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I 
THIRTEENTH CONGRESS OF THE 
1 
. First Regular Session 
1 
REPUBLIC OF THE PHILIPPINES 
) 
Introduced by Senator Franklin M. Drilon 
EXPLANATORY NOTE 
"e 
Under existing laws, the administration, implementation and issuance of 
investment promotion programs, the issuance of policies relative thereto, as 
well as the grant of fiscal and non-fiscal incentives to both foreign and 
domestic investors are being handled by various government agencies, such as 
the Board of :Investments (BOI), the Philippine Economic Zone Authority ' 
(PEZA) , the Subic Bay Metropolitan Authority (SBMA), the Clark Development 
Corporation (CbC) , and several other agencies mandated under various laws to 
establish, maiAtain and manage special economic/ freeport zones throughout 
the Philippines. 
. 
The system of having different agencies administer and implement 
various incentives laws creates a perception among foreign investors that the 
Philippines dies not have unified and responsive investments promotion 
programs and policies. Hence, to establish uniform, harmonized, simplified, 
and consistent investment policies and programs to make the Philippine more 
competitive globally, it is imperative that only one governing statute regulate 
the incentives granted by the government. 
The objective of the proposed bill is to harmonize and simplify the 
government's administration of programs and policies on the grant of fiscal and 
non-fiscal incentives to promote foreign and domestic investments in the 
Philippines. The proposed bill seeks to introduce fiscal and administrative 
amendments to the current Omnibus Investments Code of the Philippines. 
The fiscal amendments will rationalize the grant of incentives that are 
clear, simple, time-bound, performance based and at par with the regional 
countries. The Investment Priorities Plan (IPP) will include industries with high 
comparative advantage, new product / service and export oriented products 
and will be valid for a period of three (3) years. 
The incentives include the following: 
0 
Income Tax Holiday (ITH) or Net Operating Loss Carry-Over (NOLCO) 
o Four years for all activities in the IPP and domestic-oriented 
activities located within NCR 
o Six years for export activities or domestic activities that 
produce/render new or distinct product/ service and an additional 
two years for locators outside NCR 
1 


o Eight years for domestic activities with backward and forward 
linkages or strong potential for export development and listed in 
o An additional four years for Strategic Projects. Strategic projects 
shall be determined and approved as “STRATEGIC” by unanimous 
decision of an inter-agency committee composed of DTI, NEDA 
and DOF. 
the IPP 
0 
Net Operating Loss Carry Over 
o Loss incurred within the first five (5) years from start of 
commercial operation may be carried over for the next five (5) 
years following such loss 
o Enterprises availing of ITH / NOLCO / additional deductions must 
first secure prior certification of entitlement from the concerned 
IPA 
automatically extended for a period of sixty ( 60 ) days from the 
statutory filing without penalties, interests and surcharges 
o Filing of the ITR for the concerned registered enterprises shall be 
& 
0 ,  Five percent (5%) on gross income earned, in lieu of local and 
national taxes for enterprises located in the ecozones 
0 
Accelerated depreciation of plant, machinery, and equipment using a 
depreciation rate twice as fast as the normal rate 
0 
Capital Equipment Incentives 
o Tax and duty free importation of capital equipment for export- 
oriented enterprises 
o Domestic-oriented enterprises shall be entitled to importation of 
capital equipment. subject to 1% duty and the prevailing VAT 
o Tax credit on domestic capital equipment 
0 
Raw Material Incentives 
o Tax credit shall be based on actual taxes and duties paid 
o Actual sales of BOI-registered domestic producers supplying to 
domestic companies enjoying tax and duty exemptions on their 
importations of capital equipment / machinery and raw materials 
shall be eligible for tax credit incentives 
o Application for tax credit must be acted upon within 90 days from ‘ 
official acceptance, otherwise, it shall be deemed automatically 
approved 
0 
Incentives on Breeding Stocks and Genetic Materials 
0 
Deferred Imposition of the Minimum Corporate Income Tax ( MCIT ) - 
, 
the 2% MCIT shall be imposed to registered enterprises after full 
availment of all income tax--based incentives 
Additional Incentives for Ecozones 
Exemption from real property tax on machinery and equipment 
Exemption from customs and internal laws and regulations or to local 
tax ordinances on merchandise brought into the zone 
2 


