Republic of the Philippines
House of Representatives
Quezon City
Thirteenth Congress
First Regular Session

HOUSE BILLNO.___ 122

Introduced by Representative JOEY SARTE SALCEDA

EXPLANATORY NOTE

The reshaping of the global economy along the principles of free trade and international
exchange under the auspices of the world Trade Organization (WTO) is a cue for Philippine Policy-
makers to align our domestic economy along the lines of competitive advantage vis-i-vis our
neighbors in the Asia-Pacific region and trading partners from the rest of the world.

Foreign direct investments that embody advanced technology is particularly desirable in
lending our products a cutting edge in world markets. To attract such investments from companies that
operate on the technology frontiers of the world's most competitive industries, we have skills of
Filipino workers, the facilities offered by our special economic zones and the country's strategic
location in the fast rising Asia-Pacific region

This bill proposes to extend the maximum period for the income tax holiday offered to
especially desirable investors from eight (8) to twelve (12) years, subject to the extension merely tries
to align the Philippines’ income tax holiday such that it matches that our neighboring countries. To
cite, the income tax holiday in Singapore and Malaysia may be availed of for a maximum of twelve
(12) years, and for a maximum of ten (10) years in Taiwan. In the US and some countries of Europe,
this period can be extended to as long as fifteen (15) years

By matching this incentive being offered by other countries, we stand a sufficiently even
chance of attracting investments and partners that will be crucial in our drive for development.

In view of the foregoing considerations, early passage of this bill earnestly sought

JBEY SARTE SALCEDA



Republic of the Philippines
House of Representatives
Quezon City
Thirteenth Congress

First Regular Session

House Bill No,__ 122

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
HARMONIZING AND RATIONALIZING THE ADMINISTRATION AND GRANT OF
FISCAL AND NON-FISCAL INCENTIVES, REPEALING FOR THIS PURPOSE
EXECUTIVE ORDER NO. 226, OTHERWISE KNOWN AS THE OMNIBUS INVESTMENTS
CODE OF 1987

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

PRELIMINARY TITLE

TITLE AND DECLARATION OF POLICY

SECTION 1, Title of the Code. ~ This Code shall be known as “The Investments and Incentives
Code of the Philippines.” The incentives provided for in this Code shall govern all investment
promotion agencies and sectors granting incentives under special laws.

SEC-2. Declaration of Investmem Policies. ~ The development of the national economy shall be
promoted in consonance with the principles and objectives of achieving global competitiveness,
fostering economic efficiency and encouraging and supporting investments that promote countrywide
development and create productive and quality employment. Accordingly, the following are the
declared policies of the State

(1). The State shall create and maintain a stable and market-responsive investment regime

that will encourage and support private sector investments.



(2) The State shall extend fiscal and non-fiscal incentives to promote investments in activities that
will significantly contribute to the achievement of the country’s development objectives consistent with
the medium term development plan of the Philippines.

(3) The State shall grant incentives based on a system that is clear and simple to administer, time
bound and performance-based, taking into consideration the need to be competitive in attracting
investments vis-d-vis other countries in the region.

(4) The State shall adopt an integrated, cohesive and comprehensive investment incentives law
including a single administering agency, whenever applicable, that shall be recognized as the governing
statute on the grant of investment incentives. To this end, all investment incentive schemes shall be
rationalized, thereby harmonizing the fiscal incentives granted by all investment incentive-giving
agencies of the government.

(5) The State recognizes that industrial peace is an essential element of economic growth and it is
the principal responsibility of the State to ensure that such condition prevails.

(6) The State shall undertake investment promotion initiatives deemed crucial to the attainment of

each investment goal and objective.

TITLE!
ORGANIZATION AND FUNCTIONS OF THE BOARD OF INVESTMENTS

SEC. 3, The Board of Investments (BO}). ~ The Board of Investments, hereinafter referred to as
the “BOI,” shall implement the provisions of this Code except as otherwise provided herein

SEC. 4, The Board of Governors: Management Committee.

(A)The Board of Governors. - The BOI Board of Governors shall be composed of nine (9)
governors: .the Secretary of the Department of Trade and Industry (DTI): the Director General of the
National Economic and Development Authority (NEDA); the Secretary of the Department of Finance
(DOF); three (3) undersecretaries of Trade and Industry: and three (3) representatives from the private
sector to be chosen by the President. The Secretary of Trade and Industry shall concurrently be the
Chairman of the Board and the Undersecretary of the DTI for Industry and Investments shall
concurrently be the Vice Chairman of the Board and its managing governor. The other two (2)
undersecretaries of Trade and Industry may designate their permanent representatives in cases of
absence or unavailability. ‘The three (3) representatives from the private sector shall be appointed by
the President for a term of four (4) years, which may be extended by the President for another four (4)

years; Provided, That one of the governors from the private sector shall serve the Board on a full-time



basis: Provided, however, That upon the expiration of his term, a governor shall serve as such until his
successor shall have been appointed and qualified: Provided, further, That no vacancy shall be filled up
except for the unexpired portion of any term. and that no one may be designated to be a governor of
the Board in an acting capacity but all appointments shall be cad interim or permanent: Provided,
finally, That no governor from the private sector shall serve for more than eight (8) years

(B) The BO! Management Committee. - The BOI Management Committee is hereby created and
the Board of Governors may delegate some of its functions thereto, in appropriate cases, in which case,
the performance of such delegated functions shall no longer require Board approval and confirmation,

SEC. 5. Qualifications of Governors of the Board. — The governors of the Board shall be
citizens of the Philippines, at least thirty (30) years old, of good moral character and of recognized
competence in the fields of law, economics. finance, banking, commerce, industry, agriculture,
engineering, management or labor.

SEC. 6. Appointment of Board Personnel, ~ The Board shall appoint its technical staff and other
personnel subject to Civil Service law, rules and regulations.

SEC. 7. Powers and Duties of the Board. — The Board shall be responsible for the regulation and
promotion of investments in the Philippines. It shall meet as often as may be necessary, generally once
a week on such day as it may fix. Notice of regular and special meetings shall be given to all members
of the Board. The presence of five (5) members of the Board shall constitute a quorum and the
affirmative vote of five (5) members of the Board in a meeting validly held shall be necessary to
exercise its powers and perform its duties, which shall be as follows:

(1) Promulgate such rules and regulations as may be necessary to implement the intent and
provisions of this Code,

(2) Process and approve, deny, suspend, revoke applications for registration with the Board,
imposing terms and conditions as it may deem necessary to promote the objectives of this Code,
including the refund and forfeiture of incentives when appropriate, restricting availment of certain
incentives not needed by the project upon the determination of the Board, requiring performance bonds
from BOl-accredited bonding companies, and payment of application, registration, publication and
other necessary fees when warranted, may limit the availment of the tax holiday incentive to the extent
that the investor's country law or treaties with the Philippines allows a credit for taxes paid in the
Philippines;

