories shall be used 
for a non-registered project or activity of the registered business 
enterprise at any time within the first five (5) years from date of 
importation, the registered business enterprise shall first seek prior 
approval of the concerned Investment Promotion Agency and pay the 
taxes and customs duties that were not paid upon the importation; and
"(2) The approvai of the Investment Promotion Agency was 
obtained by the registered business enterprise prior to the importation of 
such capital equipment, raw materials, spare parts, or accessories.
"Within the first five (5) years from date of importation, approval 
of the Investment Promotion Agency must be secured before the sale, 
transfer, or disposition of the capital equipment, raw materials, spare 
parts, or accessories, which were granted tax and customs duty 
exemption hereunder, and shall be allowed only under the following 
circumstances:


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"(a) If made to another enterprise availing customs duty exemption 
on imported capital equipment, raw materials, spare parts, or accessories;
"(b) If made to another enterprise not availing of duty exemption 
on imported capital equipment, raw materials, spare parts, or accessories, 
upon payment of any taxes and duties due on the net book value of the 
capital equipment, raw materials, spare parts, or accessories to be sold;
"(c) Exportation of capital equipment, raw materials, spare parts, 
accessories, source documents, or those required for pollution abatement 
and control;
"(d) Proven technical obsolescence of the capital equipment, raw 
materials, spare parts, or accessories UPON PAYMENT OF ANY TAXES 
AND DUTIES DUE ON THE NET BOOK VALUE OF THE CAPITAL 
EQUIPMENT, RAW MATERIALS, SPARE PARTS, OR ACCESSORIES 
TO BE SOLD; or
"(e) If donated to the [TESDA, State Universities and CollcgGS 
(SUCs), or DepEd and CHED-accredited schools] GOVERNMENT OF THE 
PHILIPPINES OR TO ANY OF ITS AGENCIES OR POLITICAL 
SUBDIVISIONS, INCLUDING FULLY-OWNED GOVERNMENT 
CORPORATIONS: Provided, That the donation shall be exempt from 
import duties and taxes, including donor's tax.
"Provided, That if the registered business enterprise sells, 
transfers, or disposes the aforementioned imported items without prior 
approval, the registered business enterprise and the vendee, transferee, 
or assignee shall be solidarily liable to pay twice the amount of the duty 
exemption that should have been paid during its importation: Provided, 
further. That the sale, transfer, or disposition of the capital equipment, 
raw materials, spare parts, or accessories made after five (5) years from 
date of importation shall require that prior notice be given by the 
registered business enterprise to the Investment Promotion Agency: 
Provided, ffioally] FURTHERMORE, That even if the sale, transfer, or 
disposition of the capital equipment, raw materials, spare parts or 
accessories was made after five (5) years from date of importation with


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notice to the Investment Promotion Agency, the registered business 
enterprise is still liable to pay the duties based on the net book value of 
the capital equipment, raw materials, spare parts, or accessories if it has 
violated any of its registration terms and conditionsfr}: PROVIDED, 
FINALLY, THAT NET BOOK VALUE AS USED IN THIS SECTION 
SHALL REFER TO HISTORICAL COST LESS ACCUMULATED 
DEPRECIATION, AS APPEARING IN THE REGISTERED BUSINESS 
ENTERPRISE'S AUDITED FINANCIAL STATEMENTS, AND 
APPROVED BY THE BUREAU OF INTERNAL REVENUE.
"(D) The VAT exemption on importation and VAT zero-rating on 
local purchases [shall only apply to] OF goods and services [directly and 
exclusivcIy-UGcd-in] DIRECTLY ATTRIBUTABLE TO the registered 
project or activity fby^ OF a registered business enterprise.
"Notwithstanding the provisions in the preceding paragraphs, sales 
receipts and other income derived from non-registered project or activity 
shall be subject to appropriate taxes imposed under this Code.
"(E) XXX
"(F) XXX
"(G) XXX
"(H) UNLESS EXEMPT UNDER OTHER LAWS, THE 
REGISTERED BUSINESS ENTERPRISE LOCAL TAX SHALL BE 
IMPOSED ON REGISTERED BUSINESS ENTERPRISES, DURING 
THE PERIOD OF AVAILMENT OF THE ENHANCED DEDUCTION 
REGIME.
"Registered business enterprises, whose performance 
commitments include job generation, shall maintain their employment 
levels to the extent practicable, and in the case of reduced employment 
or when the performance commitment for job generation is not met, the 
registered business enterprises must submit to their respective 
Investment Promotion Agencies and the Fiscal Incentives Review Board 
their justification for the same."