E ’  
e Exemption from local taxes and licenses to the extent of their 
construction, operation or production inside the zone 
Incentives to Foreign Nationals 
e 
Foreign stockholders of BOI- registered enterprises with investments 
of US$ 150,000 are entitled to an indefinite Special Investor’s 
Resident Visa and Foreign nationals granted with Special Non- 
immigrant’s visa are entitled to the following incentives : 
a) Exemption from obtaining alien certificate of registration and 
emigration clearance certificate ; and 
b) Exemption from securing alien employment permits and all types 
of clearances, permits, licenses required by any government 
department or agency. 
All Investment Promotion Agencies ( IPA ) will ‘draw their incentives in 
the proposed bill. Likewise, the incentive administration policy of BO1 
will be applied uniformly by all IPAs. 
A cap on the total amount of 
incentives of a registered enterprise will be imposed. 
In addition, 
incentives without a specific period shall be enjoyed for a period of 20 
years from date of registration or start of commercial operations, ’ 
whichever is applicable except tax and duty free importation of capital 
equipment, machinery, spare parts, raw materials and supplies of 
enterprises registered with the ecozones. 
Application for registration will now be filed with any other 
government office authorized by the Board to accept applications. The 
time frame for. processing of registration has been shortened to 15 days 
and BO1 registration shall be valid for a period of 20 years from 
commercial operation unless extended by the Board. 
Also, ASEAN 
nationals or firms effectively controlled by ASEAN shall be considered as 
Philippine nationals except when the proposed activity is reserved by the 
Constitution to Filipinos. Moreover, all registered projects are considered 
as preferred pioneer for purposes of tax treaties. 
In view of the foregoing, immediate approval of this bill is earnestly 
sought. 
3 


’04 JlM 30 zg ;;:z 
THIRTEENTH CONGRESS OF THE 
) 
First Regular Session 
) 
REPUBLIC OF THE PHILIPPINES 
) 
A T  
Introduced by Senator Franklin M. Drilon 
THE INVESTMENTS AND INCENTIVES CODE OF THE PHILIPPINES 
Be it enacted b y  the Senate and House of Representatives of the 
Philippines in Congress assembled: 
Article 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. 
Article 2. Declaration of Investment 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 foreign investments vis-a-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 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 I - ORGANIZATION AND FUNCTIONS 
OF THE BOARD OF INVESTMENTS 
Article 3. The Board of Investments. - The Board of Investments 
shall implement the provisions of this Code except as otherwise provided 
herein. 
Article 4. The Board of Governors; Management Committee - 
A. 
The Board of Governors. - The Board of Investments shall be 
composed of nine (9) governors; The Secretary of Trade and 
Industry; the Director General of the National Economic 
Development Authority;, the Secretary of Finance; three (3) 
Undersecretaries of Trade and Industry; and three (3) 
representatives from the private sector to be chosen by the 
President of the Philippines. The Secretary of Trade and 
Industry shall concurrently be the Chairman of the Board 
and the Undersecretary of the Department of Trade and 
Industry 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 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 ad interim or 
permanent: Provided finally, That no governor from the 
private sector shall'serve for more than eight (8) years. 
B. The BO1 Management Committee. - The BO1 Management 
Committee is hereby created and the Board of Governors 
2 


5 
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. 
Article 5. Qual@cations 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. 
Article 6. Appointment of Board Personnel. - The Board shall 
appoint its technical staff and other personnel subject to Civil Service 
law, rules and regulations. 
, 
Article 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 performs 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 BOI-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 
BO1 Management Committee, or to any official of the Board 
with the rank equivalent to a Department Director; 
(4) 
After due hearing, decide controversies concerning the 
implementation of the relevant provisions of this Code that 
may arise between 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 
3 


any person/organization that fails to comply with the 
aforestated processes; Provided, That to arrive at the truth, 
the investigator(s) may grant immunity from prosecution to 
any person whose testimony or whose possessions of 
documents or other evidence is necessary or relevant to 
determine such truth in any investigation; 
(5) 
Recommend to the Commissioner of Immigration and 
Deportation the entry into the Philippines for employment of 
foreign nationals under this Code; 
(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 registered 
enterprise to ascertain compliance with its qualification to 
retain registration under this Code; 
(7) 
Periodically check and verify the compliance by 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 any registered 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 
provisions of this Code, rules and regulations issued under 
this Code, the terms and conditions of registration, laws for 
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 year, shall be considered 
automatically cancelled unless otherwise reinstated as a 
registered enterprise by the Board; 
(9) 
Determine the organizational structure taking into account 
Article 6 of this Code; appoint, discipline and remove its 
personnel consisted with the provisions of the Civil Service 
Rules; 
(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 therein and show the capability of doing 
so; Provided, That if the venture is implemented, then the 
amount advanced by the Board shall be paid within five (5) 
years from the date the commercial operation of said 
enterprise stars; 
(11) When feasible and considered desirable by the Board, 
require 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; 
4 


