Republic of the Philippines
HOUSE OF THE REPRESENTATIVD$
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

1042

HOUSE BILL NO,

Introduced by: HON. KRISTINE SINGSON-MEEHAN

AN ACT
AMENDING SECTIONS 4, 5, 20, 22, 27, 28, 34, 40, 50, 73, 112, 117, 204, 222, 237, 237-
A, 255, 256, 257, 258, 260, 261, 262, 263, 264, 265, 266, 275, 288, 290 AND ADDING
SECTIONS 6-A, 282-A, 291, 292, 293, 294, 295, 296, 297, 298, 299, 300, 301, 301-A, 301-
B, 302, 303, 304, 305, 306, 307, 308, 309, 310, 311, 312, 313, AND 314 UNDER THE
NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR
OTHER PURPOSES

EXP!

iATORY NOTE

There is a need to streamline the government’s interface with business to encourage
investment. One of the needed reforms is the optimization of the grant of incentives to
industries critical to economic development. Redundant incentives must be minimized, if not
totally removed, to give way for more productive ones.

This measure aims to provide the policy framework to rationalize the grant of incentives, It
seeks 10 entice increased investments even as it minimizes the revenue foregone from the
grant of incentives, estimated to reach more than Php100 Billion annually.

This measure hopes to pursue a market-responsive investment regime and grant investment
incentives that encourage long-term and recurrent investment Promoting substantial social
and economic spillovers and equitable development across income classes and across
provinces.

‘Thus, the passage of this bill is earnestly sought.

Ww


Republic of the Philippines
HOUSE OF THE REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

1042

HOUSE BILL NO.

Introduced by: HON. KRISTINE SINGSON-MEEHAN

AN ACT
AMENDING SECTIONS 4, 5, 20, 22, 27, 28, 34, 40, 50, 73, 112, 117, 204, 222, 237, 237-A, 255,
256, 257, 258, 260, 261, 262, 263, 264, 265, 266, 275, 288, 290 AND ADDING SECTIONS 6-A,
282-A, 291, 292, 293, 294, 295, 296, 297, 298, 299, 300, 301, 301-A, 301-B, 302, 303, 304, 305, 306,
307, 308, 309, 310, 311, 312, 313, AND 314 UNDER THE NATIONAL INTERNAL REVENUE
CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES

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

SECTION 1. Title. - This Act shall be known as the “Tax Reform for Attracting Better and High-quality
Opportunities,” or “TRABAHO.”
SEC. 2. Section 4 of the National intemal Revenue Code of 1997, as amended, is hereby further amended to read
as follows:
"SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. - The power to
interpret the provisions of the Code and other tax laws shall be under the exclusive and original jurisdiction of
the Commissioner, subject to review by the Secretary of Finance: PROVIDED, THAT THE POWER TO
INTERPRET THE PROVISIONS OF TITLE Xill OF THIS CODE SHALL BE UNDER THE
EXCLUSIVE AND ORIGINAL JURISDICTION OF THE SECRETARY OF FINANCE.
“The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges,
Penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions
thereof administered by the Bureau of Interial Revenue is vested in the Commissioner, subject to the
exclusive appellate jurisdiction ofthe Court of Tax Appeals.”
‘SEC. 3. Section 5 of the National intemal Revenue Code of 1997, as amended, is hereby further amended to read
as follows:
“SEC. 5. Power of the Commissioner to Obtain Information and to Summon, Examine, and Take
Testimony of Persons. - In ascertaining the correctness of any retum, or in making a return when none has

been made, or in determining the liability of any person for any intemal revenue tax, or in collecting
‘any such liability, or in evaluating tax compliance, the Commissioner is authorized:
MA) xxx

"@) xxx


“(C) xxx
4) xxx; [and]
4) xxx[J) AND
“(F) IN CASE THE INFORMATION OR RECORDS REQUESTED ARE NOT FURNISHED WITHIN
THE PERIOD PRESCRIBED IN THE WRITTEN NOTICE,OR © WHEN THE INFORMATION OR

RECORDS SUBMITTED ARE INCOMPLETE, THE COMMISSIONER OR HIS DULY
AUTHORIZED REPRESENTATIVE, SHALL ISSUE ‘A SUBPOENA DUCES TECUM STATING
THEREIN THE RELEVANT FACTS, SPECIFYING THE PARTICULAR DOCUMENTS OR
RECORDS NOT MADE AVAILABLE AND THE TAXPAYER LIABLE OR THE THIRD
PARTY/OFFICE CONCERNED: PROVIDED, THAT INFORMATION OR RECORDS DULY RECEIVED OR
ALREADY WITHIN THE CUSTODY OF THE BUREAU SHALL NOT BE COVERED BY ANY
SUBPOENA DUCES TECUM.

“THE SERVICE OF A SUBPOENA DUCES TECUM SHALL BE EFFECTED BY THE REVENUE
OFFICERS ASSIGNED TO INVESTIGATE THE CASE. HOWEVER, SUCH SERVICE MAY BE MADE BY
ANY OTHER INTERNAL REVENUE OFFICER AUTHORIZED FOR THE PURPOSE.

“THE SUBPOENA DUCES TECUM SHALL BE SERVED THROUGH PERSONAL
SERVICE, BUT IF NOT PRACTICABLE, IT SHALL BE SERVED BY SUBSTITUTED SERVICE IN
ACCORDANCE WITH THE RULES OF THE COURT.

“A CRIMINAL ACTION SHALL BE INSTITUTED FOR FAILURE TO OBEY THE SUBPOENA
DUCES TECUM.

“BOOKS, RECORDS, AND DOCUMENTS SUBMITTED AS A RESULT OF A SUBPOENA DUCES
TECUM SHALL BE UNDER THE CUSTODIANSHIP OF THE RECEIVING OFFICER WHO
‘SHALL BE RESPONSIBLE FOR ITS SAFEKEEPING AND PRESERVATION, SUBJECT TO APPLICABLE
RULES.” .

SEC. 4. A new section shall be inserted as Section 6-A of the National intemal Revenue Code of 1997, as
amended, to read as follows:

“SEC. 6-A. SERVICE OF LETTER OF AUTHORITY, AND ASSESSMENT NOTICES ISSUED BY
THE BUREAU. ~ THE NOTICE TO THE TAXPAYER HEREIN REQUIRED MAY BE SERVED BY THE
COMMISSIONER OR HIS DULY AUTHORIZED REPRESENTATIVE THROUGH PERSONAL SERVICE AT
HIS REGISTERED ADDRESS. IN CASE PERSONAL SERVICE IS NOT PRACTICABLE, THE NOTICE
SHALL BE SERVED BY SUBSTITUTED SERVICE IN ACCORDANCE WITH THE RULES OF THE
COURT.”

SEC. 5. Section 20 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read
as follows:

“SEC. 20. Submission of Report and Pertinent Information by the Commissioner. -

A) xxx

“(B) SUBMISSION OF TAX-RELATED INFORMATION TO THE DEPARTMENT OF
FINANCE. - THE PROVISIONS OF SECTION 71, NOTWITHSTANDING, THE COMMISSIONER SHALL,


UPON THE REQUEST OF THE SECRETARY OF FINANCE SPECIFICALLY IDENTIFYING THE NEEDED
INFORMATION AND JUSTIFICATION FOR SUCH REQUEST, FURNISH THE SECRETARY PERTINENT
TAXPAYER INFORMATION: PROVIDED, HOWEVER, THAT THE SECRETARY AND THE RELEVANT
OFFICERS HANDLING SUCH SPECIFIC INFORMATION SHALL BE COVERED BY THE PROVISIONS OF
SECTION 270.

“{(8)] (C) Report to Oversight Committee. - The Commissioner shal, wih reference to Section 204 of
this Code, submit to the Oversight Committee referred to in Section 290 hereof, through the Chairmen of the
Committee on Ways and Means of the Senate and House of Representatives, a report on the exercise of his
powers pursuant to the said Section, every six (6) months of each calendar year.”