(3) Delegate, in appropriate cases, some of its functions to the BOL management committee or to

any official of the Board with the rank equivalent to a department director,

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(4) After due hearing, decide controversies concerning the implementation of the relevant
provisions of this Code that may arise between BOI-registered enterprises or investors therein and
government agencies, within thirty (30) days after the controversy has been submitted for decision:
Provided, That the investor or the registered enterprise may appeal the decision of the Board within
thirty (30) days from receipt thereof to the President for decision. To effectively exercise this power,
the Board shall have the power to subpoena witnesses, administer oaths and compel the production of
books, papers and other evidences, and to cite for contempt any person/organization that fails to
comply with the aforestated processes: Provided, further, That to arrive at the truth, the investigator(s)
may grant immunity from prosecution to any person who possesses documents or other evidence or
whose testimony is necessary or relevant to determine such truth in any investigation;

(5) Recommend to the Commissioner of Immigration the entry into the Philippines for
employment of foreign nationals registered with the BOL:

(6 Periodically check and verify, either by inspection of the books or by requiring regular reports,
the proportion of the participation of Philippine nationals in a BOI-registered enterprise to ascertain
compliance with its qualification to retain registration under this Code,

(7) Periodically check and verify the compliance by BO!-registered enterprises with the relevant
provisions of this Code, the rules and regulations promulgated under this Code and the terms and
conditions of registration;

(8) After due notice, cancel the registration or suspend the enjoyment of incentives benefits of a
BOLregistered enterprise and/or require refund of incentives enjoyed by such enterprise including
interests and monetary penalties, and levy properties of the registered enterprise, if appropriate, for (a)
failure to maintain the qualifications required by this Code for registration with the Board or (b) for
violation of any provision of this Code, the rules and regulations issued under this Code, the terms and
conditions of registration, laws for the protection of labor or the consuming public: Provided, That the
registration of an enterprise whose project timetable, as set by the Board is delayed by one (1) year,
shall be considered automatically cancelled unless otherwise reinstated as a registered enterprise by the
Board;

(9) Determine the organizational structure of the BO! taking into account Section 6 of this Code,
appoint, discipline and remove its personnel consistent with the provisions of the Civil Service rules and
regulations,

(10) Prepare or contract for preparation of feasibility and other pre-investment studies, either

upon its own initiative or upon the request of Philippine nationals who commit themselves to invest

4



therein and show the capability of doing so: Provided, That if the venture is implemented, then the
amount advanced by the Board shall be repaid within five (5) years from the date the commercial
operation of said enterprise starts,

(11) When feasible and considered desirable by the Board, require BOI-registered enterprises
to list their shares of stock in any accredited stock exchange or directly offer a portion of their capital
stock to the public and/or their employees;

(12) Formulate and implement industrial programs that would hasten economic growth and
development including those relating to the implementation of international trade, investments and
environmental agreements and protocols;

(13) Recommend to the President of the Philippines, in appropriate cases and subject to the
conditions, which the Board deems necessary. the suspension of the nationality requirement provided
for in this Code or any other nationalization statute,

(14) Establish offices in the Philippines and abroad:

(15) Prepare or contract for the preparation of industry and sectoral development programs,
the National Plan for Investment Promotions (NPIP) and gather and compile statistical, technical,
marketing, financial and other data required for the effective implementation of this Code,

(16) Within four (4) months after the close of the fiscal year, submit annual reports to the
President that shall cover its activities in the administration of this Code, including recommendations on
investment policies,

(17) _ Provide, directly or through Philippine Diplomatic Missions, such information as may be
of interest to prospective foreign investors;

(18) Collate, analyze and compile pertinent information and studies concerning
activities/industries/sector that have been or may be in the Investment Priorities Plan,

(19) Enter into agreements with other agencies of government for the simplification and
facilitation of systems and procedures involved in the promotion of investments, operation of economic
zones and registered enterprises, and other activities necessary for the effective implementation of this
Code; and

(20) Generally, exercise all the powers necessary or incidental to attain the purposes of this
Code and other laws vesting additional functions on the Board,

SEC. 8. Powers and Duties of the Chairman. ~ The Chairman shall have the following powers
and duties:

(1) To preside over the meetings of the Board of Governors,

5



(2) To render annual reports to the President and such special reports as may be requested;

(3) To act as liaison between investors seeking joint venture arrangements in particular areas of
investments;

(4) Recommend to the Board of Governors such policies and measures he may deem necessary to
carry out the objectives of this Code; and

(5) Generally, to exercise such other powers and perform such other duties as may be directed by
the Board of Governors from time to time.

SEC. 9. Powers and Duties of the Vice Chairman, ~ The Vice Chairman shall have the following
powers and duties:

(1) To act as managing governor of the Board, thereby executing all acts of administration,

(2) To preside over the meetings of the Board of Governors in the absence of the Chairman,

(3) Prepare the agenda for the meetings of the Board of Governors and submit for its
consideration and approval the policies and measures which the Chairman deems necessary and proper
to carry out.the provisions of this Code,

(4) Assist BOI-registered enterprises and prospective investors to have their papers processed
with dispatch by all government offices, agencies, instrumentalities and financial institutions; and

(5)'Perform the other duties of the Chairman in the absence of the fatter and such other duties as

may be assigned to him by the Board of Governors

TITLE HL
DEFINITION OF TERMS

SEC. 10. Definition of Terms. ~ As used herein, the following terms shall mean:

(a) “BOT” or “Board” shall mean the Board of Investments (BOl) created under this Code.

(b) “Investment Promotion Agencies (IPA)” shall include BOI, Philippine Economic Zone
Authority (PEZA), Subic Bay Metropolitan Authority (SBMA), Clark Development Corporation
(CDC), John Hay Management Corporation (JHMC), Poro Point Management Corporation (PPMC),
Bataan Technology Park Inc. (BTPI), Cagayan Economic Zone Authority (CEZA), Zamboanga City
Special Economic Zone Authority (ZCSEZA). Philippine Veterans Investment Development
Corporation (PHIVIDEC) and all other government agencies granting incentives to specific sectors
under special laws,

(0) “Registered enterprises” shall mean any individual, partnership, corporation, Philippine branch

of a foreign corporation, or other entity incorporated and/or organized and existing under Philippine

6



laws; and registered with the Board in accordance with this Code or with other investment promotion
agencies: Provided, however, That the term “registered enterprise” shall not include commercial banks,
savings and mortgage banks, rural banks, savings and loan associations, building, and loan associations,
developmental banks, trust companies, investment banks, finance companies, brokers and dealers in
secutities, consumers’ cooperatives and credit unions, and other business organizations whose principal
purpose or principal source of income is to receive deposits, lend or borrow money, buy and sell or
otherwise deal, trade or invest in common or preferred stocks, debentures, bonds or other marketable
instruments generally recognized as securities. or discharge other similar intermediary, trust or
fiduciary functions

(4) “Technological assistance contracts” shall mean contracts for: (1) the transfer, by license
otherwise, of patents, processes, formulas or other technological rights of foreign origin; and/or (2)
foreign assistance concerning technical and factory management, design, planning, construction,
operation and similar matters.