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; 
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; 
Establish offices in the Philippines and abroad; 
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; 
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; 
Provide, directly or through Philippine Diplomatkc Missions, 
such information as may be of interest to prospective foreign 
investors; 
Collate, analyze and compile pertinent information and 
studies concerning activities/ industries/ sector that have 
been or may be in the Investment Priorities Plan; 
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; 
Generally, exercise all the powers necessary or incidental to 
attain the purposes of this Code and other Laws vesting 
additional functions on the Board. 
Article 8. Powers and Duties of the Chairman. - The Chairman 
shall have the following powers and duties: 
(1) 
To preside over the meetings of the Governors; 
(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; 
5 


c 
I 
1 
(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. 
Article 9. Powers and Duties of the Vice-chairman. - The Vice- 
Chairman shall have the following powers and duties: 
To act as Managing Governor of the Board, thereby executing 
all acts of Administration; 
To preside over the meetings of the Board of Governors in 
the absence of the Chairman; 
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; 
Assist registered enterprises and prospective investors to 
have their papers processed with dispatch by all government 
offices, agencies, instrumentalities and financial institutions; 
and 
Perform the other duties of the Chairman in the absence of 
the latter, and such other duties as may be assigned to him 
by the Board of Governors. 
TITLE 11 
DEFINITION OF TERMS 
Article 10. Definition of Terms. - As used herein, the following 
terms shall mean - 
(A) “BOP or “Board” shall mean the Board of Investments (BOI) 
created under this Code. 
(B) “Investment Promotion Agencies (PA)” shall include BOI, 
Philippine Economic Zone Authority (PEZA) , Subic Bay Metropolitan 
Authority (SBMA), Clark Development Corporation (CDC), Cagayan 
Economic Zone Authority (CEZA), Zamboanga City Special Economic 
Zone Authority (ZCSEZA) and all other government agencies granting 
incentives to specific sectors under special laws. 
(C) 
“Registered Enterprises” 
shall 
mean 
any 
individual, 
partnership, cooperative, corporation or other entity incorporated and/ or 
organized and existing under Philippine Laws; and registered with the 
Board in accordance with this Book: Provided, however, That the term 
“registered enterprise” shall not include commercial banks, savings and 
mortgage banks, rural banks, savings and loan associations, building 
6 


. 
and loan associations, development banks, trust companies, investment 
banks, finance companies, brokers and dealers in securities, 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. 
(D) “Technological assistance contracts” shall mean contract for: ( 1) 
the transfer, by license or 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 creditors has the option to demand 
payment in foreign exchange and registered with the Central Bank and 
the Board. 
(F) “Investment Priorities Plan (IPP)” shall mean the list of industries 
and activities prepared by the BOI, which will be eligible for registration 
with the Board, which includes industries with high comparative 
advantage, activities that will produce new product/ service and export- 
oriented industries. 
I 
(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 Board of Investments, 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 DRCS and/or High 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”, means all income derived from 
whatever source, including, but not limited to the following items: 
(1) 
Compensation for services in whatever form paid, 
including but not limited to fees, salaries, wages, 
commission, and similar items; 
7 


, 
n 
1 
L 
Gross income derived from the conduct of trade or 
business or the exercise of profession; 
Gains derived from dealings in property; 
Interests; 
Rents; 
Royalties; 
Dividends; 
Annuities ; 
Prizes and Winnings; 
Pensions; and 
Partner’s distributive share from the net income of the 
general professional partnership. 
Credit” shall mean any credits against taxes and/or 
duties equal to those actually paid or would have been paid to which a 
tax credit certificate shall be issued by the Secretary of Finance or his 
representative, or the Board, if so delegated by the Secretary of Finance. 
The tax credit certificate issued by the Board 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 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 Products” means manufactured 
or 
processed 
products the total F.O.B. Philippine port value of the export of which did 
not exceed five million dollars in the United States Currency in the 
calendar year 1968. The above definition notwithstanding, the National 
Plan Investments Promotions may include other products for export 
subjects to such conditions and limited incentives as may be determined 
by the Board. Further, it may include. other products for exports subject 
to such conditions and limited incentives as may be determined by the 
Board. 
(N) 
“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/ service ( 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 enterprise and/ or export producers to 
entities/ institutions allowed to import tax and duty-free goods for 
consumption in the country; or, (4) services rendered to clients abroad 
8 