SEC. 6. Section 22 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read
as follows:

“SEC. 22. Definitions. - xxx

4A) xxx

4B) xxx

4C) xxx

“O) xxx

“(E) The term ‘nonresident citizen’ means:

*(1) A citizen ofthe Philippines who establishes to the satisfaction of the Commissioner the fact of his
physical presence abroad with a definite intention to reside therein.

(2) A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad,
either as an immigrant or for employment on a permanent basis.

“3) Accitizen of the Philippines who works and derives income from abroad and whose employment
thereat requires him to be physically present abroad {most of the time] FOR ONE HUNDRED EIGHTY-
THREE (183) DAYS OR MORE during the taxable year.

“(4) A citizen who has been previously considered as nonresident citizen and who arrives in the
Philippines at any time during the taxable year to reside permanently in the Philippines shail likewise be
treated as a nonresident citizen for the taxable year in which he arrives in the Philippines with respect to his
income derived from sources abroad until the date of his arrival in the Philippines.

(6) The taxpayer shall submit proof to the Commissioner to show his intention of leaving the
Philippines to reside permanently abroad or to return to and reside in the Philippines as the case may be for
purpose of this Section.

SOK"

SEC. 7. Section 27 of the National intemal Revenue Code of 1997, as amended, is hereby further amended to read
as follows:

“SEC. 27. Rates of income Tax on Domestic Corporations. —

“(A) in General, ~ Except as otherwise provided in this Code, [an income tax of thity-five percent
(35%)] AN INCOME TAX RATE OF THIRTY PERCENT (30%), is hereby imposed upon the taxable income
derived during each taxable year from all sources within and without the Philippines by every corporation, as


defined in Section 22(B) of this Code and taxable under this Title as a corporation, organized in, or existing
under the laws of the Philippines: [Provided, That effective January 1, 2009, the rate of income tax shail be
thirty percent (30%),] PROVIDED, THAT THE RATE OF CORPORATE INCOME TAX SHALL BE TWENTY-
EIGHT PERCENT (28%) BEGINNING JANUARY 1, 2021; TWENTY-SIX PERCENT (26%) BEGINNING
JANUARY 4, 2023; TWENTY-FOUR PERCENT (24%) BEGINNING JANUARY 1, 2025; TWENTY-TWO
PERCENT (22%) BEGINNING JANUARY 1, 2027; AND TWENTY PERCENT (20%) BEGINNING
JANUARY 1, 2029: PROVIDED, FURTHER, THAT THE PRESIDENT MAY ADVANCE THE SCHEDULED
REDUCTION IN THE CORPORATE INCOME TAX RATE WHEN ADEQUATE SAVINGS ARE REALIZED
FROM THE RATIONALIZATION OF FISCAL INCENTIVES UNDER TITLE Xill OF THIS CODE, AS
CERTIFIED BY THE SECRETARY OF FINANCE.

“in the case of corporations adopting the fiscal-year accounting period, the taxable income
shall be computed without regard to the specific date when specific sales, purchases and other transactions
‘occur. Their income and expenses for the fiscal year shall be deemed to have been earned and spent equally
for each month of the period.

“The corporate income tax rate shall be applied on the amount computed by multiplying the number of
months covered by the new rate within the fiscal year by the taxable income of the corporation forthe period,
divided by twelve.

“[Provided, further, That the President, upon the recommendation of the Secretary of Finance, may,
effective January 1, 2000, allow corporations the option to be taxed at fifteen percent (15%) of gross income
a defined herein, after the following conditions have been satisfied:

“(1)_ A tax effort ratio of twenty percent (20%) of Gross National Product (GNP);

“(2). Aratio of forty percent (40%) of income tax collection to total tax revenues;

(8) AVAT tax effort of four percent (4%) of GNP; and]

“{(4) A.0.9 percent (0.9%) ratio of the Consolidated Public Sector Financial Position (CPSFP) to GNP.

“The option to be taxed based on gross income shall be available only to firms whose ratio of cost of
sales to gross sales or receipts from all sources does not exceed fifty-five percent (55%).

“The election of the gross income tax option by the corporation shall be irevocable for three (3)
consecutive taxable years during which the corporation is qualified under the scheme

“For purposes of this Section, the term ‘gross income’ derived from business shall be equivalent to
gross sales less sales retums, discounts and allowances and cost of goods sold. ‘Cost of goods sold’ shall
include all business expenses directly incurred to produce the merchandise to bring them to their present
location and use.

“For a trading or merchandising concem, ‘cost of goods sold’ shall include the invoice cost of the
goods sold, plus import duties, freight in transporting the goods to the place where the goods are actually
sold, including insurance while the goods are in transit.

“For a manufacturing concer, ‘cost of goods manufactured and soid’ shall include all costs of
production of finished goods, such as raw materials used, direct labor and manufacturing overhead, freight
cost, insurance premiums and other costs incurred to bring the raw materials to the factory or warehouse.)


“fin the case of taxpayers engaged in the sale of service, ‘gross income’ means gross receipts less
sales retums, allowances and discounts.]

“(8) Proprietary Educational institutions and Hospitals. ~

KKK"

“Provided, That if the gross income from ‘unrelated trade, business or other activity’ exceeds fifty
percent (60%) of the total gross income derived by such educational institutions or hospitals from all sources,
the tax prescribed in Subsection (A) hereof shall be imposed on the entire taxable income. For purposes of
this Subsection, the term ‘unrelated trade, business or other activity’ means any trade, business or other
activity, the conduct of which is not substantially related to the exercise or performance by such educational
institution or hospital ofits primary purpose or function. A ‘proprietary educational institution’ is any private
school maintained and administered by private individuals or groups with an issued permit to operate from the
Department of Educationf, Culture and Sports (DECS)] (DEPED), or the Commission on Higher Education
(CHED), or the Technical Education and Skills Development Authority (TESDA), as the case may be, in
‘accordance with existing laws and regulations.

“(C)_ Government-owned or -Controlied Corporations, Agencies or Instrumentalites. - The provisions
of existing special or general laws to the contrary notwithstanding, all corporations, agencies, or
instrumentaliies owned or controlled by the Government, except the Government Service Insurance System
(GSIS), the Social Security System (SSS), HOME DEVELOPMENT MUTUAL FUND, the Philippine Health
Insurance Corporation (PHIC), and the local water districts (LWDs) shall pay such rate of tax upon their
taxable income as are imposed by this Section upon corporations or associations engaged in a similar
business, industry, or activity.

40) xxx

E) xxx"

SEC. 8. Section 28 of the National intemal Revenue Code of 1997, as amended, is hereby further amended to read
as follows:

"SEC. 28, Rates of Income Tax on Foreign Corporations. ~

4A) Tax on Resident Foreign Corporations. -

"(1) In General. - Except as otherwise provided in this Code, a corporation organized, authorized, or
existing under the laws of any foreign country, engaged in trade or business within the Philippines, shall be
Subject to an income tax equivalent to {thirty-five percent (35%)] THIRTY PERCENT (30%) of the taxable
income derived in the preceding taxable year from all sources within the Philippines: [Provided, That effective
January 1, 2009, the rate of income tax shall be thirty percent (30%)] PROVIDED, THAT THE RATE OF
CORPORATE INCOME TAX SHALL BE TWENTY-EIGHT PERCENT (28%) BEGINNING JANUARY 1,
2021; TWENTY-SIX PERCENT (26%) BEGINNING JANUARY 1, 2023; TWENTY-FOUR PERCENT
(24%) BEGINNING JANUARY 1, 2025; TWENTY-TWO PERCENT (22%) BEGINNING JANUARY 1, 2027;
AND TWENTY PERCENT (20%) BEGINNING JANUARY 1, 2029: PROVIDED, FURTHER, THAT THE
PRESIDENT MAY ADVANCE THE SCHEDULED REDUCTION IN THE CORPORATE INCOME TAX RATE


WHEN ADEQUATE SAVINGS ARE REALIZED FROM THE RATIONALIZATION OF FISCAL INCENTIVES
UNDER TITLE Xill OF THIS CODE, AS CERTIFIED BY THE SECRETARY OF FINANCE.

