FOURTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
EXPLANATORY NOTE 
This bill seeks to revive the ailing Philippine film industry by exempting it from 
payment of certain taxes imposed by the government. 
Pursuant to the constitutional guarantee on freedom of expression, Section 14, Article 
XIV of the Philippine Constitution states that the State shall foster the preservation, enrichment, 
and dynamic evolution of a Filipino national culture based on the principle of unity in diversity 
in a climate of free artistic and intellectual expression. 
Republic Act No. 9167 otherwise known as the Film Development Council of the 
Philippines was enacted & 2002 to formulate and implement policies and programs to upgrade 
the art and craft of film making and encourage the production of films that seek to enhance the 
quality of life, examine the human and social conditions and contribute to the dignity and 
nobility of the human spirit. Clearly, the film and movie industry is no longer corhed to an 
entertainment industry, but more importantly, it is the means by which we achieve national 
identity and showcase the same to the rest of the world. 
Despite the enactment of the said law, the film inaustry is dying. Sales of local film 
dropped from P833.8 million in 1999 to P706.5 million in 2001 or 15.3% drop in 3 years. Jobs in 
the film business have dropped since 1997, from an estimated number of 258,310 workers in 
1997 to 175,651 workers in 2000. If this trend continues, the Philippines will be producing less 
than 30 films yearly by 2004. 
One major reason cited for the continuing weakening of the Philippine film industry is 
heavy taxation. Under our present laws, the local film industry is subject to the following taxes: 
1.) 30% amusement tax on gross receipts from admission fees imposed by the province to be 
collected from the proprietors, lessees, or operators of theaters and cinemas; 2.) 5% withholding 
tax on producer's film share; 3.) 35% corporate income tax; and 4.) 12% value-added tax on 
producer's film share. 
This proposed measure aims to exempt producers of films, classified as general 
patronage and parental guidance-13 from the payment of amusement tax imposed by the local 
governments. Likewise, this bill exempts producers from payment of value-added tax on the 
importation of raw materials and equipment to be used in making films and other 
cinematographic work, to allow our local film makers to compete with international film 
makers. 
It is high time that the State recognize the film iitdustry as partners in promoting 
Filipino culture and fostering unity among Filipinos. 
In view of the foregoing, immediate passage of this bill is earnestly requested. 
-e- 
LOREN LEGARDA 
Senator 


FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
1 
First Regular Session 
1 
Introduced by Senator Loren Legarda 
. ANACT 
EXEMPTING THE PHILIPPINE FILM AND MOVIE INDUSTRY FROM THE 
PAYMENT OF CERTAIN TAXES, AMENDING FOR THE PURPOSE CERTAIN 
PROVISIONS OF THE LOCAL GOVERNMENT CODE OF 1991, THE NATIONAL 
INTERNAL REVENUE CODE OF THE PHILIPPINES, AND FOR OTHER 
PURPOSES 
Be if enacted by fhe Senate and the house of Representatives of fhe Philippines in 
Congress assembled: 
SECTION 1. Section 140 of Republic Act No. 7160, otherwise known as the Local 
Government Code of 1991, is hereby amended to read as follows: 
SECTION 140. Amusement Tax. - (a) The province may levy an amusement tax 
to be collected from the proprietors, lessees, or operators of theaters, cinemas, 
concert halls, circuses, boxing stadia, and other places of amusement at a rate of 
not more than thirty percent (30%) of the gross receipts from admission fees, 
PRODUCED FILMS THAT ARE CLASSIFIED BY THE MOVIE AND 
TELEVISION .REVIEW AND CLASSIFICATION BOARD (MTRCB) AS 
13"). 
PROVIDED, THAT, THIS IMPOSITION SHALL NOT APPLY TO LOCALLY- 
GENERAL PATRONAGE ("GP") AND PARENTAL GUIDANCE - 13 ("PG- 
(b) xxx " 
SEC. 2. Section 109 of Republic Act No. 8424, otherwise known as the National 
Internal Revenue Code, as amended by Republic Act No. 9337, is hereby amended to 
read as follows: 
"SEC. 109. Exempt Transactions. - (1) Subject to the provisions of subsection (2) 
hereof, the following transactions shall be exempt from the value-added tax: 
(A) xxx 
(B) xxx 
(D) xxx 
(E) xxx 
(F) xxx 
(H) xxx 
(C) xxx 
(GI xxx 


(I) xxx 
(1) xxx 
(K) xxx 
(t) xxx 
(N) xxx 
(0) xxx 
(P) xxx 
(Q) xxx 
(S) xxx 
(M)xxx 
(R) xxx 
(T) xxx 
(U) IMPORTATION OF RAW MATERIALS AND EQUIPMENT BY 
PERSONS ENGAGED IN THE BUSINESS OF MAKING FILMS AND 
OTHER CINEMATOGRAPHIC WORK, FOR USE IN PRODUCING 
SUCH FILMS AND OTHER RELATED WORK, PROVIDED, THAT THE 
BUREAU OF INTERNAL REVENUE, SHALL HAVE EXCLUSIVE RIGHT 
TO DETERMINE, AFTER PRIOR CONSULTATION WITH MEMBERS 
OF THE FILM INDUSTRY, THE RAW MATERIALS AND EQUIPMENT 
THAT SHALL BE EXEMPT FROM VALUE ADDED TAX. 
SEC. 3. Repealing Clause.- 
All republic acts, executive orders, rules and 
regulations, and other issuances, or parts thereof, that are inconsistent with the 
provisions of this Republic Act are hereby repealed or modified accordingly. 
SEC. 3. Separability Clause.- If for any reason or reasons, any part or provision 
of this Act shall be declared or held to be unconstitutional or invalid other parts or 
provisions hereof, which are not affected thereby shalI continue to be in full force and 
effect. 
SEC. 4. Effectivity Clause.- This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in at least two (2) national newspapers of general 
circulation. 
Approved,