t 
such as knowledge, information, technology and systems and/ or 
application or installation thereof in the projects 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 provided revenues are paid for in foreign currency, 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 non-residents of the 
Philippines as well as returning Overseas Filipinos abroad under the 
Internal Export Program of the government shall also be considered 
export sales. 
. 
(0) “Service enterprise” refer 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. 
(P) 
An “Export. enterprise” shall mean a manufacturer, processor 
or service provider that earns fifty percent (50%) of its annual sales from 
exports. 
The Information Technology (IT) industry shall automatically be 
considered as export enterprise but subject to the preparation of a 
negative list by the Board. 
(Q) 
A “Domestic enterprise” shall mean an enterprise which 
produces goods for sale, or renders services to the domestic market 
entirely or if exporting a portion of its output fails to consistently export 
at least fifty percent (50%). 
(R) “Production Cost” shall mean the total of the cost of direct 
labor, raw materials, and manufacturing overhead, determined in 
accordance with the generally accepted accounting principles, which are 
incurred in manufacturing or processing the products of a registered 
enterprise. 
(S) “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 chance in the nature or state 
of the products. Merely packing or packaging shall not constitute 
processing. 
TITLE I11 - INVESTMENTS WITH INCENTIVES 
CHAPTER I - QUALIFIED ACTIVITIE 
Article 11. INVESTMENT PRIORITIES PLAN (IPP) - Not later than 
the end of June of every third year, the Board of Investments, after 
consultation with the appropriate government agencies and the private 
9 


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 120 
days by the BOI, in consultation with the NEDA, and the private sector 
and in accordance with the criteria for determining the list of industries 
entitled to incentives. 
The IPP shall be prepared once every three (3) years by the BO1 to 
be submitted to the President for his approval not later than the end of 
june of the year immediately preceding the three-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. 
Article 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 
after 
thorough 
investigation and analysis by the Board. 
The determination of preferred areas of investment to be listed in 
the Investment Priorities Plan (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 (e.g., DRC, RCA); 
(d) 
The market and technical aspects and considerations of the 
activity proposed to be included. 
Article 13. Amendments. - Subject to publication requirements 
and the criteria for investment priority determination, the Board of 
Investment may, at anytime, add additional areas in the IPP, alter any of 
the terms of the 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. 
Article 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) year newspaper of general circulation and all 
such areas shall be open for publication of an amendment or deletion 
thereof, or until the Board approves registration of enterprises. 
10 


CHAPTER I1 --INCENTIVE 
TERED ENTERPRISES 
Article 15. Governing Incentive Provision for Investment Promotion 
Agencies - All existing and future Investment Promotion Agencies (IPA) 
vested with the power to grant incentives, including but not limited to the 
Philippine Economic Zone Authority (PEZA), Subic Bay Metropolitan 
Authority (SBMA), Clark Development Corporation (CDC), Cagayan 
Economic Zone Authority (CEZA) and Zamboanga City Special Economic 
Zone (ZCEZA), Phividec Industrial Authority, as well as industries 
granted investment incentives under special laws shall draw their 
incentives under this Code. 
For this purpose, the incentives provisions of the governing laws of 
the investment promotion agencies and industries are hereby repealed 
accordingly. 
Article 16. Incentives, to Registered Enterpn’ses - 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 - All activities listed in the IPP, which includes inter alia, 
domestic oriented activities located within NCR shall be entitled to four 
(4) income tax holiday. 
Category B - Export-oriented activities located within NCR or domestic 
oriented activities producing/ rendering distinct or new products/ services 
shall be entitled to six (6) years income tax holiday. 
Category C - Export-oriented activities located outside NCR or domestic 
oriented activities located within or outside NCR with (a) backward and 
forward linkages or strong potential for export development; and (b) listed 
in the IPP shall be entitled to eight (8) years income tax holiday. 
Enterprise with existing operations that qualify for registrations 
shall be limited to their incremental capacities and/ or incremental sales 
value for ITH availment. 
Category D - The foregoing categories notwithstanding, an additional 
four (4) years shall be granted for “strategic projects”. Strategic Projects 
refer to activities which exhibit high social economic returns and comply 
with any of the following conditions: 
(a) Project would create high value-added; 
(b) Project would generate sizable employment; 
(c) Project would require large investment; or 
11 


(d) Project would use new and internationally-accepted high 
level of technology. 
A project shall be determined and approved as “STRATEGIC” by a 
unanimous decision of an inter-agency committee composed DTI- 
BOI, NEDA and DOF. 
NET OPERATING LOSS CARRYOVER - The net operating loss of the 
business or enterprise during the first five (5) years from the start of 
commercial operation which had not been previously offset as deduction 
from gross income shall be carried over for the next five (5) consecutive 
taxable years from gross income immediately following the year of such 
loss; Provide however, That operating loss resulting from availment of 
incentives provided in this Code shall not be entitled to NOLCO. 
A registered enterprise availing of ITH, NOLCO or additional 
deductions must secure a prior certification of entitlement from the 
concerned investment promotion agency (IPA) 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 Bureau of 
Internal Revenue (BIR) shall be automatically extended for the 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 Net Operating Loss Carry Over (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 
Except for real property taxes, 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: 
I.FOR ECONOMIC ZONES 
3 Three percent (3%) shall be remitted to the national 
government; and 
9 Two percent (2%) shall be remitted directly to the local 
government units concerned 
1I.FOR SUBIC BAY FREEPORT 
9 
9 
3 
Three percent (3%) shall be remitted to the national 
government; 
One percent (1%) shall be remitted directly to the local 
government units concerned; and 
One percent (1%) to be included in a development fund 
to be utilized for the development of the municipalities 
12 