“In the case of corporations adopting the fiscal-year accounting period, the taxable income
shall be computed without regard to the specific date when sales, purchases and other transactions occur.
Their income and expenses for the fiscal year shall be deemed to have been eamed and spent equally for
‘each month of the period.

“The corporate income tax rate shal be applied on the amount computed by multiplying the number of
‘months covered by the new rate within the fiscal year by the taxable income of the corporation forthe period,
divided by twelve.

‘[Provided, however, That a resident foreign corporation shall be granted the option to be taxed at
fifteen percent (15%) on gross income under the same conditions, as provided in Section 27(A).]

2) xxx

“Q) xxx

“{(4) Offshore Banking Units. - The provisions of any law to the contrary notwithstanding, income
derived by offshore banking units authorized by the Bangko Sentral ng Pilipinas (BSP), from foreign currency
transactions with nonresidents, other offshore banking units, local commercial banks, including branches of
foreign banks that may be authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business with
offshore banking units shall be exempt from all taxes except net income from such transactions as may
be specified by the Secretary of Finance, upon recommendation of the Monetary Board which shall be subject
to the regular income tax payable by banks: Provided, however, That any interest income derived from foreign
Currency loans granted to residents other than offshore banking units or local commercial banks, including
‘ocal branches of foreign banks that may be authorized by the BSP to transact business with offshore banking
Units, shall be subject only to a final tax at the rate of ten percent (10%).

“Any income of nonresidents, whether individuals or corporations, from transactions with said offshore
banking units shall be exempt from income tax.]

“[(6)] (4) Tax on Branch Profits Remittances. - Any profit remitted by a branch to its head office shall
bbe subject to a tax of fifteen percent (15%) which shail be based on the total profits applied or earmarked for
‘emittance without any deduction forthe tax component thereof [(except those activities which are registered
with the Philippine Economic Zone Authority)]. x x x

“{E)] (5) Regional or Area Headquarters and Regional Operating Headquarters of Multinational
Companies. ~

“(@) Regional or area headquarters as defined in Section 22(0D) shall not be subject to income tax.

“(b) Regional operating headquarters as defined in Section 22(E€) shall pay a tax of ten percent (10%)
of their taxable income.

“PROVIDED, THAT REGIONAL OPERATING HEADQUARTERS SHALL BE SUBJECT TO THE
REGULAR CORPORATE INCOME TAX TWO (2) YEARS FROM THE EFFECTIVITY OF THIS ACT.

“{(7)] (6) Tax on Certain Incomes Received by a Resident Foreign Corporation, —


“(a)_ Interest from Deposits and Yield or any other Monetary Benefit from Deposit Substitutes, Trust
Funds and Similar Arrangements and Royalties. — Interest from any currency bank deposit and yield or any
other monetary benefit from deposit substitutes and from trust funds and similar arrangements and royalties
derived from sources within the Philippines shall be subject to a final income tax at the rate of twenty percent
(20%) of such interest: Provided, however, That interest income derived by a resident foreign corporation
{rom a depository bank under the expanded foreign currency deposit system shall be subject toa final income
tax at the rate of {seven and one-half percent (7'/,%)] FIFTEEN PERCENT (15%) of such interest income.

“(b)_ Income Derived under the Expanded Foreign Currency Deposit System. - xxx

“(c) Capital Gains from Sale of Shares of Stock Not Traded in the Stock Exchange. ~ A final tax at
the rate[s prescribed below] OF FIFTEEN PERCENT (15%) is hereby imposed upon the net capital gains
realized during the taxable year from the sale, barter, exchange or other disposition of shares of stock in a
domestic corporation except shares sold or disposed of through the stack exchange:

"Not over P100,000 «.....socseseeeseseneess
“On any amount in excess of P100,000 ..... 10%)

“(d)_ Intercorporate Dividends. ~ x xx

“(B) Tax on Nonresident Foreign Corporation, ~

“(1)_ In General. - Except as otherwise provided in this Code, a foreign corporation not engaged in
trade or business in the Philippines shall pay a tax equal to {thity-ive percent (35%)] THIRTY PERCENT
(30%) of the gross income received during each taxable year from all sources within the Philippines, such as
interests, dividends, rents, royalties, salaries, premiums (except reinsurance premiums), annuities,
emoluments or other fixed or determinable annual, periodic or casual gains, profits and income, and capital
gains, except capital gains subject to tax under subparagraph 5(c): [Provided, That effective January 1,
2008, the rate of income tax shail be thirty percent (30%).] PROVIDED, THAT THE RATE OF CORPORATE
INCOME TAX SHALL BE TWENTY-EIGHT PERCENT (28%) BEGINNING JANUARY 4, 2024; TWENTY-
SIX PERCENT (26%) BEGINNING JANUARY 1, 2023; TWENTY-FOUR PERCENT (24%) BEGINNING
JANUARY 1, 2025; TWENTY-TWO PERCENT (22%) BEGINNING JANUARY 1, 2027; AND TWENTY
PERCENT (20%) BEGINNING JANUARY 1, 2029: PROVIDED, FURTHER, THAT THE PRESIDENT MAY
ADVANCE THE SCHEDULED REDUCTION IN THE CORPORATE INCOME TAX RATE WHEN
ADEQUATE SAVINGS ARE REALIZED FROM THE RATIONALIZATION OF FISCAL INCENTIVES
UNDER TITLE Xill OF THIS CODE, AS CERTIFIED BY THE SECRETARY OF FINANCE.

“(2)_ Nonresident Cinematographic Film Owner, Lessor or Distributor. — A cinematographic film owner,
lessor, or distributor shall pay a tax of twenty-five percent (25%) ofits gross income from all sources within the
Philippines.

8) xxx

"A) xxx

(6), Tax on Certain Incomes Received by a Nonresident Foreign Corporation. —

“(@)_ Interest on Foreign Loans. ~ xxx


“(b)_Intercorporate Dividends. - A final withholding tax at the rate of fiteen percent (15%) is hereby
Imposed on the amount of cash and/or property dividends received from a domestic corporation, which shall
be collected and paid as provided in Section 57(A) of this Code, subject to the condition that the country in
which the nonresident foreign corporation is domiciled, shall allow a credit against the tax due from the
Nonresident foreign corporation taxes deemed to have been paid in the Philippines equivalent to (twenty
Percent (20%)] FIFTEEN PERCENT (15%), which represents the difference between the regular income tax
{of thity-five percent (35%)] and the fifteen percent (15%) tax on dividends as provided in this subparagraph:
Provided, That [effective January 1, 2009] EFFECTIVE JANUARY 1, 2019, the credit against the tax due
Shall be equivalent to [fifteen percent (15%), which represents] the difference between the regular income tax
RATE [of thirty percent (30%)] and the fiteen percent (15%) tax on dividends;

“(©) Capital Gains from Sale of Shares of Stock not Traded in the Stock Exchange. — A final tax at
the rate[s prescribed below] OF FIFTEEN PERCENT (15%) is hereby imposed upon the net capital gains
realized during the taxable year from the sale, barter, exchange or other disposition of shares of stock in a
domestic corporation, except shares sold, or disposed of through the stock exchange.