(e) “Foreign loans” shall mean any credit facility or financial assistance other than equity
investment denominated and payable in foreign currency or where the creditor has the option to
demand payment in foreign exchange and registered with the Central Bank and the Board.

(0) “Investment Priorities Plan (IPP)” shall mean the list of industries and activities prepared by
the BOI, which will be eligible for incentives applicable under Section 16 of this Code which includes
industries with high comparative advantage, activities that will produce new product/service and
export-oriented industries.

(g) “New product/service” shall refer to any product/service not locally manufactured/rendered or
not sufficiently manufactured/rendered to meet the demands for the said product/service.

The BOI, in consultation with the National Economic and Development Authority (NEDA), shall
prepare an annual list of products/services that are not sufficiently manufactured/rendered

(h) “Industries with high comparative advantage” shall refer to industries which have export
potential or those which have economically viable Domestic Resource Costs (DRCs) and/or High
Revealed Comparative Advantage (RCA) indices.

(i) “Domestic Resource Cost (DRC)” refers to the economic value in pesos of domestic
resources needed to save or earn foreign exchange

(j) “Revealed Comparative Advantage Index (RCA Index)

is the ratio of a given commodity’s

share in the country’s total exports to that commodity’s share in the total exports of the world.



(k) “Gross income earned” shall refer to gross sales or gross revenues derived from entitled
business activities within the ecozone and freeport, less sales returns, discounts and allowances, cost of
goods sold, cost of goods manufactured and sold or cost of services, as defined in the National Internal
Revenue Code of 1997, as amended.

(\) “Tax Credit” shall mean any credits against taxes and/or duties equal to those actually paid or

would have been paid to evidence which a tax credit certificate shall be issued by the Secretary of

Finance or his representative, or by the Board or concerned IPA, if so delegated by the Secretary of
Finance. The tax credit certificate issued pursuant to this Code shall not be transferable. The tax credit
certificate shall be used to pay taxes, duties, charges and fees due to the national government:
Provided, That the tax credit issued under this Code shall form part of the gross income of the grantee
for income tax purposes under Section 32 of the National Internal Revenue Code of 1997, as amended,
and therefore taxable: Provided, further, That such tax credits shall be valid only for a period of ten
(10) years from date of issuance.

(m)“Export sales” shall mean the sales values and/or revenues, determined from invoices, bills of
lading, inward letters of credit, landing certificates and other commercial documents, of

products/services (1) shipped out of the country and sold in the territory of another country by

registered enterprises (direct exportation), or, (2) sold to other export producers whether registered
enterprises or not, for further processing to be shipped out of the country and sold in the territory of
another country by such export producers (indirect exportation): or, (3) sales of export
products/services by registered entesprise and/or export producers to emities/institutions allowed to
import tax and duty-free goods for consumption in the country: or. (4) services rendered to clients
abroad such as knowledge, information, technology and systems and/or application or installation
thereof in the project sites including but not limited to the fields of engineering and construction design,
logistics, repair and maintenance, and services provided to_international_airlines/shipping
lines/military aircraft or seacraft even if rendered locally, excluding mere deployment of people or
individual practice of profession abroad (constructive exportation)

Sales of locally manufactured or assembled goods for household and personal use to Filipinos
abroad and other nonresidents of the Philippines as well as returning overseas Filipinos under the
Internal Export Program of the government shall also be considered export sales.

(n) “Service provider” refers to an enterprise engaged or proposing to engage in rendering
technical, professional or other services. The Board shall formulate an annual list of services not

covered herein.



(0) “Export enterprise” shall mean a manufacturer, processor or service provider that earns fifty
percent (50%) of its annual dollar sales or fifty percent (50%) of its sales volume from exports.

‘An export trader that earns one hundred percent (100%) of its annual sales from exports shall be
deemed to be an export enterprise.

The Information Technology (IT) industry shall automatically be considered as export enterprise
but subject to the preparation of a negative list by the Board.

(p) “Domestic enterprise” shall mean an enterprise which produces goods for sale, or renders
services exclusively to the domestic market or if exporting, a portion of its output does not consistently
export at least fifty percent (50%)

(q) “Production cost shall mean the total of the cost of direct labor, raw materials and
manufacturing overhead, determined in accordance with generally accepted accounting principles,
which are incurred in manufacturing or processing the products of a registered enterprise.

(1) “Processing” shall mean converting of raw materials into marketable form through physical,
mechanical, chemical, electrical, biochemical. biological or other means, or by a special treatment or a
series of actions, such as slaughtering, milling. pasteurizing, drying or desiccating. quick freezing, that
results in a change in the nature or state of the products. Merely packing or packaging shall not

constitute processing.

TITLE Wd
INVESTMENTS WITH INCENTIVES
CHAPTER |
QUALIFIED ACTIVITIES

SEC. 11. /nvestment Priorities Plan (IPP). ~ Not later than the end of June of every third year,
the BOI, after consultation with the investment promotion agencies and other appropriate government
agencies and the private sector, shall submit to the President the IPP: Provided, however, That the

deadline for submission may be extended by the President.
Upon approval of this Code, the IPP shall be prepared within one hundred twenty (120) days by
the BOI, in consultation with the NEDA. the IPAs, other appropriate government agencies, and the
private sector and in accordance with the criteria for determining the list of industries eligible for

incentives under Section 16 (A) ~ (G) of this Code.



The IPP shall be prepared once every three (3) years by the BOI to be submitted to the President
for his approval not later than the end of June of the year immediately preceding the three (3)-year
period to be covered by the IPP.

‘The IPP shall contain the industries or activities with high comparative advantage as evidenced by
indicators such as DRC and RCA. It shall also include those that will engage in the production or
manufacture of new product/service and export product/service.

SEC. 12.Criteria in the Investment Priorities Plan. — No economic activity shall be included in
the IPP unless it is shown to be economically, technically and financially sound afler thorough
investigation and analysis by the Board

‘The determination of preferred areas of investment to be listed in the IPP shall be based on long-
run comparative advantage, taking into account the value of social objectives and employing economic
criteria along with market, technical and financial analyses

‘The Board shall take into account the following

(a) Primarily, the economic soundness of the specific activity as shown by its economic internal
rate of return;

(b) The extent of contribution of an activity to a specific developmental goal,

(c) Other indicators of comparative advantage (eg. DRC, RCA), and

(d) The market and technical aspects and considerations of the activity proposed to be included.