outside the City of Olongapo and the Municipality of 
Subic, and other municipalities contiguous to the base 
areas. 
111. 
FOR THE ZAMBOANGA CITY ECONOMIC ZONE AND 
FREEPORT 
P Two percent (2%) shall be remitted to the national 
9 Three percent (3%) which shall be allocated as follows: 
government; and 
Two percent (2%) to the City of Zamboanga 
One percent (1%) to Barabgay Special 
Development Fund 
IV. 
FOR THE CAGAYAN ECONOMIC ZONE AND FREEPORT 
P Two percent (2%) shall be remitted to the national 
government; 
> One percent (1%) shall be remitted directly to the 
Province of Cagayan; 
9 One percent  YO) 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 
P One percent (1%) shall be remitted directly to the 
Cagayan Economic Zone Authority; 
(C) ACCELERATED DEPRECIATION 
Accelerated depreciation, in accordance with the rules and regulations 
prescribed by the Department of Finance, 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 provisions of the National Internal Revenue Code (NIRC); and 
Provided further, 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 it. 
(D) CAPITAL EQUIPMENT INCENTIVES 
( 1) Importations of capital equipment, spare parts, production 
consumables, or those required for pollution abatement and control 
including consignment thereof, by registered export-oriented enterprises 
upon the effectivity of this law shall be exempt to the extent of one 
hundred percent (100%) of the taxes and custom duties; Provided, That 
the importation thereof shall be used exclusively by the registered 
enterprise in its registered activity; Provided further, That importation of 
source documents by enterprises engaged in information technology 
shall likewise be fully exempt for the period stated herein. 
(2) The aforementioned importations of registered domestic- 
oriented enterprises shall be subject to payment of 1% custom duties 
and the prevailing value-added tax. 
13 


Board approval must be secured before any sale, transfer or 
disposition of the said items is made; Provide, 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: 
(a) 
If made to another enterprise enjoying tax and duty 
exemption on imported capital equipment; 
(b) 
If made to another enterprise, upon payment of any taxes 
and duties due on the undepreciated portion of the item to 
be sold based on a normal rate of depreciation; 
Exportation of the equipment, machinery, spare parts or 
source documents or those required for pollution abatement 
and control; 
(c) 
(d) 
(e) 
For reasons of proven technical obsolescence; 
For purposes of replacement to improve and/or expand the 
operations of the registered enterprise; or 
(f) 
Repair of the imported item. 
When the aforementioned sale, transfer or disposition is made 
under any of the 
conditions provided for in the foregoing paragraphs other that paragraph 
(b), the registered firm shall not pay the taxes and duties waived on such 
items. 
Provided further, That if the registered enterprise sells, transfers or 
disposes the aforementioned imported items without prior Board 
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 exemption given it; 
Provided finally, that &en if the Board approved the sale, transfer 
or disposition of the equipment after five (5) years from the date of 
importation, the registered enterprise is still liable to pay the taxes and 
duties on the undepreciated portion of the equipment, machinery or 
spare parts based on a normal rate of depreciation 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. 
(3) A tax credit equivalent to the taxes and/or duties paid on raw 
materials, supplies, parts and semi-finished products used in the 
fabrication of the machinery and equipment shall be given to export- 
oriented firms which purchased machinery and equipment from a 
domestic manufacturer; Provided: (a) that said equipment, machinery 
and spare parts will be used exclusively by the registered enterprise in its 
registered activity; (b) that the equipment would have qualified for taxes 
for tax and duty importation; (c) that the value-added tax that has been 
paid and refunded to or for which tax credit has already been issued to 
the manufacturer of the equipment or machinery for such raw materials, 
supplies, spare parts or semi-finished products, shall no longer be 
available for the issuance of tax credit to the registered enterprise who 
14 


purchased the equipment; and (d) that the approval of the Board is 
obtained by the registered enterprise. If the registered enterprise sells, 
transfers or disposes of these machinery, 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. 
(E) RAW MATERIAL INCENTIVES 
Every registered export enterprise shall enjoy a tax credit 
equivalent to the National 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 enterprise, based on the actual taxes and duties paid for such 
materials/ supplies/ semi-manufactured 
products by 
the 
registered 
enterprise. 
Provided further, That the actual sales of BO1 registered 
domestic 
producers 
supplying 
raw 
materials, 
semi- 
manufactured/ manufactured products and machineries/ equipment to 
domestic companies enjoying tax and duty exemption on their 
importation of capital equipment, machinery, spare parts or raw 
materials/supplies by law, or by their charters or franchise shall be 
eligible for the tax credit incentives provided for in this Code. 
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 filled 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 material 
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. 
15 