Not over P100,000 ....cscssnessstnssene 5M

“On any amount in excess of P100,000 .... 10%]"

SEC. 9. Section 34 ofthe National Intemal Revenue Code of 1997, as amended, is hereby further amended to read
as follows:

"SEC. 34. Deductions from Gross Income. - Except for taxpayers eaming compensation income
arising from personal services rendered under an employer-employee relationship where no deductions shall
be allowed under this Section, in computing taxable income subject to income tax under Sections 24(A);
25(A); 26; 27(A), (B), and (C); and 28(A)(1), there shall be allowed the following deductions from gross
income:

“A) Expenses, ~

“(1) Ordinary and Necessary Trade, Business or Professional Expenses. ~

xx

“@) Interest. -

“(1) In General. ~ The amount of interest paid or incurred within a taxable year on indebtedness in
Connection with the taxpayer's profession, trade or business shall be allowed as deduction from gross
income: Provided, however, That the taxpayer's otherwise allowable deduction for interest expense shall be
reduced by [forty-two percent (42%)] THIRTY-THREE PERCENT (33%) of the interest income
Subjected to final tax{: Provided, That effective January 1, 2009, the percentage shall be thirty-three percent
(33%). PROVIDED, FURTHER, THAT THE FOLLOWING PERCENTAGES SHALL APPLY IF THE
CORPORATE INCOME TAX RATE AS PROVIDED IN SECTIONS 27(A) AND 28(A)(1) IS ADJUSTED AS
FOLLOWS:

“IF RATE IS TWENTY-EIGHT PERCENT (28%), INTEREST EXPENSE REDUCTION RATE IS
TWENTY-NINE PERCENT (29%);


10

“IF RATE IS TWENTY-SIX PERCENT (26%), INTEREST EXPENSE REDUCTION RATE IS
TWENTY-THREE PERCENT (23%);

“IF RATE IS TWENTY-FOUR PERCENT (24%), INTEREST EXPENSE REDUCTION RATE IS
SIXTEEN PERCENT (16%);

“IF RATE IS TWENTY-TWO PERCENT (22%), INTEREST EXPENSE REDUCTION RATE IS NINE
PERCENT (9%);

“IF RATE IS TWENTY PERCENT (20%), INTEREST EXPENSE REDUCTION RATE IS ZERO
PERCENT (0%).

"PROVIDED, FINALLY, THAT IF THE INTEREST INCOME TAX IS ADJUSTED IN THE FUTURE,
THE INTEREST EXPENSE REDUCTION RATE SHALL BE ADJUSTED ACCORDINGLY BASED ON THE
PRESCRIBED STANDARD FORMULA AS DEFINED IN THE RULES ‘AND REGULATIONS
TO BE PROMULGATED BY THE SECRETARY OF FINANCE, UPON THE RECOMMENDATION OF THE
COMMISSIONER.

"Q) xxx

“C) Taxes. - xxx

4D) Losses. ~ xxx

“E) Bad Debts. - xxx

“() Depreciation, ~ xxx

“(@)_Depletion of Oil and Gas Wells and Mines. -x xx

“(H) Charitable and Other Contributions. — xxx

“(Research and Development. ~ xxx

“() Pension Trusts. - xxx

“{K) Additional Requirements for Deductibilty of Certain Payments. — xxx

“(L) Optional Standard Deduction (OSD). - In lieu of the deductions allowed under the preceding
Subsections, an individual subject to tax under Section 24, other than a nonresident alien, (may elect a
Standard deduction in an amount not exceeding forty percent (40%) of his gross sales or gross receipts, as
the case maybe. In the case of a] AND A corporation CLASSIFIED AS A MICRO, SMALL AND MEDIUM-
SIZED ENTERPRISE AS DETERMINED BY THE DEPARTMENT OF TRADE AND INDUSTRY AND
Subject to tax under Sections 27(A) and 28(A)(1), [it] may elect a standard deduction in an amount not
exceeding forty percent (40%) of its gross income as defined in Section 32 of this Code. Unless the taxpayer
Signifies in his return his intention to elect the optional standard deduction, he shall be considered as having
availed himself of the deductions allowed in the preceding Subsections. Such election when made in the
return shall be irrevocable for the taxable year for which the retun is made: Provided, That an individual who
is entitled to and claimed for the optional standard deduction shall not be required to submit with his
tax retum such financial statements otherwise required under this Code: [Provided, further, That a
general professional partnership and the partners comprising such partnership may avail of the optional
standard deduction only once, either by the general professional partnership or the partners comprising the
partnership:] Provided, [finaly.] FURTHER, That except when the Commissioner otherwise permits, the said


individual shall keep such records pertaining to his gross sales or gross receipts, or the said corporation shall
keep such records pertaining to his gross income as defined in Section 32 of this Code during the taxable
year, as may be required by the rules and regulations promulgated by the Secretary of Finance, upon
recommendation of the Commissioner.

“Notwithstanding the provisions of the preceding Subsections, the Secretary of Finance, upon
tecommendation of the Commissioner, after a public hearing shall have been held for this purpose,
may prescribe by rules and regulations, limitations ‘r ceilings for any of the itemized deductions
under Subsections (A) to (J) of this Section: Provided, That for purposes of determining such
ceilings or limitations, the Secretary of Finance shall consider the following factors: (1) adequacy of
the prescribed limits on the actual expenditure requirements of each particular industry; and (2)
effects of inflation on expenditure levels: Provided, further, That no ceilings shall further be imposed
‘on items of expense already subject to ceilings under present law.”

SEC. 10. Section 40(C)(2) of the National intemal Revenue Code of 1997, as amended, is hereby further amended
to read as follows:

“SEC. 40. Determination of Amount and Recognition of Gain or Loss. —

A) xxx

4B) xxx

“(C) Exchange of Property. —

“W) xxx

(2) Exception. ~ No gain or loss shall be recognized TO A CORPORATION OR ON ITS STOCK OR
SECURITIES IF SUCH CORPORATION IS A PARTY TO A REORGANIZATION AND EXCHANGES
PROPERTY, [i] in pursuance of a plan of {merger or consolidation] REORGANIZATION SOLELY FOR
‘STOCK OR SECURITIES IN ANOTHER CORPORATION THAT IS A PARTY TO THE REORGANIZATION.
‘A REORGANIZATION IS DEFINED AS:

“(a) A corporation, which is a party to a merger or consolidation, exchanges property solely for stock
in a corporation, which is a party to the merger or consolidation; or

“(0)_ [A shareholder exchanges stock in a corporation, which is a party to the merger or consolidation,
solely forthe stock of another corporation also a party to the merger or consolidation; or] THE ACQUISITION
BY ONE CORPORATION, IN EXCHANGE SOLELY FOR ALL OR A PART OF ITS VOTING STOCK, OR
IN EXCHANGE SOLELY FOR ALL OR A PART OF THE VOTING STOCK OF A CORPORATION WHICH
IS IN CONTROL OF THE ACQUIRING CORPORATION, OF STOCK OF ANOTHER
CORPORATION IF, IMMEDIATELY AFTER THE ACQUISITION, THE ACQUIRING CORPORATION HAS
CONTROL OF SUCH OTHER CORPORATION WHETHER OR NOT SUCH ACQUIRING CORPORATION
HAD CONTROL IMMEDIATELY BEFORE THE ACQUISITION;

“(c) TA security holder of a corporation, which is a party to the merger or consolidation, exchanges his
securities in such corporation, solely for stock or securities in another corporation, a party to the
merger or consolidation J THE ACQUISITION BY ONE CORPORATION, IN EXCHANGE SOLELY FOR ALL
OR A PART OF ITS VOTING STOCK OR IN EXCHANGE SOLELY FOR ALL OR A PART OF THE


VOTING STOCK OF A CORPORATION WHICH IS IN CONTROL OF THE ACQUIRING
CORPORATION, OR SUBSTANTIALLY ALL OF THE PROPERTIES OF ANOTHER CORPORATION, BUT

IN DETERMINING WHETHER THE EXCHANGE IS SOLELY FOR STOCK THE ASSUMPTION BY
THE ACQUIRING CORPORATION OF A LIABILITY OF THE OTHER SHALL BE
DISREGARDED;

“(D) ARECAPITALIZATION; OR

“{E) AREINCORPORATION.

“No gain or loss shall also be recognized if property is transferred to a corporation by a person in
exchange for stock or unit of participation in such a corporation of which as a result of such exchange said
person, alone or together with others, not exceeding four (4) persons, [gains control of said corporation] AND,
IMMEDIATELY AFTER, SUCH PERSON OR PERSONS ARE IN CONTROL: Provided, That stocks issued
for services shall not be considered as issued in return for property.