SEC. 13.Amendments. - Subject to publication requirements and the criteria for investment
priority determination, the BOI may, at any time, add additional areas in the IPP, alter any of the terms
ofthe declaration of an investment area or terminate the status of preference. In no case, however, shall
any amendment of the IPP impair whatever rights that may have already been legally vested in qualified

enterprises which shall continue to enjoy such rights to the full extent allowed under this Code. The

Board shall not accept applications in an area of investment prior to the approval of the same as a
preferred area nor after approval of its deletion as a preferred area of investment,

SEC. 14. Publication. — Upon approval of the IPP, in whole or in part, or upon approval of an
amendment thereof, the IPP or the amendment, specifying and declaring the areas of investment shall be
published in at least one (1) newspaper of general circulation and all such areas shall be open for
application until publication of an amendment or deletion thereof, or until the Board approves

registration of enterprises.

Ww



CHAPTER f1
INCENTIVES TO REGISTERED ENTERPRISES

SEC. 18.Governing Incentive Provision for Investment Promotion Agencies. ~ All existing and
future IPAs vested with the power to grant incentives, including but not fimited to the PEZA, SBMA,
CDC, JHMC, PPMC, BTPI, CEZA, ZCSEZA and PHIVIDEC Industrial Authority, as well as all
industries granted investment incentives under special laws, shall draw their incentives under this Code.

For this purpose, the incentive provisions of the governing laws of the investment promotion
agencies and industries are hereby repealed accordingly.

SEC. 16. Incentives to Registered Fmerprises. ~ All investment promotion agencies may grant the
following incentives to their respective registered enterprises to the extent of the activity/project

(A)Income Tax Holiday or Net Operating Loss Carryover

Income Tax Holiday (ITH) - Registered enterprises shall be entitled to an income tax holiday
from the start of their commercial operation to the extent of their activity under the following
categories:

Category A - Domestic-oriented activities located within the National Capital Region (NCR)
shall be entitled to four (4) years income tax holiday

Category B - Domestic oriented activities producing/rendering distinct or new products/services
or located outside NCR shall be entitled to six (6) years income tax holiday

Category C ~ Export-oriented activities or a limited number of domestic-oriented activities with
strong backward and forward linkages shall be entitled to eight (8) years income tax holiday.

Enterprises with existing operations that qualify for registration shall be limited to their
incremental capacities and/or incremental sales value for ITH availment

Enterprises that register within six (6) years from the effectivity of this Act with their respective
IPAs shall be granted a maximum period of twelve (12) years income tax holiday if the activities they
engage in will exhibit high social economic returns, require large investments and comply with any of
the following conditions:

(a) Project would create high value-added:

(b) Project would generate sizeable employment; or

(c) Project would use new and internationally accepted and high level of technology.

Such project shall be determined and approved by a unanimous decision of an inter-agency

committee composed of the secretaries of the DTI, NEDA and DOF. The activities covered herein



shall also be granted the other incentives even these may or may not be listed in the IPP: Provided,
That all the requirements are complied with.

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

A registered enterprise availing of 1TH or NOLCO must secure a prior certification of entitlement
from the concerned IPAs before filing their income tax returns (ITR) with the Bureau of Internal
Revenue (BIR). For this purpose, the statutory time for filing of the income tax returns (ITR) of the
concerned registered enterprise with the BIR shall be automatically extended for a period of sixty (60)
days therefrom, without penalties, interests and surcharges.

Registered enterprises availing of the ITH as herein provided shall not be entitled to avail of the
NOLCO and vice-versa. Registered enterprises shall have the option to avail of the ITH or NOLCO at
the time of registration, but once the option is made, no amendment shall be allowed.

(B) Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned (GIE) ~ Except for
real property tax on land owned by developers, no taxes. local and national, shall be imposed on
business establishments operating within an economic zone or freeport. In lieu thereof, five percent
(5%) of the gross income shall be paid and remitted as follows:

1. For PEZA Special Economic Zones or Ecozones

(a) three percent (3%) shall be remitted to the national government; and

(b) two percent (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.

IL. For Subic Bay Freeport/Clark Special Economic Zone/John Hay Special Economic Zone/Poro
Point Economic and Freeport Zone/Morong Special Economic Zone

{a) three percent (3%) shall be remitted to the national government,

(b) one percent (1%) shall be remitted directly to the local government units (LGUs) concerned,
and

(c) one percent (1%) to be included in a development fund to be utilized for the development of
municipalities contiguous to the base areas or ecozone/freeport

ILL, For the Zamboanga City Economic Zone and Freeport

2



(a) two percent (2%) shall be remitted to the national government, and

(b) three percent (3%) which shall be allocated as follows.

(i) two percent (2%) to the City of Zamboanga; and

(ii) one percent (1%) to Barangay Special Development Fund.

IV. For the Cagayan Economic Zone and Freeport

(a) two percent (2%) shall be remitted to the national government;

(b) one percent (1%) shall be remitted directly to the Province of Cagayan;

(c) one-half percent (1/2%) to be shared by the municipalities affected by the declaration of the
zone in proportion to their income from business activities within the zone, and

(d) one and one-half percent (1. 1/2%) shall be remitted directly to the Cagayan Economic Zone
Authority.

The five percent (5%) gross income earned incentive shall not be available to BO! and
PHIVIDEC registered enterprises.

(C) 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
depreciated using a depreciation rate twice as fast as the normal rate in accordance with the rules and
regulations prescribed by the Secretary of Finance and the provisions of the National Internal Revenue
Code (NIRC) of 1997, as amended: Provided, That the taxpayer notifies in writing the Commissioner
of Internal Revenue at the beginning of the depreciation period as to what depreciation rate allowed
thereunder shall be used by the said taxpayer

(D) Capital Equipment Incentives — Importation’s of capital equipment, spare parts, production
consumables, or those required for pollution abatement and contro! including consignment thereof by
registered export-oriented enterprises upon the effectivity of this law, shall be exempted to the extent of
one hundred percent (100%) of the taxes and customs duties: /’rovided, That the importation thereof

shall be used exclusively by the registered enterprise in its registered activity: Provided, further, That

the IPAs will undertake inquiries of their local availability: Provided, finally, That importation of
source dacuments by enterprises engaged in information technology shall likewise be fully exempt for
the period stated herein

The aforementioned importations of registered domestic-oriented enterprises shall be subject to
payment of one percent (1%) customs duty and the value-added tax (VAT) as prescribed under the
NIRC of 1997, as amended.



Approval of the Board or the concerned IPA 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 date of importation, any of the
following conditions must be present

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

(2) If made to another enterprise, upon payment of any taxes and duties due on the net book

value of the capital equipment to be sold:

(3) Exportation of the capital equipment. machinery. spare parts or source documents or those
required for pollution abatement and control: and

(4) For reasons of proven technical obsolescence.