A tax credit equivalent to one hundred percent (100%) 
of the value of 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 
the approval of the Board 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 tax is greater than the tax computed 
unaer the National Internal Revenue Code (NIRC) as amended for the 
taxable year; Provided however, That said MCIT shall be imposed only 
after the enterprise' entitlement period to the income tax based 
incentives. 
(H)EXEMF'TION FROM 
REAL 
PROPERTY 
TAX 
ON 
MACHINERY AND EQUIPMENT 
Ecozone registered enterprises shall be fully exempt from the 
payment of the real property tax on equipment and machineries imposed 
under the Local Government Code. 
[ I ] TAX TREATMENT OF MERCHANDISE IN THE ZONE - 
(1) 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 zone 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. 
16 


(2) Merchandise purchased by a registered zone enterprise from 
the customs territory and subsequently brought into the zone, shall be 
considered as export sales and the exported thereof shall be entitled to 
the benefits allowed by law for such transaction. 
(3) 
Domestic merchandise sent from the zone to the customs 
territory shall, whether or not combined with or made part of other 
articles likewise of local origin or manufactured in the Philippines while 
in the export processing zone, be subject to Internal Revenue Laws of the 
Philippines as domestic goods sold, transferred or disposed of for local 
consump tion. 
(4) 
Merchandise sent from the export processing zone 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 assessed 
on the value of imported materials (except when the final product is 
exempt) and the internal revenue taxes on the values added. 
(5) 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 zone from the 
customs territory of the Philippines and be brought back thereto free of 
quotas, duty or tax. 
(6) 
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 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 Custom Code. 
(7) 
Articles produced or manufactured in the zone 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; 
(8) 
Unless the contrary is shown, merchandise taken out of the 
zone shall be considered for tax purposes to have been sent to customs 
territory. 
(J) EXEMPTION FROM LOCAL TAXES AND LICENSES 
(1) 
Notwithstanding the provisions of law to the contrary, zone 
registered 
enterprise 
shall, 
to 
the 
extent 
of 
their 
construction, operation, or production inside the zone be 
exempt from the payment of any and all local government 
imposts, fees, licenses or taxes. 
(2) 
Production equipment or machineries, not attached to real 
estate, used directly or indirectly, in the production, 
assembly or manufacture of the registered product of the 
zone registered enterprise shall be exempt from real property 
taxes. 
17 


(K) 
EMPLOYMENT OF FOREIGN NATIONALS 
Subject to the provision of Section 29 of 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; Provide however, That the 
total number of foreign nationals employed shall not exceed five percent 
(5%) of the enterprise’ total work force; Provided further, That when the 
majority of the capital stock of a registered enterprise is owned by foreign 
investors, the positions of the president, treasures and general manager 
of their equivalents may be retained by foreign nationals beyond the 
period set forth herein and such officer is the owner or a stockholder 
owning at least ten percent (10%) of the outstanding capital stock of the 
registered enterprise and he remains the owner or maintains his 
stockholdings therein. 
Foreign nationals under employment contract within the purview 
of this incentive, their spouses and unmarried children under eighteen 
(18) years of age, who are not excluded by Section 29 of Commonwealth 
Act numbered 613, as amended, shall be permitted to enter and reside in 
the Philippines during the period of employment of such foreign 
nationals. 
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. 
Article 17. Incentive to investors -When a foreign national covered 
under Article 16, paragraph (K) of this Code, invests an amount of at 
least US$150,000.00 
either in cash and/or equipment, in an enterprise 
engaged in an activity registered with the Board of Investments, he 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 of with any loathsome, dangerous or 
contagious disease; 
4. 
He has not been institutionalized for any mental disorder or 
disability; 
Provide further, That for purposes of compliance with this 
particular condition, the alien-applicant should prove that he has 
remitted such amount in acceptable foreign currency to BOI-accredited 
Philippine government banks or has brought into the Philippines the said 
equipment; Provided finally, That in securing the special investor’s 
18 


resident visa, the alien-applicant shall be entitled to the same privileges 
provided for under Article 16 (K), last paragraph. 
As a holder of the Special Investors 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 
investments in the country. Should said alien withdraw his investments 
from the Philippines, then the Special Investors 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 Philippine 
Economic Zone Authority, Subic Bay Metropolitan Authority, Clark 
Development 
Corporation, Cagayan 
Special Economic Zone 
and 
Zamboanga City Special Economic Zone. 
CHAPTER 111 - REGISTRATION OF ENTERPRISES 
Article 18. Qualifications of a Registered Enterprise. - To be 
entitled to register to avail of incentives, an applicant must satisfy the 
following conditions: 
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, it must be organized 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 ASEAN citizen or a 
corporation effectively controlled by ASEAN citizens shall be 
considered as a Philippine investor; Provided, that the 
investment is made in an activity where the constitution 
does not specifically require Filipino participation; 
That it will engage in an activity included in the IPP; 
That the activity it will engage in is not within the activities, 
reserved by the Constitution to the 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 therefore. 
If the applicant is engaged or proposes to engage in 
undertaking or activities other than registered projects, it 
has installed or undertakes to install an accounting system 
adequate to identify the investments, revenues, costs, and 
profits or losses of each registered project undertaken by the 
enterprise separately from 
the 
aggregate 
investment, 