“IN ALL OF THE ABOVE INSTANCES, THE TRANSACTION OR ARRANGEMENT MUST BE
UNDERTAKEN FOR A LEGITIMATE OR BONA FIDE BUSINESS PURPOSE AND NOT SOLELY FOR THE
PURPOSE OF AVOIDING OR ESCAPING THE BURDEN OF TAXATION.

“THE PROVISION OF SECTION 50 OF THIS CODE SHALL BE APPLIED AND ENFORCED IN
CASES WHERE THE TRANSACTION OR ARRANGEMENT ENTERED INTO IS FOUND TO BE NOT FOR
LEGITIMATE OR BONA FIDE BUSINESS PURPOSE.

“SALE OR EXCHANGES OF PROPERTY USED FOR BUSINESS FOR SHARES OF STOCK
COVERED UNDER THIS SUBSECTION SHALL NOT BE SUBJECT TO VALUE-ADDED TAX (VAT).

OK"

SEC. 11. Section 50 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to
read as follows:

“SEC. 50. [Allocation of Income and Deductions. -In the case of two or more organizations, trades or
businesses (whether or not incorporated and whether or not organized in the Philippines) owned or controlled
directly or indirectly by the same interests, the Commissioner is authorized to distribute, apportion or allocate
{gross income or deductions between or among such organization, trade or business, if he determines that
such distribution, apportionment or allocation is necessary in order to prevent evasion of taxes or clearly to
reflect the income of any such organization, trade or business ] AUTHORITY OF THE COMMISSIONER TO
DISTRIBUTE, APPORTION, ALLOCATE, AND IMPUTE INCOME AND DEDUCTIONS TO DISREGARD
AND COUNTERACT TAX AVOIDANCE ARRANGEMENTS. - IN CASE OF TWO (2) OR MORE
ORGANIZATIONS, TRADES OR BUSINESSES, WHETHER OR NOT ORGANIZED IN
THE PHILIPPINES, OWNED OR CONTROLLED DIRECTLY OR INDIRECTLY BY THE SAME INTERESTS,
THE COMMISSIONER IS AUTHORIZED TO DISTRIBUTE, APPORTION, ALLOCATE, OR IMPUTE
INCOME OR DEDUCTIONS BETWEEN OR AMONG SUCH — ORGANIZATIONS, TRADES OR
BUSINESSES, IF THE COMMISSIONER DETERMINES THAT SUCH DISTRIBUTION,
APPORTIONMENT, ALLOCATION, OR IMPUTATION IS NECESSARY IN ORDER TO PREVENT


AVOIDANCE OF TAXES OR TO CLEARLY REFLECT THE INCOME OF ANY SUCH
ORGANIZATION, TRADE, OR BUSINESS.

“IN CASES WHEN A TRANSACTION OR ARRANGEMENT, WHETHER ENTERED INTO BY THE
PERSON AFFECTED BY THE TRANSACTION OR ARRANGEMENT OR BY ANOTHER PERSON, THAT
DIRECTLY OR INDIRECTLY HAS TAX AVOIDANCE AS ITS PURPOSE OR EFFECT, WHETHER OR NOT
ANY OTHER PURPOSE OR EFFECT 1S ATTRIBUTABLE TO ORDINARY BUSINESS OR FAMILY
DEALINGS, IF THE TAX AVOIDANCE PURPOSE OR EFFECT IS NOT MERELY INCIDENTAL, THE
COMMISSIONER IS AUTHORIZED TO DISREGARD AND CONSIDER SUCH TRANSACTION OR
ARRANGEMENT AS VOID FOR INCOME TAX PURPOSES, AND MAY ADJUST THE TAXABLE
INCOME OF A PERSON AFFECTED BY THE ARRANGEMENT IN A WAY THE COMMISSIONER
THINKS APPROPRIATE, IN ORDER TO COUNTERACT A TAX ADVANTAGE OBTAINED BY THE
PERSON FROM OR UNDER THE ARRANGEMENT.

“FOR PURPOSES OF THIS SECTION, THE TERM ‘TAX AVOIDANCE’ INCLUDES: (A) DIRECTLY
OR INDIRECTLY ALTERING THE INCIDENCE OF ANY INCOME TAX; (8) DIRECTLY OR
INDIRECTLY RELIEVING A PERSON FROM LIABILITY TO PAY INCOME TAX OR FROM A POTENTIAL
OR PROSPECTIVE LIABILITY TO FUTURE INCOME TAX; OR (C) DIRECTLY OR INDIRECTLY
AVOIDING, POSTPONING, OR REDUCING ANY LIABILITY TO INCOME TAX, OR ANY POTENTIAL OR
PROSPECTIVE LIABILITY TO FUTURE INCOME TAX. THERE IS TAX AVOIDANCE IN THE
AFOREMENTIONED INSTANCES, WHERE THE TRANSACTION OR ARRANGEMENT IS MOTIVATED
BY OBTAINING TAX BENEFIT OR ADVANTAGE WITH NO COMMERCIAL REALITY OR ECONOMIC
EFFECT AND THE USE OF THE PROVISIONS OF TAX LAWS ON SUCH TRANSACTION OR
ARRANGEMENT WOULD NOT HAVE BEEN THE INTENTION OF THE LAW."

SEC. 12. Section 73 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as
follows:

“SEC. 73, Distribution of Dividends or Assets by Corporations. ~

(A) Definition of Dividends. ~ The term ‘dividends’ when used in this Title means any distribution
made by a corporation to its shareholders out of its earings or profits and payable to its shareholders,
whether in money or in other property.

[Where a corporation distributes all of its assets in complete liquidation or dissolution, the gain
realized or loss sustained by the stockholder, whether individual or corporate, is a taxable income or a
deductible loss, as the case may be.]

“(B) Stock Dividend. - A stock dividend representing the transfer of surplus to capital account shall
‘not be subject to tax. However, f a corporation cancels or redeems stock issued as a dividend at such time
and in such manner as to make the distribution and cancellation or redemption, in whole or in part, essentially
equivalent to the distribution of a taxable dividend, the amount so distributed in redemption or cancelation of
the stock shall be considered as taxable income to the extent that it represents a distribution of eamings or
profits.


+(C)_ LIQUIDATING DIVIDENDS. - LIQUIDATING DIVIDENDS ARE DIVIDENDS REPRESENTING
THE REMAINING GAINS REALIZED OR LOSS SUSTAINED BY THE STOCKHOLDER IN A COMPLETE
LIQUIDATION OR DISSOLUTION BY A CORPORATION AND SHALL BE CONSIDERED AS TAXABLE
INCOME OR A DEDUCTIBLE LOSS, AS THE CASE MAY BE.

“[(C)] (0) Dividends Distributed are Deemed Made from Most Recently Accumulated Profits. ~ Any
distribution made to the shareholders or members of a corporation shall be deemed to have been made from
the most recently accumulated profits or surplus, and shall constitute a part of the annual income of the
distributee for the year in which received

“{(0)] (E) Net Income of a Partnership Deemed Constructively Received by Partners. ~ The taxable
income dectared by a partnership for a taxable year which is subject to tax under Section 27(A) of this Code,
after deducting the corporate income tax imposed therein, shall be deemed to have been actually or
constructively received by the partners in the same taxable year and shall be taxed to them in their individual
capacity, whether actually distributed or not”

SEC. 13, Section 112(A) and 112(8) of the National internal Revenue Code of 1997, as amended, is hereby further
amended to read as follows:

“SEC. 112, Refunds [or Tax Credits] of input Tax, -

“(A) Zero-Rated or Etfectively Zero-Rated Sales. - Any VAT-registered person, whose sales are zero-
rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales
were made, apply for [the issuance of a tax credit certificate or} refund of creditable input tax due or paid
attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied
against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2)
and [(b) and] Section 108 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had
been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas
(BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and
also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due
or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated
proportionately on the basis of the volume of sales: Provided, finaly, That for a person making sales that are
zero-rated under Section 108(B)(6), the input taxes shall be allocated ratably between his zero-rated and non-
zero-rated sales

“B) Cancellation of VAT Registration. - A person whose registration has been cancelled due to
retirement from or cessation of business, or due to changes in or cessation of status under Section 106(C) of
this Code may, within two (2) years from the date of cancellation, apply for {the issuance of a tax credit
certiicate for any unused input tax which may be used in payment of his other internal revenue taxes]
REFUND.