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SEC. 5. Section 296 of the National Internal Revenue Code of 1997, as
2 
amended, is hereby further amended to read as follows:
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"SEC. 296. Period of Availment - The period of availment of
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incentives by the registered business enterprise shall be as follows:
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"(A) For export enterprise, income tax holiday of four (4) to seven
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(7) years, depending on location and industry priorities as specified in this
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Section, and followed by special corporate income tax rate or enhanced
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deductions for ten (10) years. REGISTERED EXPORT ENTERPRISES
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SHALL ENJOY NON-INCOME TAX INCENTIVES, SUCH AS DUTY
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EXEMPTION ON IMPORTATION OF CAPITAL EQUIPMENT, RAW
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MATERIALS, SPARE PARTS, OR ACCESSORIES, VAT EXEMPTION
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ON IMPORTATION AND VAT ZERO-RATING ON LOCAL
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PURCHASES, AS LONG AS THE REGISTERED EXPORT
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ENTERPRISE MAINTAINS SEVENTY PERCENT (70%) OF TOTAL
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ANNUAL PRODUCTION AS EXPORT SALES AND CONTINUES TO BE
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REGISTERED IN GOOD STANDING WITH THE INVESTMENT
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PROMOTION AGENCY.
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"(B) For domestic market enterprise under the Strategic Investment
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Priority Plan, income tax holiday for four (4) to seven (7) years followed
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by enhanced deductions for five (5) years.
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"A qualified expansion or entirely new project or activity registered
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under this Act may qualify to avail of incentives, subject to the
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qualifications set forth in the Strategic Investment Priority Plan and
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performance review by the Fiscal Incentives Review Board: Provided, That
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existing registered projects or activities prior to the effectivity of this Act
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may qualify to register and avail of the incentives granted under this Act
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for the prescribed period, subject to the criteria and conditions set forth in
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the Strategic Investment Priority Plan.
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"The period of availment of the foregoing incentives shall
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commence from the actual start of commercial operations with the
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registered business enterprise availing of the tax incentives within three
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(3) years from the date of registration, unless otherwise provided in the
10