I
’
 
revenues, costs, and profits of losses of the whole enterprise 
or to establish a separate corporation for each registered 
project if the Board should so require to facilitate proper 
implementation of this Code. 
CHAPTER IV - BASIC RIGHTS AND GUARANTEES 
OF REGISTERED ENTERPRISE 
Article 19. Protection of Investments - All 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 originally 
made and at the exchange rate prevailing at the time of repatriation, 
subject to the provisions of Section 74 of the Republic Act No. 265 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 
necessary 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 
no 
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 time of the remittance, subject to the 
provisions of Section 74 of the Republic Act No. 265 as amended; 
[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 
20 


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. 
Article 20. Administrative 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 Board of Governors shall be 
uniformly applied by all incentive administering agencies. 
Article 21. Application - Applications shall be filed with the Board 
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. 
Article 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; 
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. 
Article 23. Approval and Registration Procedures - The Board is 
authorized to adopt rules and regulations to facilitate action on 
applications filed with it; prescribed criteria for the evaluation of several 
applications; devise standard forms for the use of applicants and 
delegate to the regional offices of the Department of Trade and Industry 
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; and Provided finally that the 
Board shall act upon the application within ten (10) working days from 
compliance with the cause of the last deferment. 
21 


Article 24. Certificate of Registration - A registered 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. 
Article 25. Validity of BO1 registration. - A firm’s registration with 
the Board shall be valid for a period of twenty (20) years from the start of 
commercial operation unless extended by the Board. 
Article 26. Treaties on double taxation. - All projects registered 
with the Board shall be considered as preferred pioneer areas of activities 
for purposes of the treaties on double taxation with other countries. 
All enterprises registered with an Investment Promotion Agency 
shall be automatically registered with the Board of Investments for 
purposes of tax treaty privileges. 
Article 27. Capping of Incentives. - As it may deem necessary, the 
BO1 may impose a cap on the total amount of incentives that may be 
availed of by a registered enterprise within a given year. But in no case 
shall be the Board withdraw or commute the incentives granted after the 
firm’s registration except for violations of its registration terms and 
conditions. 
Article 28. Extension of period of availrnent. - 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. 
Article 29. Duration of Incentives. - Export-Oriented enterprises 
registered with PEZA, SBMA, CDC, CEZ, ZCEZ may enjoy the ITH or 
NOLCO granted by the concerned IPA, prior to availment of the 5% GIE, 
but, in no case shall the cumulative availment of the ITH/NOLCO and 
the 5% GIE incentives exceed twenty (20) years. 
Incentives provided under this Code where there is no specific 
period of availment shall terminate after a period of twenty (20) years 
from the date of registration or start-up of commercial operations of the 
registered enterprise, whichever is applicable; Provided however, that this 
shall not be applicable to the incentive of tax and duty free importation of 
22 


. 
capital equipment, raw materials, supplies and spare parts of enterprises 
registered with PEZA, SBMA, CDC, CEZ, ZCEZ. 
Article 30. Payment in the form of foreign currencies. - All 
investment promotion agencies may be allowed to receive foreign 
currencies as payment of application fees, fines and penalties, including 
refund of incentives. 
TITLE I11 
FINAL PROVISIONS 
Article 31. 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 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 reviews by the Board no more than every two years without 
prejudice to yearly merit reviews or increases based on productivity. The 
Board shall therefore be exempt from existing laws, rules and regulations 
on compensation, position classification and qualification standards. 
Article 32. 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 
availrpent, fines, penalties and refund of incentives and other sources of 
incode subject to the usual accounting process. 
Article 33. Vested Rights. - Existing registered enterprises which 
are enjoying the incentives under the laws repealed by Books One and 
Six of this Code shall continue to enjoy such incentives for the period 
therein stated: Provided, however, That firms which made investments on 
projects approved or registered by BO1 and PEZA six (6) months before 
the effectivity of this Code may opt to be governed by the provisions of 
this Code; Provided further, that PEZA enterprises enjoying the 5% GIE, 
regardless of date of registration, may opt to be governed by the 
provisions of this Code. 
Article 34. After Tax Profits. - Without prior Bangko Sentral 
approval, after tax profits and other earnings of foreign investments of 
registered enterprises may be remitted outward in the equivalent foreign 
exchange through any of the banks licensed by the Bangko Sentral ng 
Pilipinas; Provided, however, That such foreign investments in said 
enterprises have been previously registered with the Bangko Sentral. 
Article 35. Protection of 
the Environment. - The BOI, in 
coordination with the appropriate agencies, shall take concrete and 
appropriate steps and enact the proper measures for the protection of the 
environment. 
Article 36. Suspension and forfeiture of incentives; refund and 
penalties. - When there is probable cause to believe that the registered 
23 