SEC. 14. Section 117 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as
follows:

“SEC. 117. Percentage Tax on Domestic Carriers and Keepers of Garages. ~ Cars for rent or hire
driven by the lessee; transportation contractors, including persons who transport passengers for hire, and


other domestic carriers by land for the transport of passengers (except OWNERSIOPERATORS OF
TRICYCLES OPERATING NOT MORE THAN TWO (2) UNITS, owners of bancas, and owners of animal-
drawn two-wheeled vehicle), and keepers of yarages shall pay a tax equivalent to three percent (3%) of their
quarterly gross receipts.
SOK
SEC. 15. Section 204 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as
follows:
“SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The
Commissioner may ~
“(A)_ Compromise the payment of any internal revenue tax, when:
“(1) A reasonable doubt as to the validity of the claim against the taxpayer exists; or
(2) The financial position of the taxpayer demonstrates a clear inability to pay the assessed tax.
“The compromise settlement of any tax liability shail be subject to the following minimum amounts:
“For cases of financial incapacity, a minimum compromise rate equivalent to ten percent (10%) of the
basic assessed tax; and
“For other cases, a minimum compromise rate equivalent to forty percent (40%) ofthe basic assessed
tax.
“Where the basic tax involved exceeds [One] TEN million pesos {(P1,000.000)] (P10,000,000) or
where the settlement offered is less than the prescribed minimum rates, the compromise shall be subject to
the approval of the Evaluation Board which shall be composed of the Commissioner and the four (4) Deputy
Commissioners.
OK"
SEC. 16. Section 222 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as
follows
“SEC. 222. Exceptions as to Period of Limitation of Assessment and Collection of Taxes. ~
(a) xxx
“(b)_If before the expiration of the time prescribed in Section 203 for the assessment ofthe tax, [both
the Commissioner and) the taxpayer [have agreed] APPLIES WITH THE COMMISSIONER in writing to its
assessment after such time, the tax may be assessed within the period [agreed upon] SPECIFIED IN THE
APPLICATION WHICH SHALL NOT EXCEED SIX (6) MONTHS AT ANY ONE TIME. The
FOREGOING period [so agreed upon} may be extended by subsequent written [agreement] APPLICATION
made before the expiration of the period previously [agreed upon] APPLIED FOR
KK"
SEC. 17. Section 237 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as
follows:
“SEC. 237. Issuance of Receipts or Sales or Commercial invoices. -
4A) Issuance. ~ xxx


to

Within five (5) years from the effectivity of this Act and upon the establishment of a system capable of
storing and processing the required data, the Bureau shall require taxpayers engaged in the export of goods
and services, taxpayers engaged in e-commerce, and taxpayers under the jurisdiction of the Large Taxpayers
Service to issue AND TRANSMIT electronic receipts or sales or commercial invoices fin leu of manual
receipts or sales or commercial invoices] THRU DESIGNATED ELECTRONIC CHANNELS WITH A PUBLIC
CERTIFICATION SYSTEM ACCREDITED BY THE BUREAU, subject to the rules and regulations to be
issued by the Secretary of Finance upon recommendation of the Commissioner [and after al following a
public hearing [shall have been] held for this purpose: Provided, That taxpayers not covered by the mandate
of this provision may issue electronic receipts of sales or commercial invoices in lieu of manual
receipts or sales or commercial invoices: PROVIDED, FURTHER, SUBJECT TO THE RULES AND
REGULATIONS TO BE ISSUED BY THE SECRETARY OF FINANCE, THE COMMISSIONER MAY
REQUIRE ANY TAXPAYER TO COMPLY WITH THE PROVISIONS OF THIS SECTION.

“A PUBLIC CERTIFICATION SYSTEM SHALL REFER TO A DIGITAL PERSONAL
AUTHENTICATION PROGRAM WITH ABILITY TO VERIFY THE IDENTITY OF ISSUING TAXPAYER AND
ATTEST TO THE AUTHENTICITY OF THE INFORMATION IN THE ELECTRONIC RECEIPTS OR
‘SALES OR COMMERCIAL INVOICES. THIS MAY INCLUDE THE USE OF DIGITAL SIGNATURE ISSUED
BY CERTIFICATION AUTHORITY AS ACCREDITED BY THE BUREAU OF INTERNAL REVENUE.

"A DESIGNATED ELECTRONIC CHANNEL SHALL REFER TO ANY MEDIUM OR PORTAL
IDENTIFIED BY THE BUREAU WITH AN ABILITY TO RECEIVE THE TRANSACTION DATA
OF THE ELECTRONIC RECEIPTS OF SALES OR COMMERCIAL INVOICES FOR ASSIGNMENT OF AN
APPROVED ELECTRONIC TAX TRANSACTION NUMBER.

“AN APPROVED TAX TRANSACTION NUMBER SHALL REFER TO THE UNIQUE ASSIGNED
SERVICE NUMBERS AND/OR LETTERS LINKED TO A VALIDATED SALES TRANSACTION REPORTED
THROUGH THE DESIGNATED ELECTRONIC CHANNEL.

“The original of each receipt or invoice shall be issued to the purchaser, customer, or client at the time
the transaction is effected, who, if engaged in the business or in the exercise of profession, shall keep and
preserve the same in his place of business for a period of three (3) years from the close of the taxable year in
Which such invoice or receipt was issued, while the duplicate shall be kept and preserved by the issuer, also
in hs place of business, fora like period: Provided, That in case of electronic receipts or sales or commercial
invoices, digital record of the same [shall be kept by the purchaser, customer or client and the issuer for the
same period above stated] BEARING THE APPROVED ELECTRONIC TAX TRANSACTION NUMBER
SHALL BE SUFFICIENT COMPLIANCE.

“The Commissioner may, in meritorious cases, exempt any person subject to internal revenue tax from
‘compliance with the provision of this Section.”

SEC. 18. Section 237-A of the National internal Revenue Code of 1997, as amended, is hereby amended to read
as follows:

“SEC. 237-A. Electronic Sales Reporting System. — Within five (5) years from the effectivity of this Act
and upon the establishment of a system capable of storing and processing the required data, the Bureau shall


require taxpayers engaged in the export of goods and services, and taxpayers engaged in e-
commerce and taxpayers under the jurisdiction of the Large Taxpayers Service to USE A SYSTEM
CAPABLE OF ISSUING ELECTRONIC RECEIPTS OR SALES OR COMMERCIAL INVOICES, COLLECT
TRANSACTION RECORDS, AND TRANSMIT THE SAME THROUGH THE DESIGNATED ELECTRONIC
CHANNELS OF THE BUREAU IN THE STANDARD FORMAT REQUIRED (electronically report their sales
data to the Bureau through the use of electronic point of sales systems,] subject to the rules and regulations
to be issued by the Secretary of Finance upon recommendation of the Commissioner of Internal Revenue:
Provided, That the POINT OF SALE (POS) machines, VALUE-ADDED NETWORK (VAN) TERMINALS,
fiscal devices, and fiscal memory devices WITH CAPACITY TO MAKE SUCH TRANSMISSION shall be at
the expense of the taxpayers: PROVIDED, FURTHER, SUBJECT TO THE RULES AND REGULATIONS
TO BE ISSUED BY ‘THE SECRETARY OF FINANCE, THE COMMISSIONER MAY
REQUIRE ANY TAXPAYER TO COMPLY WITH THE PROVISIONS OF THIS SECTION.