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Strategic Investment Priority Plan and its corresponding guidelines: 
Provided, That after the expiration of the transitory period under Section 
311(C), export enterprises registered prior to the effectivity of this Act 
shall have the option to reapply and avail of the incentives granted under 
Section 294(B), (D), AND (E) ON THEIR EXISTING INVESTMENT for 
the same period provided under this Section, subject to the conditions and 
qualifications set forth in the Strategic Investment Priority Plan and 
performance review by the Fiscal Incentives Review Board.
"xxx."
SEC. 6. Section 297 of the National Internal Revenue Code of 1997, as 
amended, is hereby further amended to read as follows:
"SEC. 297. Expanded Functions of the Fiscal Incentives Review 
Board. - The functions and powers of the Fiscal Incentives Review Board 
created under Presidential Decree No. 776, as amended, shall be 
expanded as follows:
"(A) To exercise policy making and oversight functions on the 
administration and grant of tax incentives by the Investment Promotion 
Agencies and other government agencies administering tax incentives. In 
particular, the Fiscal Incentives Review Board shall:
"(1) Determine the target performance metrics as conditions to 
avail of tax incentives;
"(2) Review and audit the compliance of other government 
agencies administering tax incentives, with respect to the administration 
and grant of tax incentives and impose sanctions such as, but not limited 
to, withdrawal, suspension, or cancellation of their power to grant tax 
incentives;
"(3) Determine the minimum contiguous land area that vertical 
economic zones should comply with AND RECOMMEND TO THE 
PRESIDENT STANDARDS FOR PROCLAIMING ECONOMIC ZONES;
"(4) Conduct regular monitoring and evaluation of investment and 
non-investment tax incentives, such as using cost-benefit analysis (CBA) 
to determine their impact on the economy and whether agreed
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performance targets are met, AND PRESCRIBE THE DATA 
REQUIREMENTS FOR THE APPLICATION OF INCENTIVES TO 
ALLOW FOR THE CALCULATION OF COSTS AND BENEFITS UPON 
APPLICATION; [and[
"(5) XXX
"(B) To approve or disapprove, the grant of tax incentives to the 
extent of the registered project or activity upon the recommendation of 
the Investment Promotion Agency: Provided, That the application for tax 
incentives shall be duly accompanied by a cost-benefit analysis: Provided, 
further. That the Fiscal Incentives Review Board shall prescribe the data 
requirements for the application of incentives to allow for the calculation 
of costs and benefits upon application: Provided, further. That the grant 
of tax incentives to registered projects or activities with investment capital 
of One billion pesos (P1,000,000,000.00) and below shall be delegated by 
the Fiscal Incentives Review Board to the concerned Investment 
Promotion Agency to the extent of the registered project or activity: 
Provided, furthermore. That the Fiscal Incentives Review Board may 
increase the threshold amount of One billion ONE HUNDRED MILLION 
pesos ([P1,000,000,000.00] Pl,100,000,000.000);
"(C) To approve applications for tax subsidies to government- 
owned or -controlled corporations, government instrumentalities, 
government commissaries, and state universities and colleges^/
"For this purpose, the other government agencies shall ensure 
complete submission of applications, documents, records, books, or other 
relevant data or material;
"(D) To [formulate] RECOMMEND ADDITIONAL TIME- 
BOUND OR place-specific PROJECTS OR ACTIVITIES TO THE
strategic investment PRIORITY plan[s] during periods of recovery from 
calamities and post-conflict situations and where the Fiscal Incentives 
Review Board determines that there is a need to attract many classes, 
firms, that would accelerate the growth of a region's flagship industries, 
in accordance with the Medium-Term Development Plan, [The Fiscal
12


1 
Incentives Review Board moy-formulatc and approve placc-spccific
2 
strategic investment plans and recommend incentives to the President,]
3 
following the same procedure in Section 297;
4 
"(E) XXX
5 
"(F) XXX
6 
"(G) XXX
7 
"(H) XXX
8 
"(I) XXX
9 
"(J) XXX
10 
"(K) XXX
11 
"(L) XXX
12 
"(M) XXX
13 
"(N) To adopt policies for the development and expansion of the
14 
domestic supply chain in order to reduce dependence on imports; promote
15 
diversification and sophistication of products produced and services
16 
offered, whether exported or consumed locally; and cater to local market
17 
demand; [and]
18 
"(O) TO INQUIRE UPON AND RECOMMEND POLICIES FOR
19 
THE PREVENTION OF THE ABUSE OF AVAILMENT OF FISCAL
20 
INCENTIVES UNDER THIS CODE FOR TAX EVASION AND
21 
SMUGGLING ACTIVITIES; AND
22 
"[(©)] (P) To exercise all other powers necessary or incidental to
23 
attain the purposes of this Act and other laws vesting additional functions
24 
on the Fiscal Incentives Review Board.
25 
"xxx."
26 
SEC. 7. Section 300 of the National Internal Revenue Code of 1997, as
27 
amended, is hereby further amended to read as follows:
28 
"SEC. 300. Strategic Investment Priority Pian. - The Board of
29 
Investments, in coordination with the Fiscal Incentives Review Board,
30 
Investment Promotion Agencies, other government agencies
31 
administering tax incentives, and the private sector, shall formulate the
32 
Strategic Investment Priority Plan to be submitted to the President for
13