When the aforementioned sale, transfer or disposition is made under any of the conditions
provided for in the foregoing paragraphs other than paragraph (2). the registered firm shall not pay the
taxes and duties waived on such items: Provieled, further, That if the registered enterprise sells,
transfers or disposes the aforementioned imported items without prior approval within five (5) years
from date of importation, the registered enterprise and the vendee, 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 date of importation, the registered enterprise is still iable 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

A tax credit equivalent to the amount of taxes and/or duties paid on raw materials, supplies, parts
and semi-finished products used in the fabrication of the machinery and capital equipment shall be given
to registered export-oriented enterprises which purchased said machinery and capital equipment from a
domestic manufacturer: Provided, (a) That said capital equipment, machinery and spare parts will be
used exclusively by the registered enterprise in its registered activity: (b) 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: (c) That the value-added tax portion claimed as tax credit
shall be reflected in the VAT return of the registered enterprise as a deduction from input tax under
Section 110(c) of Republic Act No. 8424, otherwise known as “The Tax Reform Act of 1997,” only
upon issuance of the tax credit certificate: and (d) That the approval of the Board or the concerned

IPA is obtained by the registered enterprise. If the registered enterprise sells, transfers or disposes of

u



these machineries, capital equipment and spare parts, the provision in the preceding paragraphs for such
disposition shall apply.

The tax credit certificate issued shall be valid for a period of ten (10) years from date of issuance:
Provided, however, That it shall form part of the gross income of the grantee for income tax purposes
and therefore taxable: Provided, finally, That applications for tax credit under this subsection must be
filed within one (1) year from date of delivery, otherwise, this incentive shall be considered as waived.

(B) 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 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.

The tax credit certificate issued shall be valid for a period of ten (10) years from date of issuance:
Provided, however, That it shall form part of the gross income of the grantee for income tax purposes
and therefore taxable: Provided, finally, That applications for tax credit under this subsection must be
filed within two (2) years from exportation of the final product for indirect exports or one (1) year for
direct exports, otherwise, this incentive shall be considered as waived

All applications for tax credit must be acted upon within a period of ninety (90) days from official
acceptance, otherwise, they shall be deemed automatically approved

Registered export-oriented enterprises shall have access to the utilization of the bonded
warehousing system,

(F) Incentives on Breeding Stocks and Genetic Materials — (1) 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 all taxes and duties: Provided, That such breeding stocks and genetic
materials are: (a) reasonably needed in the registered activity: and (b) approved by the Board or the
concerned JPA,

(2) A tax credit equivalent to one hundred percent (100%) of the value of the taxes and customs
duties that would have been waived on the breeding stocks and genetic materials had these items been
imported shall be given to the registered enterprise which purchases breeding stocks and genetic
materials from a domestic producer: Provided, (a) That said breeding stocks and genetic materials
would have been qualified for tax and duty-free importation under the preceding paragraph; (b) That

the breeding stocks and genetic materials are reasonably needed in the registered activity; (c) That

15



approval of the Board or the concerned IPA has been obtained by the registered enterprise, and (d)
That the purchase is made within ten (10) years from the date of registration of commercial operation
of the registered enterprise

The tax credit certificate issued shall be valid for a period of ten (10) years from date of issuance
Provided, however, That the tax credit shall form part of the gross income of the grantee for income tax
purposes and therefore taxable.

(G)Deferred Imposition of the Minimum Corporate Income Tax (MCIT) — 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 minimum corporate income tay 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

(H)(1) Tax Treatment of Merchandise in the Export Processing Zones, Free Trade Zones or
Freeports ~ (a) Except as otherwise provided in this Code. 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 export processing zone, free trade zone or freeport to be sold,
stored, broken up, repacked, assembled, installed, sorted, cleaned, graded or otherwise processed,
manipulated, 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, the provisions of law to the contrary notwithstanding

(b) Merchandise purchased by a registered export processing zone, free trade zone or freeport
enterprise from the customs territory and subsequently brought into export processing zone, free trade
zone ot freeport shall be considered as export sales and exportation thereof shall be entitled to the
benefits allowed by law for such transaction

(©) Domestic merchandise sent from the export processing zone. free trade zone or freeport 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, free trade zone or

freeport, be subject to internal revenue laws of the Philippines as domestic goods sold, transferred or
disposed of for local consumption.

(d) Merchandise sent from the export processing zone, free trade zone or freeport 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).

te



(e) Domestic merchandise on which all internal revenue taxes have been paid, if subject thereto,
and foreign merchandise previously imported on which duty or tax has been paid, or which have been
admitted free of duty and tax, may be taken into the export processing zone, free trade zone or freeport
from the customs territory of the Philippines and be brought back thereto free of quotas, duty or tax.

(f) Subject to such regulations respecting identity and safeguarding of the revenue as the
authority may deem necessary when the identity of an article entered into the export processing zone,
free trade zone or freeport 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

(g) Articles produced or manufactured in the export processing zone, free trade zone or freeport
and exported therefrom shall, on subsequent importation into the customs territory, be subject to the
import laws applicable to like articles manufactured in a foreign country.

(h) Unless the contrary is shown, merchandise taken out of the export processing zone, free trade
zone or freeport. shail be considered for tax purposes to have been sent to customs territory.

(2) Tax Treatment of Services in the Economic Zones and Freeports (a) 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, 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.

(b) Sale or service by a registered ecozone or freeport enterprise to the customs territory shall be
subject to applicable internal revenue laws and regulations.

(D) Exemption from Local Taxes and Licenses - Notwithstanding the provisions of law to the
contrary, registered ecozone enterprises shall, to the extent of their construction, operation or
production inside the ecozone, be exempt from the payment of any and all local government imposts,
fees, licenses or taxes.

ions of Section 29 of

() Employment of Foreign Nationals ~ Subject to the pro\
Commonwealth Act No. 613, as amended. a registered enterprise may employ foreign nationals in
supervisory, technical or advisory 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

W



a stockholder owning at least ten percent (10%) of the outstanding capital stock of the registered
enterprise and he remains the owner ot 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 a multiple entry visa,
valid for a period of three (3) years, to enter and leave the Philippines without further documentary
requirements other than valid passports or other travel documents in the nature of passports. The
validity of the multiple entry visa shall be extendible yearly

The foreign national admitted herein, as well as their respective spouses and dependents, shall be
exempt from: (a) obtaining alien certificate of registration and emigration clearance certificates; and (b)
securing the Alien Employment Permit (AEP) and all types of clearances, permits, licenses or their
equivalents required by any government department or agency

SEC. 17. Incentive to Investors. ~ foreign national covered under Section 16 (J) of this Code
who invests an amount of at least US$150,000.00, either in cash and/or equipment, in a registered
enterprise shall be entitled to a Special Investor's Resident Visa. Provided, That

(1) He is at least eighteen (18) years of age;

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

(3) He is not afflicted with any loathsome. dangerous or contagious disease: and

(4) He has not been institutionalized for any mental disorder or disability Provided, further, That

in securing the special investor's resident visa, the alien-applicant shall be entitled to the same privileges
provided for under Section 16(5), last paragraph