“IN YEAR ONE (1) TO YEAR FOUR (4) OF THE IMPLEMENTATION PERIOD, A TAXPAYER WHO
ADOPTS THE REQUIRED SYSTEM SHALL BE GRANTED A TAX CREDIT OF 0.1% OF THE PURCHASE
VALUE, NET OF VALUE-ADDED TAX, FOR EVERY ELECTRONIC RECEIPT OR SALE OR
COMMERCIAL INVOICE TRANSMITTED THROUGH THE DESIGNATED ELECTRONIC CHANNELS OF
THE BUREAU AND ISSUED AN ELECTRONIC TAX TRANSACTION NUMBER.

“IN SUPPORT OF THE ELECTRONIC SALES REPORTING SYSTEM, THE BUREAU OF INTERNAL
REVENUE MAY GRANT TAX INCENTIVES FOR ELECTRONICALLY TRACEABLE PAYMENTS (ETP) IN
THE FORM OF ALLOWABLE DEDUCTIBLE EXPENSE OF UP TO TEN PERCENT (10%) OF
THE ETP MADE BY THE TAXPAYER. AN ANNUAL LIMIT ON THE ALLOWED ETP DEDUCTIBLE
EXPENSE PER TAXPAYER MAY BE SET BY THE COMMISSIONER WITH THE APPROVAL OF THE
‘SECRETARY OF FINANCE.

“ELECTRONICALLY TRACEABLE PAYMENTS REFER TO CREDIT CARD, DEBIT CARD, OR
OTHER METHODS OF PAYMENT WITH A SYSTEM TO VERIFY OR LINK THE PAYMENT TO THE
IDENTITY OF PAYOR.

“THE BUREAU MAY LIKEWISE ESTABLISH A RECEIPT AND INVOICE LOTTERY PROGRAM
FOR ELECTRONIC RECEIPTS OR SALES OR COMMERCIAL INVOICES TRANSMITTED THROUGH THE
DESIGNATED ELECTRONIC CHANNELS OF THE BUREAU AND ISSUED AN ELECTRONIC TAX
TRANSACTION NUMBER.

“The data processing of sales and purchase data shall comply with the provisions of Republic Act
No, 10173, otherwise known as the ‘Data Privacy Act’ and Section 270 of the NIRC, as amended, on unlawful
divulgence of taxpayer information and such other laws relating to the confidentiality of information.

“The Bureau shall also establish policies, risk management approaches, actions, trainings, and
technologies to protect the cyber environment, organization, and data in compliance with Republic Act No.
10175 or the ‘Cybercrime Prevention Act of 2012.'*

SEC. 19. Section 255 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as
follows:


"SEC. 255. Failure to File Return, Supply Correct and Accurate Information, Pay Tax Withhold and
Remit Tax and Refund Excess Taxes Withheld on Compensation. - Any person required under this Code or
by rules and regulations promulgated thereunder to pay any tax. make a retum, Keep any record, or supply
correct and accurate information, who wilfully fails to pay such tax, make such return, Keep such record, or
supply correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld
‘on compensation, at the time or times required by law or rules and regulations shall, in addition to other
penalties provided by law, upon conviction thereof, be punished by a fine of not less than [Ten thousand
pesos (P 10,000)] ONE HUNDRED THOUSAND PESOS (P100,000) BUT NOT MORE THAN ONE
MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000) and suffer imprisonment of not less than one
(1) year but not more than ten (10) years.

“Any person who attempis to make it appear for any reason that he or another has in fact filed a return
or statement, or actually files a return or statement and subsequently withdraws the same retum or statement
after securing the official receiving seal or stamp of receipt of internal revenue office wherein the same was
‘actually fled shall, upon conviction therefore, be punished by a fine of not less than [Ten thousand pesos
(P10,000) but not more than Twenty thousand pesos (P20,000)] ONE HUNDRED THOUSAND PESOS
(P100,000) BUT NOT MORE THAN ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000) and
suffer imprisonment of not less than one (1) year but not more than three (3) years.”


SEC. 20. Section 256 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as
follows:

"SEC. 256. Penal Liability of Corporations. - Any corporation, association or general co-partnership
liable for any of the acts or omissions penalized under this Code, in addition to the penalties imposed herein
upon the responsible corporate officers, partners, or employees shall, upon conviction for each act or
‘omission, be punished by a fine of not less than [Fifty thousand pesos (P50,000) but not more than One
hundred thousand pesos (P100,000)] TWO HUNDRED THOUSAND PESOS (P200,000) BUT NOT MORE
‘THAN TWO MILLION FOUR HUNDRED THOUSAND PESOS (P2,400,000).”

SEC. 21. Section 257 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as
follows:

"SEC. 257. Penal Liability for Making False Entries, Records or Reports, or Using Falsitied or Fake
‘Accountable Forms. -

“(A)_ Any financial officer or independent Certified Public Accountant engaged to examine and audit
books of accounts of taxpayers under Section 232(A) and any person under hs direction who:

(1) Wilfully falsifies any report or statement bearing on any examination or audi, or renders a
report, including exhibits, statements, schedules or other forms of accountancy work which has not been
verified by him personally or under his supervision or by a member of his firm or by a member of his staff in
accordance with sound auditing practices; or

“(2) Certifies financial statements of a business enterprise containing an essential misstatement of
facts or omission in respect ofthe transactions, taxable income, deduction and exemption of his client; or

“@) Any person who:

“(1)_ Not being an independent Certified Public Accountant according to Section 232(8) or a financial
officer, examines and audits books of accounts of taxpayers; or

*(2)_ Offers to sign and certty financial statements without audit, or

“(3) Offers any taxpayer the use of accounting bookkeeping records for internal revenue purposes not
in conformity with the requirements prescribed in this Code or rules and regulations promulgated thereunder,
or

“(4)_ Knowingly makes any false entry or enters any false or fictitious name in the books of accounts
6 record mentioned in the preceding paragraphs; or

“(6)_ Keeps two (2) or more sets of such records or books of accounts; or

“(6)_In any way commits an act or omission, in violation ofthe provisions of this Section; or

“(7) Fails to keep the books of accounts or records mentioned in Section 232 in a native language,
English or Spanish, or to make a true and complete translation as required in Section 234 of this Code, or
whose books of accounts or records kept in a native language, English or Spanish, and found to be at
‘material variance with books or records kept by him in another language; or

(8) Wilfully attempts in any manner to evade or defeat any tax imposed under this Code, or
knowingly uses fake or falsified revenue official receipts, Letters of Authority, certificates authorizing
registration, Tax Credit Certticates, Tax Debit Memoranda and other accountable forms shall, upon


conviction for each act or omission, be punished by a fine not less than (Fifty thousand pesos (P50,000) but
not more than One hundred thousand pesos (P100,000)} THREE HUNDRED THOUSAND PESOS
{P300,000) BUT NOT MORE THAN ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000) and
suffer imprisonment of not fess than two (2) years but not more than six (6) years.

“ifthe offender is a Certified Public Accountant, his certificate as a Certified Public Accountant shall be
automatically revoked or cancelled upon conviction.

“in the case of foreigners, conviction under this Code shall result in [his] THEIR immediate deportation
after serving sentence, without further proceedings for deportation.”

SEC. 22. Section 258 of the National Intemal Revenue Code of 1997, as amended, is hereby amended to read as
follows:

“SEC. 258. Unlawful Pursuit of Business. - Any person who carries on any business for which an
annual registration fee is imposed without paying the tax as required by law shall, upon conviction for each
act of omission, be punished by a fine of not less than [Five thousand pesos (P5,000) but not more than
Twenty thousand pesos (P20,000)] FIFTY THOUSAND PESOS (P50,000) BUT NOT MORE THAN THREE
HUNDRED THOUSAND PESOS (P300,000) and sutfer imprisonment of not less than six (6) months but not
more than two (2) years: Provided, That in the case of a person engaged in the business of distiling,
rectifying, repacking, compounding or manufacturing any article subject to excise tax, he shall, upon
conviction for each act or omission, be punished by a fine of not less than [Thirty thousand pesos (P30,000)
but not more than Fifty thousand pesos (P50,000)] THREE HUNDRED THOUSAND PESOS (P300,000)
BUT NOT MORE THAN SEVEN HUNDRED THOUSAND PESOS (P700,000) and suffer imprisonment of not
less than two (2) years but not more than four (4) years."