enterprise has violated its registration terms and conditions, the Board 
may suspend its incentives availment, 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. 
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 all 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 dully 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,OOO.OO) but not 
more than Three Hundred Thousand Pesos (P300,OOO.OO). 
Government Officers and employees who participate directly or 
indirectly in the commission of the foregoing acts shall likewise be liable 
to a fine of not less than One Hundred Thousand Pesos (P100,OOO.OO) 
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 foreign national, in addition to the imposable fines 
and penalties above, the foregoing acts shall be grounds for his summary 
deportation. 
Article 37. 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 supersedes bond equivalent to the amount stated in 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 
24 


shall be allowed, subject to the posting of the aforementioned 
supersedes bond which shall be limited to cash and/or surety bond from 
a BOI-accredited bonding company. 
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 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 perpection 
of the appeal, unless reversed. 
Articl 38. Effectivity of Implementing Rules and Regulations. - The 
BOI, in consultation with NEDA,DOF, Department of Trade and Industry 
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 fifteen (15) days following its 
publication in a newspaper of general circulation in the Philippines. 
Article 39. 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. 
Article 40. Repealing Clause. - The following provisions or laws 
are hereby repealed: 
Batas Pambansa 44 
Batas Pambansa 39 1 
Presidential Decree No. 218 
Presidential Decree No. 14 19 
Presidential Decree No. 1623, as amended 
Presidential Decree No. 1789 
Presidential Decree No. 2032 
Presidential Decree No 538 
Executive Order No. 8 15 
Executive Order No. 1045 
Republic Act No. 7888 
Book I of Executive Order No. 226 is hereby absolutely 
repealed; 
Books I11 and IV of Executive Order No. 226 are hereby 
repealed by Republic Act 
No. 8756; and 
Books V and VI of Executive Order No. 226 are hereby 
absolutely repealed. 
The provisions of Republic Act Nos. 7916 and 8748, which 
are inconsistent with this Code are hereby repealed or 
modified accordingly. 
The Provisions of Commonwealth Act No. 146, as amended 
are hereby modified accordingly. 
The provisions of Section 12 of Republic Act No. 7227, 
otherwise known as the “Bases Conversion and Development 
Act of 1992, Section 4, Paragraphs (e), (r) and (g) of Republic 
25 


P 
Act No. 7903 otherwise known as “Zamboanga City Special 
Economic Zone Act of 1995” and Section 4, 
Paragraphs (b), 
(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 however, That they shall draw their respective 
incentives from any of those provided for under this Code. 
(5) 
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 Sections 10 (Q) (R) of this Code. The 
provision of Section 5 RA 7103, is modified by Section 7 (20) 
of this Code. 
(6) 
The incentives provisions under other investment incentives 
laws catering to specific industries are hereby repealed as 
follows : 
Section 36 of Presidential Decree No. 705, 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 Decree No. 538 otherwise known as 
the “Philippine Veterans Investment Development Corporation”, Sections 
16 and 17 of Presidential Decree No. 972 otherwise known as the “Coal 
Development Act”; Section 4 (a) and (d) of Presidential Decree No. 1442, 
otherwise known as the “Geothermal Exploration and Development Act”; 
and 
Section 10 and 11 of Republic Act No. 7156 otherwise known as 
the “Mini-hydroelectic Incentive Act”; Sections 6, 7 and 8 of Republic Act 
No. 7130 otherwise know as the “Iron and Steel Industry Act”; Sections 
6 and 7 of Republic Act No. 7471 otherwise know as the “Philippine 
Overseas Shipping Development Act”; Sections 19 and 20 of Republic 
Act No. 7279 otherwise 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 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. 7942 otherwise known as the “Philippine 
Mining Act of 1995”; Section 12 of Republic Act No. 7718 otherwise 
known as the “Build-operate-transfer Law”; Section 3 (a), (c), (d) and (h) 
of Republic Act 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”. 
(7) 
All other laws, acts, decrees, orders and issuances 
inconsistent with any provisions of this Code are hereby repealed or 
modified accordingly. 
Article 41. Effectivity. - This Code shall take effect fifteen (15) days 
after its complete publication in the Official Gazette or in at least two 
newspapers of general circulation. 
26 


Approved, 
27