As a holder of the Special Investor's Resident Visa, an alien shall be entitled to reside in the
Philippines while his investment subsists. For this purpose. he should 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 Special Investor's Resident
Visa issued to him shall automatically expire

The minimum amount for investment provided for under this Code shall be made applicable to
visas granted to investors by the PEZA, SBMA. CDC. JHMC. PPMC. BTPI, CEZA, ZCSEZA,
PHIVIDEC and other investment promotion agencies



CHAPTER I)
REGISTRATION OF ENTERPRISES

SEC. 18. Qualifications of a Registered Emerprise, — To be entitled to register to avail of
incentives, an applicant must satisfy the following conditions:

(1) He is a citizen of the Philippines, in case the applicant is a natural person, or in case of a
corporation or partnership or any other association, regardless of nationality, it must be organized
and/or registered and existing under Philippine laws and that it must comply with all the qualifications
provided under this Code: Provided. however, That for purposes of this Code and any law to the
contrary notwithstanding, a natural-born Association of Southeast Asian Nations (ASEAN) citizen or a
corporation effectively controlled by ASEAN citizens shall be considered as a Philippine investor:
Provided, further, That the investment is made in an activity where the Constitution does not
specifically require Filipino participation;

(2) That it will engage in an activity included in the IPP or projects identified under Section
16(A), paragraphs 6 and 7;

(3) That the activity it will engage in is not within the activities reserved by the Constitution to
Philippine citizens or corporations owned and controlled by Philippine citizens, such as the operation of
public utilities

For this purpose and any law to the contrary notwithstanding, the business of constructing and
repairing vessels or parts thereof shall not be considered a public utility and no certificate of public
convenience shall be required thereof, and

(A) Thal if the applicant is engaged or proposes fo cngage in undertakings or activities other than the registered
projects, it shall install an accounting system adequate to identify the investments, revenues. costs and profits or losses of
cach registered project undertaken by the cuterprise separately from the aggregate investment, revenues. costs and profits

oF losses of the whole enterprise, or to establish a separate corporation for cach registered project if the Board or other
IPAs should so require to facititate proper implementation of this Code.

CHAPTER IV
BASIC RIGHTS AND GUARANTEES OF REGISTERED ENTERPRISES

SEC. 19. Protection of Investments. — Ail investors and registered enterprises are entitled to the

basic rights and guarantees provided in the Constitution Among other rights recognized by the
government of the Philippines are the following.
(a) Repatriation of Investments — In the case of foreign investments. the right to repatriate the

entire proceeds of the liquidation of the investment in the currency in which the investment was

v



originally made and at the exchange rate prevailing at the time of repatriation, subject to the provisions
of Section 74 of Republic Act No. 265, otherwise known as the “Central Bank Act,” as amended.

For investments made pursuant to Executive Order No. 32 and its implementing rules and
regulations, remittability shall be as provided therein;

(b) Remittance of Earnings ~ In the case of foreign investments, the right to remit earnings from
the investment in the currency in which the investment was originally made and at the exchange rate
prevailing at the time of remittance, subject to the provisions of Section 74 of Republic Act No. 265, as
amended;

(c) Foreign Loans and Contracts — The right to remit at the exchange rate prevailing at the time

of remittance such sums as may be neces

Fy to meet the payments of interest and principal on foreign
loans and foreign obligations arising from technological assistance contracts, subject to the provisions
of Section 74 of Republic Act No. 265. as amended.

(d) Freedom from Expropriation - There shall be

» expropriation by the government of the
property represented by investments or of the property of the enterprise except for public use or in the
interest of national welfare or defense and upon payment of just compensation In such cases, foreign
investors or enterprises shall have the right to remit sums received as compensation for the expropriated
property in the currency in which the investment was originally made and at the exchange rate at the
time of remittance, subject to the provisions of Section 74 of Republic Act No. 265, as amended; and
(e) Requisition of Investment - There shall be no requisition of the property represented by the
investment or of the property of enterprises. except in the event of war or national emergency and only
for the duration thereof. Just compensation shall be determined and paid either at the time of requisition
or immediately after cessation of the state of war or national emergency. Payments received as
compensation for the requisitioned property may be remitted in the currency in which the investment
was originally made and at the exchange rate prevailing at the time of remittance, subject to the

provisions of Section 74 of Republic Act No 265, as amended

CHAPTER V
ADMINISTRATION OF INCENTIVES,
SEC. 20. Administration and Implementation of Incentives. The investment promotion agencies

shall be responsible for the implementation and administration of the incentives granted to their

respective registered enterprises. Provided. That any incentive administration policy adopted by the

2»



Board for incentives common to all registered enterprises shall be uniformly applied by all incentive
administering agencies.

SEC. 21. Application, ~ Applications shall be filed with the IPAs or any other government office
authorized by the Board to accept applications recorded in a registration book and the date appearing
therein and stamped on the application shall be considered the date of official acceptance.

All applications and their supporting documents filed under this Code shall be confidential and
shall not be disclosed to any person except with the consent of the applicant or upon an order of a court
of competent jurisdiction

SEC. 22. Criteria Evaluation of Application. ~ The following criteria will be considered in the
evaluation of applications for registration under a preferred area:

(a) Impact of the project on the overall economy;

(b) Overall viability of the project;

(c) The extent of employment generation;

(d) The extent to which technological advances are applied and adopted to local conditions; and

(e) Such other criteria as the Board may determine

SEC. 23. Approval and Registration Procedures. ~ The Board is authorized to adopt rules and
regulations to facilitate action on applications filed with it; prescribe criteria for the evaluation of
several applications; devise standard forms for the use of applicants and delegate to the regional offices
of the DTI the authority to receive and process applications for enterprises to be located in their
respective regions.

Applications filed shall be considered automatically approved if not acted upon by the Board
within fifteen (15) working days from official acceptance thereof. Deferment by the Board shall be
considered as an official action: Provided, however, That the Board may defer action to a specific
application not more than twice: Provided, finally. That the Board shall act upon the application within
ten (10) working days from compliance with the cause of the last deferment

SEC. 24. Certificate of Registration. ~ A BOI

gistered enterprise under this Code
Shall be issued a Certificate of Registration under the seal of the Board of Investments and the
signature of its Chairman and/or such other officer or employee of the Board as it may empower
and designate for the purpose. The certificate shall be in such form and style as the Board may
determine and shall state, among other matters:

(a) the name of the registered enterprise;

(b) the area of investment in which the registered enterprise is proposing to engage,



(c) the type of the activity it is undertaking or proposing to undertake: and

(d) the other terms and conditions to be observed by the registered enterprise by virtue of the
registration,

SEC. 25. Validity of BOL registration. ~ A firm's registration with the Board shall be valid for a
period of twenty (20) years from the start of commercial operation: Provided, however, That
registered enterprises enjoying the tax treaty on double taxation privilege shall retain its registration
solely for the said purpose.