1 
approval, which may contain recommendations for types of non-fiscal
2 
support needed to create high-skilled jobs to grow a local pool of
3 
enterprises, particularly micro, small and medium enterprises (MSMEs),
4 
that can supply to domestic and global value chains, to increase the
5 
sophistication of products and services that are produced and/or sourced
6 
domestically, to expand domestic supply and reduce dependence on
7 
imports, and to attract significant foreign capital or investment. The
8 
Strategic Investment Priority Plan shall be valid for a period of three (3)
9 
years, subject to review and amendment every three (3) years thereafter
10 
unless there would be a supervening event that would necessitate its
11 
review.
12 
"The Strategic Investment Priority Plan shall contain the following:
13 
"(A) XXX
14 
"(B) X X x; and
15 
"(C) Terms and conditions on the grant of enhanced deductions
16 
under Section 294(C), AS DETERMINED BY THE DEPARTMENT OF
17 
FINANCE.
18 
"XXX."
19 
SEC. 8. Section 301 of the National Internal Revenue Code of 1997, as
20 
amended, is hereby further amended to read as follows:
21 
"SEC. 301. Power of the President to Grant Incentives. - xxx
22 
"This power of the President, in as far as it commands additional public
23 
sector expenditures in support of investors, is suspended during fiscal
24 
years when, an [unimaginable] UNMANAGEABLE fiscal deficit is
25 
declared by the President on the advice of the Development Budget
26 
Coordination Committee with a consequence that even core budgetary
27 
obligations, such as, but not limited to, mandatory revenue allotments for
28 
local government units and budget for the National Economic and
29 
Development Authority's core public investments program, cannot be fully
30 
financed.
31 
"x X X."
14


1 
SEC. 9. Section 309 of the National Internal Revenue Code of 1997, as
2 
amended, is hereby further amended to read as follows:
3 
"SEC. 309. Prohibition on Registered Activities. - A qualified
4 
registered project or activity under an Investment Promotion Agency
5 
administering an economic zone or freeport shall be exclusively conducted
6 
or operated within the geographical boundaries of the zone or freeport
7 
being administered by the Investment Promotion Agency in which the
8 
project or activity is registered: Provided, That a registered business
9 
enterprise may conduct or operate more than one qualified registered
10 
project or activity within the same zone or freeport under the same
11 
Investment Promotion Agency: Provided, further. That any project or
12 
activity conducted or performed outside the geographical boundaries of
13 
the zone or freeport shall not be entitled to the incentives provided in this
14 
Act, unless such project or activity is conducted or operated under another
15 
Investment Promotion Agency: PROVIDED, FURTHERMORE, THAT
16 
REGISTERED BUSINESS ENTERPRISES IN THE INFORMATION
17 
TECHNOLOGY - BUSINESS PROCESS MANAGEMENT SECTOR,
18 
COMPLIANT WITH ON-SITE WORK REQUIREMENTS SET BY
19 
THEIR RESPECTIVE INVESTMENT PROMOTION AGENCIES, MAY
20 
BE ALLOWED TO INSTITUTE A "TELECOMMUTING" PROGRAM AS
21 
DEFINED UNDER REPUBLIC ACT NO. 11165, OTHERWISE
22 
KNOWN AS "THE TELECOMMUTING ACT," INCLUDING WORK-
23 
FROM-HOME ARRANGEMENTS, EXCLUSIVELY WITHIN THE
24 
GEOGRAPHICAL BOUNDARIES OF THE ECONOMIC ZONE OR
25 
FREEPORT, WHICH SHALL NOT COVER MORE THAN FIFTY
26 
PERCENT (50%) OF THE TOTAL WORKFORCE."
27 
SEC. 10. Section 310 of the National Internal Revenue Code of 1997, as
28 
amended, is hereby further amended to read as follows:
29 
"SEC. 310. Establishment of One-Stop Action Center AND INITIAL
30 
POINT OF CONTACT FOR FOREIGN INVESTMENT LEADS. - All
31 
Investment Promotion Agencies shall establish a one-stop shop or one-
32 
stop action center that will facilitate and expedite, to the extent possible.
15