SEC. 26. Treaties on Double Taxation Pri

of the IPAs shall be considered as BOI-registered preferred pioneer areas of activities for purposes of

ferential Tex Rate. All projects registered with any

the treaties on double taxation/preferential tax rates with other countries.

SEC. 27. Extension of Period of Availment, ~The availment period of the incentives provided
herein may be extended by the concerned investment promotion agency in the event that the registered
enterprise has suffered operational force majeure that has impaired its viability.

SEC. 28. Duration of Incentives. — Emterprises registered with PEZA, SBMA, CDC, JHMC,
PPMC, BTPI, CEZA and ZCSEZA may enjoy the ITH or NOLCO granted by the concerned IPA prior
to availment of the five percent (5%) GIE.

Fiscal incentives under this Code with no specific period of availment shall be terminated after a
period of twenty (20) years from date of registration or start of commercial operation, whichever is
applicable: Provided, however, That this shall not be applicable to the incentive of tax and duty free
importation of capital equipment, raw materials, supplies and spare parts of enterprises registered with
PEZA, SBMA, CDC, JHMC, PPMC, BTPI, CEZA and ZCSEZA.

SEC. 29. Payment in the Form of Voreign Currencies. ~ AU IPAs may be allowed to receive

foreign currencies as payment of application fees, fines and penalties, including refund of incentives

TITLE IV
FINAL PROVISIONS
SEC. 30, Personnel, ~ All positions in the Board shall be governed by a compensation, position
classification systems and qualification standards approved by the managing governor with the
concurrence of the Board of Governors based on a comprehensive job analysis and audit of actual
duties and responsibilities. The compensation plan shall be comparable with the prevailing
compensation plans of a government financial institution and shall be subject to periodic review by the

Board no more than every two (2) years without prejudice to yearly merit reviews or increases based

2



‘on productivity. The Board shall therefore be exempt from existing laws. rules and regulations on
compensation, position classification and qualification standards.
SEC. 31. Authority to Retain Funds, — The Board shall have the authority to retain one-half of the

funds arising from the collection of fees from applications/certifications of registration and/or incentives

availment, fines, penalties and refiund of incentives and other sources of income subject to the usual
accounting process.
SEC. 32. Vested Rights. ~ Existing registered enterprises which are enjoying the incentives under

Books One and of Executive Order No. 226, otherwise known as the Omnibus Investments Code.

of 1987, as amended, shall continue to enjoy such incentives under their respective registration, in
accordance with the provisions of their respective laws prior to the enactment of this Code: Provided,

however, That enterprises which made investments on projects approved or registered by the

investment promotion agencies six (6) months before the effectivity of this Code may opt to be
governed by the provisions of this Code

SEC. 33.Protection of the Environment. ~ The BOI. in coordination with the appropriate
agencies, shall take concrete and appropriate steps to enact the proper measures for the protection of
the environment and shall coordinate with the Environmental Management Bureau of the Department
of Environment and Natural Resources (DENR) to avoid undue delay in the isstance of the required
Environmental Compliance Certificate (ECC): Provided, however, That applications for environmental
clearances, permits and/or licenses of registered enterprises shall be acted upon by the appropriate
government agency within one hundred twenty (120) days from date of official acceptance. In the
event that the appropriate government agency failed to act within the aforementioned date, the
application for the said environmental requirement shall be deemed complied with for purposes of
operation of the registered activity: Provided, finally, That the Board may withdraw the certificate of
registration issued to the enterprise should the appropriate government agency eventually deny the
application

SEC. 34. Suspension and Forfeiture of Incentives of BOL-Registered Fmerprises; Refund and
Penalties. ~ When there is probable cause to believe that the registered enterprise has violated its
registration terms and conditions. the Board may suspend its availment of incentives, until proven
otherwise.

The Board may impose fines and penalties and/or forfeit the incentives granted to its registered
enterprises whenever there are violations of the registration terms and conditions by the latter, without

prejudice to the cancellation of the registration of said enterprise

23



In case of cancellation of the Certificate granted under this Code. the Board may, in appropriate
cases, require the refund of incentives availed of and impose corresponding fines and penalties

Any enterprise which violates any provision of this Code, its implementing rules and regulations,
the terms and conditions of its registration, of any lawful directive of the Board, or willfully commits
any fraudulent misrepresentation in the course of filing an application for registration, or in the
availment.of incentives, including al! official reports required to be submitted by the Board, shall be
subject to a fine of not more than One million pesos (P1.000,000.00), without prejudice to the
disapproval of its application for registration or cancellation of its registration.

‘The Board shall prepare a schedule of fines and penalties to be imposed on erring registered
enterprises depending on the violation incurred. which may be reduced in exceptional cases.

Responsible officers of such enterprises, including duly appointed external consultants-agents who
knowingly commit, aid or abet the commission of any of the acts mentioned above, shall be subject to a
fine of not less than One hundred thousand pesos (P100.000.00) but not more than Three hundred
thousand pesos (P300,000.00).

Government officers and employees who participate directly 0

directly in the commission of the
foregoing acts shall likewise be liable to a fine of not less than One hundred thousand pesos
(P100,000.00) but not more than Three hundred thousand pesos (P300.000.00), in addition to any
criminal and administrative penalties imposable under the Civil Service Law, Revised Penal Code,
Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act), Republic Act No. 6713 (Code Of
Conduct and Ethical Standards for Public Officials) and other applicable laws.

If the offender is a foreign national, in addition to the imposable fines and penalties above, the
foregoing acts shall be grounds for his summary deportation

SEC. 35.Appeals from Board's Decision. — All orders or decisions of the Board in cases
involving the provisions of this Code shall immediately be executory No appeal from the order or
decision of the Board by the party adversely affected shall stay such order or decision, unless a

supersedeas bond equivalent to the amount stated

the order or decision is posted by the appellant,
All appeals involving cases decided by the Board, except as provided in the next succeeding
paragraph, shall be filed with the Court of Appeals within fifteen (15) days from notice of the order or
decision or of the denial of the appellant's motion for new trial or reconsideration. Within the same
period, the aggrieved party may file a motion for reinvestigation or reconsideration. Only one (1)
motion for reconsideration shall be allowed, subject to the posting of the aforementioned supersedeas

bond which shall be limited to cash and/or surety bond from a BOI-accredited bonding company.

4



In cases involving the denial of an application for registration. the party adversely affected by such
denial may appeal the same to the Office of the President within thirty (30) days from notice of the
order denying the application for registration. Where an appeal has been filed, said order or decision
shall be final and executory ninety (90) days after the perfection of the appeal, unless reversed.

SEC. 36. Effectivity of Implementing Rules and Regulations. ~ The IPAs, NEDA, DOF, DTI and
‘other appropriate government agencies shall promulgate rules and regulations to implement the intent
and provisions of this Code. Such rules and regulations shall take effect fifleen (15) days following its
publication in a newspaper of general circulation in the Philippines.