1 
the setting up and conduct of registered projects or activities, including
2 
assistance in coordinating with the local government units and other
3 
government agencies to comply with Republic Act No. 11032, otherwise
4 
known as the Ease of Doing Business and Efficient Government Service
5 
Delivery Act of 2018: Provided, however, That the enterprises shall
6 
continue to avail of the one-stop shop facility notwithstanding the
7 
expiration of their incentives under this Code.
8 
"LOCAL GOVERNMENT UNITS MAY DELEGATE TO
9 
INVESTMENT PROMOTION AGENCIES, THROUGH APPROPRIATE
10 
MEMORANDA OF AGREEMENT, THE FUNCTION OF ACCEPTING,
11 
PROCESSING, AND GRANTING BUSINESS PERMITS AND
12 
LICENSES.
13 
"INVESTMENT PROMOTION AGENCIES MAY ALSO ASSIST
14 
REGISTERED BUSINESS ENTERPRISES IN OBTAINING LICENSES
15 
AND PERMITS FROM NATIONAL GOVERNMENT AGENCIES BY
16 
ACCEPTING DOCUMENTARY REQUIREMENTS FOR SUCH
17 
LICENSES AND PERMITS, AND SUBMITTING THE SAME ON
18 
BEHALF OF REGISTERED BUSINESS ENTERPRISES TO THE
19 
APPROPRIATE NATIONAL GOVERNMENT AGENCIES.
20 
"INVESTMENT PROMOTION AGENCIES MAY UNDERTAKE
21 
SUCH ACTIVITIES THAT ARE NECESSARY TO PERFORM THE
22 
FUNCTION OF THE INITIAL POINT OF CONTACT FOR FOREIGN
23 
INVESTMENT LEADS."
24 
SEC. 11. Section 311 of the National Internal Revenue Code of 1997, as
25 
amended, is hereby further amended to read as follows:
26 
""SEC. 311. Investments Prior to the Effectivity of this Act. -
27 
Registered business enterprises with incentives granted prior to the
28 
effectivity of this Act shall be subject to the following rules:
29 
""(A) Registered business enterprises whose projects or activities
30 
were granted only an income tax holiday prior to the effectivity of this Act
31 
shall be allowed to continue with the availment of the income tax holiday
32 
for the remaining period of the income tax holiday as specified in the
16