SEC. 37. Separability Clause. - The provisions of this Code are hereby declared to be separable
and, in the event any of such provisions is declared unconstitutional, the other provisions which are not
affected thereby shall remain in force and effect

SEC. 38. Repeating Clause. ~ The following provisions or laws are hereby repealed.

(1) Batas Pambansa Blg. 44 ~ “An Act to Promote Investments in Less Developed Areas,”

(2) Batas Pambansa Bly. 391 ~ “An Act Declaring the 1983 Investment Incentives Policy by
Modifying the System on the Grant of Investment Incentives, Amending for the Purpose Presidential
Decree No. 1689 and Other Pertinent Laws.”

(3) Presidential Decree No. 218 ~ “Prescribing Incentives for the Establishment of Regional or
Area Headquarters;”

(4) Presidential Decree No. 1419 ~ “Prescribing Incentives for the Establishment of Multinational
Regional Warehouses by Multinational Companies Supplying Spare Parts or Manufactured
Components and Raw Materials to the Asia-Pacific Area:”

(5) Presidential Decree No. 1623 - “Authorizing the Issuance of Special Investors Resident Visas
to Aliens and for Other Purposes (Repealed by Executive Order No. 226).”

Presidential Decree No. 1893 - “Further Amending Presidential Decree (P.D.) No. 1623 entitled,
‘Authorizing the Issuance of Special Investors Resident Visas to Aliens and for Other Purposes,” as
amended”

(6) Presidential Decree No. 1789 - “A Decree to Revise. Amend and Codify the Investment,
Agricultural and Export Incentives Acts to be Known as the Omnibus Investments Code (Repealed by
Batas Pambansa Bly. 39!):”

(1) Presidential Decree No. 2032 - “A Decree Declaring National Policies on Agricultural
Development and Promulgating the Agricultural Incentives Act of 1986 (Repealed by Batas Pambansa
Big. 391).

28



nN

(8) Presidential Decree No. S38 “A Deeree Creating and Establishing the PHIVIDEC Industrial
Authority and Making it a Subsidiary Agency of the Philippine Veterans Investment Development

Corporation, Defining its Powers. Fametions and Responsibilities and for Other Purposes,”

(9) Executive Order No, 815. “To Safeguard and Promote the Development of the Philippine

Semiconductor FE ics Industry”

(10) Executive Order No. 1048 “Modifying Fiscal Incentives 10 BOL-Registered Enterprises,”

(11) Republic Act No. 7888 - “An Act to Amend Article 7713) of Executive Order No, 226,

Otherwise Known as the Omnibus Investment Code af 198)
(12) Book 1 of Executive Order No. 226 is hereby absolutely repealed:

ive Order No. 22%

(13) Books V and VI of Exe are hereby absolutely repealed:
(14) The provisions of Republic Act No. 7916, atherwise known as “Special Economic Zone Act

* and Republic Act No. 8748, otherwise known as “An Act Amending Republic Act No,

consistent with this Code are hereby repealed or moditied accordingly:

(15) The provisions of Section 12 (bh). (¢). (g) of Republic Net No, 7227, otherwise known as the

“Bases Conversion and Development Act of 1492, Section 6 of Proclamation No. 984, °Creating the

Morony Special Economie Zone purstant to Republie et Ne 7227.” Section $ of Proclamation No.

216, “Créating the Poro Point Special Economic Zone Pursuant to Republic Act No. 7227" Section 3

of Executive Order No. 32. Seties of 14 amending Executive Order 103, Series of 1993,
“Establishing

the John Hay Development Corporation.” Section 1. paragraphs (e), (1) and (g) of

Republic Act No, 7903, otherwise known as “Zamboanga City Special Economic Zone Act of 1995."

and Section 4, paragraphs (bh). (c) and (e} of Republic Act No. 7922 entitled, “Cagayan Special

Economic Zone Act of 1995” which are inconsistent with this Act. are hereby repealed or modified

accordingly: Provided, here’

vr, That they shail draw their respective incentives fiom any of those

provided for under this Code.

(16) The incentives provision

under other investment incentives kaws catering to specific
industries are hereby repealed as follows:

Section 36(f) of Presidential Decree No. 708. otherwise known as the “Revised Forestry Code,”
Section 12 of Presidential Decree No. 87, otherwise known as the “Oil Exploration Development Act
of 1972.” Sections 8, 9 and 10 of Presidential Dectee No. $38, othernise known as the “Philippine

Veterans Investinent Development Corporation.” Sections 16 and 17 of Presidential Deeree No. 972,

otherwise known as the “Coal Development Act.” Sections 4(a) and (d) of Presidential Decree No.

1442, otherwise known as the “Geothermal Exploration and Development Act” Sections 10 and Hof



Republic Act No. 7156, otherwise known as the “Mini-hydroelectric Incentive Act;” Sections 6, 7 and
8 of Republic Act No. 7103, otherwise known as the “Iron and Stee! Industry Act,” Sections 6 and 7
of Republic Act No. 7471, otherwise known as the “Philippine Overseas Shipping Development Act;”
Sections 19 and 20 of Republic Act No, 7279, atherwise known as the “Urban Development and
Housing Act of 1992:” Sections 61 and 62 of Republic Act No. 6938, otherwise known as the
“Cooperative Code of the Philippines,” Sections 16 and 17 of Republic Act No. 7844, otherwise known
as the “Export Development Act of 1994.” Section 12 of Republic Act No. 8047, otherwise known as

the “Book Publishing Industry Development Act:

Sections 83, 90, 91, 92 and 93 of Republic Act No.
section 12 of Republic Act No. 7718,
otherwise known as the “Build-Operate-Transfer Law:” Section 3a), (c), (d) and (h) of Republic Act

7942, otherwise known as the “Philippine Mining Act of 1995

No. 8502, otherwise known as the “Jewelry Industry Development Act of 1998." Section 35 of
Republic Act No. 8550, otherwise known as the “Philippine Fisheries Code of 1998:" and Section 9 of
Republic Act No. 8479, otherwise known as the “Downstream Oil Deregulation Act of 1998.”

(17) The provisions of Commonwealth Act No. 146, as amended, are hereby modified
accordingly; and

(18) The provisions of Section 3(e) and (f) of Republic Act No. 7042. as amended by Republic

Act No. 8179, otherwise known as “The Foreign Investments Act, as Amended.” are hereby modified
by Section 10(P) and (Q) of this Code. ‘The provision of Section S of Republic Act No. 7103 is
modified accordingly

All other laws, acts, decrees, orders and issuances inconsistent with any provisions of this Code
are hereby repealed or modified accordingly.

SEC. 39.Hiffectivity. ~ This Act shall take effect fifieen (15) days following its publication in a
newspaper of general circulation in the Philippines.

Approved,