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
30
31
32
terms and conditions of their registration: Provided, That for those that 
have been granted the income tax holiday but have not yet availed of the 
incentive upon the effectivity of this Act, they may use the income tax 
holiday for the period specified in the terms and conditions of their 
registration;
"(B) Registered business enterprises, whose projects or activities 
were granted an income tax holiday prior to the effectivity of this Act and 
that are entitled to the five percent (5%) tax on gross income earned 
incentive after the income tax holiday, shall be allowed to avail of the five 
percent (5%) tax on gross income earned incentive based on Subsection 
(C), INCLUDING ALL CORRESPONDING EXEMPTIONS FROM 
LOCAL AND NATIONAL TAXES, FOR THE DURATION OF THE 
PERIOD OF REGISTRATION OF THE PROJECTS OR ACTIVITIES 
WITH THE INVESTMENT PROMOTION AGENCY; [aed]
"(C) Registered business enterprises currently availing of the five 
percent (5%) tax on gross income earned granted prior to the effectivity 
of this Act shall be allowed to continue availing the said tax incentive at 
the rate of five percent (5%), INCLUDING ALL CORRESPONDING 
EXEMPTIONS FROM LOCAL AND NATIONAL TAXES, for ten (10) 
yearsH;
"(D) ALL EXISTING REGISTERED BUSINESS ENTERPRISES, 
WHICH ARE IN GOOD STANDING WITH THEIR RESPECTIVE 
INVESTMENT PROMOTION AGENCY, MAY CONTINUE TO ENJOY 
THE FOLLOWING INCENTIVES AS PROVIDED IN THEIR 
REGISTRATION DURING THE TRANSITORY PERIOD:
"(1) FOR REGISTERED BUSINESS ENTERPRISES, 
WHETHER DOMESTIC OR EXPORT, INSIDE THE ECONOMIC 
AND FREEPORT ZONES - DUTY EXEMPTION ON 
IMPORTATION OF CAPITAL EQUIPMENT, RAW 
MATERIALS, SPARE PARTS, OR ACCESSORIES, VAT 
EXEMPTION ON IMPORTATION, AND VAT ZERO-RATING 
ON LOCAL PURCHASES; AND
17


1 
"(2) FOR REGISTERED EXPORT ENTERPRISES
2 
OUTSIDE THE ECONOMIC AND FREEPORT ZONES - DUTY
3 
EXEMPTION ON IMPORTATION OF CAPITAL EQUIPMENT,
4 
RAW MATERIALS, SPARE PARTS, OR ACCESSORIES AND
5 
VAT ZERO-RATING ON LOCAL PURCHASES.
6 
"(E) REGISTERED BUSINESS ENTERPRISES WITH
7 
INCENTIVES GRANTED PRIOR TO THE EFFECTIVITY OF THIS ACT
8 
MAY CONTINUE TO ENJOY THE VAT EXEMPTION ON
g 
IMPORTATION, AND VAT ZERO-RATING ON LOCAL PURCHASES,
10 
FOR TWELVE (12) YEARS: PROVIDED, THAT NO TAX REFUND OR
11 
CREDIT SHALL BE GRANTED TO QUALIFIED REGISTERED
12 
BUSINESS ENTERPRISES."
13 
SEC. 12. Transitory Provisions. - The exemption from local and national taxes
14 
under Section 8 of this Act shall have retroactive application: Provided, That no tax
15 
refund or credit shall be granted to registered business enterprises covered by Section
16 
311 of the National Internal Revenue Code of 1997, as amended, as a result of the
17 
exemption from local and national taxes.
18 
SEC. 13. Impiementing RuiesandReguiations. - Within ninety (90) days from
19 
the effectivity of this Act, the Secretary of Finance, upon the recommendation of the
20 
Commissioner of Internal Revenue, shall promulgate the necessary rules and
21 
regulations for its effective implementation: Provided, That for the provisions under
22 
Title XIII of the National Internal Revenue Code of 1997, as amended, the Secretary
23 
of Finance and the Secretary of Trade and Industry shall jointly promulgate the
24 
necessary rules and regulations thereof within the same period, after due
25 
consultations with the Commissioner of Internal Revenue, the Board of Investments,
26 
and other Investment Promotion Agencies, for their effective implementation. Failure
27 
to promulgate the rules and regulations shall not prevent the implementation of this
28 
Act upon its effectivity.
29 
SEC. 14. Separabiiity Clause. - If any provision of this Act is declared
30 
unconstitutional, the remaining parts or provisions hereof not affected thereby shall
31 
remain in full force and effect.
18


1
2
3
4
5
6 
7
SEC. 15. Repealing Clause. - All law, decrees, executive orders, implementing 
rules and regulations, issuances, or any part thereof inconsistent with the provisions 
of this Act are deemed repealed, amended or modified accordingly.
SEC. 16. Effectivity. - This Act shall take effect after fifteen (15) days from its 
publication in the Official Gazette or in a newspaper of general circulation.
Approved,
19