SEC. 23, Section 260 of the National Interal Revenue Code of 1997, as amended, is hereby amended to read as
follows:

“SEC. 260. Unlawful Possession of Cigarette Paper in Bobbins or Rolls, Etc. — It shall be unlawful
for any person to have in his possession cigarette paper in bobbins or rolls, cigarette tipping paper or
cigarette fit tips, without the corresponding authority therefor issued by the Commissioner. Any person,
importer, manufacturer of cigar and cigarettes, who has been found guilty under this Section, shall, upon
conviction for each act or omission, be punished by a fine of not less than {Twenty thousand pesos (P20,000)
but not more than One hundred thousand pesos (P100,000)] ONE MILLION FIVE HUNDRED THOUSAND
PESOS (P1,500,000) BUT NOT MORE THAN FIFTEEN MILLION PESOS (P15,000,000) and sutfer
imprisonment fora term of not less than six (6) years and one (1) day but not more than twelve (12) years.”
SEC. 24, Section 261 of the National internal Revenue Code of 1997, as amended, is hereby amended to read as

follows:

“SEC. 261. Unlawful Use of Denatured Alcohol. - Any person who for the purpose of manufacturing
any beverage, uses denatured alcohol or alcohol specially denatured to be used for motive power or
withdrawn under bond for industrial uses or alcoho! knowingly misrepresented to be denatured to be unfit for
oral intake or who knowingly sells or offers for sale any beverage made in whole or in part from such alcohol
Cor who uses such alcohol for the manufacture of liquid medicinal preparations taken internally, or knowingly


sells or offers for sale such preparations containing as an ingredient such alcohol, shall upon conviction for
each act or omission be punished by a fine of not less than [/wenty thousand pesos (P20,000) but not more
than One hundred thousand pesos (P100,000)] ONE MILLION FIVE HUNDRED THOUSAND PESOS
(P1,500,000) BUT NOT MORE THAN FIFTEEN MILLION PESOS (P15,000,000) and suffer imprisonment for
a term of not less than six (6) years and one (1) day but not more than twelve (12) years.

“Any person who shall unlawfully recover or attempt to recover by distilation or other process any
denatured alcohol or who knowingly sells or offers for sale, conceals or otherwise disposes of alcohol so
recovered or redstilled shall be subject to the same penalties imposed under this Section.”

SEC. 25. Section 262 of the National Interal Revenue Code of 1997, as amended, is hereby amended to read as
follows

"SEC. 262. Shipment or Removal of Liquor or Tobacco Products under False Name or Brand or as
an Imitation of any Existing or Otherwise Known Product Name or Brand. - Any person who ships,
transports or removes spirituous, compounded or fermented liquors, wines or any manufactured products of
tobacco under any other than the proper name or brand known to the trade as designating the kind and
quality of the contents of the cask, bottle or package containing the same or as an imitation of any existing or
otherwise known product name or brand or causes such act to be done, shall, upon convietion for each act or
omission, be punished by a fine of not less than [Twenty thousand pesos (P20,000) but not more than One
hundred thousand pesos (P100,000)} ONE MILLION FIVE HUNDRED THOUSAND PESOS (P1,500,000)
BUT NOT MORE THAN FIFTEEN MILLION PESOS (P15,000,000) and suffer imprisonment of not less than
six (6) years and one (1) day but not more than twelve (12) years.”

SEC. 26. Section 263 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as
follows:

“SEC. 263. Unlawful Possession or Removal of Articles Subject to Excise Tax Without Payment of
the Tax. - Any person who owns and/or is found in possession of imported articles subject to excise tax, the
tax on which has not been paid in accordance with law, or any person who owns andlor is found in
Possession of imported tax-exempt articles other than those to whom they are legally issued shall be
punished by:

“{a) A fine of not less than [One thousand pesos (P1,000)] TWENTY-FIVE THOUSAND PESOS
{P25,000) [nor] BUT NOT more than [Two thousand pesos (P2,000)] SEVENTY-FIVE THOUSAND
PESOS (75,000) and sutfer imprisonment of not less than [sixty (60) days but not more than one hundred
(100) days] THIRTY (30) DAYS BUT NOT MORE THAN SIX (6) MONTHS if the appraised valve, to be
determined in the manner prescribed in the {Tarif and Customs Code] CUSTOMS MODERNIZATION AND
TARIFF ACT, including duties and taxes, of the articles does not exceed [One thousand pesos (P1,000)]
TWO HUNDRED FIFTY THOUSAND PESOS (P250,000);

“{b) A fine of not less than {Ten thousand pesos (P10,000)] SEVENTY-FIVE THOUSAND PESOS
(P75,000) but not more than [Twenty thousand pesos (P20,000)] ONE HUNDRED FIFTY THOUSAND
PESOS (P150,000) and suffer imprisonment of not less than {two (2) years but not more than four (4) years)
‘SIX (6) MONTHS AND ONE (1) DAY BUT NOT MORE THAN ONE (1) YEAR if the appraised value, to be


determined in the manner prescribed in the {rit and Customs Code ] CUSTOMS MODERNIZATION AND
TARIFF ACT, including duties and taxes, of the articles exceeds [One thousand pesos (P1,000)] TWO
HUNDRED FIFTY THOUSAND PESOS (P250,000) but does riot exceed [Fifty thousand pesos (P50,000))
FIVE HUNDRED THOUSAND PESOS (500,000);

“(c) Aine of not less than [Thirty thousand pesos (P30,000)] ONE HUNDRED FIFTY THOUSAND
PESOS (P150,000) but not more than [Sixty thousand pesos (P60,000)} THREE HUNDRED THOUSAND
PESOS (P300,000) and sutfer imprisonment of not fess than _{four (4) years but not more than six (6)
years] ONE (1) YEAR AND ONE (1) DAY BUT NOT MORE THAN THREE (3) YEARS, if the appraised
value, to be determined in the manner prescribed in the [Tantf and Customs Code] CUSTOMS
MODERNIZATION AND TARIFF ACT, including duties and taxes, ofthe articles is more than [Fifty thousand
pesos (P50,000) but does not exceed One hundred fifty thousand pesos (P150,000)) FIVE HUNDRED
THOUSAND PESOS (P500,000) BUT DOES NOT EXCEED ONE MILLION PESOS (P1,000,000); [or]

“(@) A ine of not less than (Fifty thousand pesos (P50,000)] THREE HUNDRED THOUSAND
PESOS (P300,000) but not more than {One hundred thousand pesos (P100,000)] ONE MILLION FIVE
HUNDRED THOUSAND PESOS (P1,500,000) and sutfer imprisonment of {not less than ten (10) years but
‘not more than twelve (12) years] THREE (3) YEARS AND ONE (1) DAY BUT NOT MORE THAN SIX (6)
YEARS, if the appraised value, to be determined in the manner prescribed in the [Tariff and Customs Code]
CUSTOMS MODERNIZATION AND TARIFF ACT, including duties and taxes, of the articles exceeds [One
hundred fifty thousand pesos (P'150,000)] IS MORE THAN ONE MILLION PESOS (P1,000,000) BUT NOT
MORE THAN FIVE MILLION PESOS (P5,000,000)[,);

“(E) A FINE OF NOT LESS THAN ONE MILLION FIVE HUNDRED THOUSAND PESOS
{P1,500,000) BUT NOT MORE THAN FIFTEEN MILLION PESOS (P15,000,000), AND SUFFER
IMPRISONMENT OF NOT LESS THAN SIX (6) YEARS AND ONE (1) DAY BUT NOT MORE THAN
TWELVE (12) YEARS, IF THE APPRAISED VALUE, TO BE DETERMINED IN THE MANNER
PRESCRIBED IN THE CUSTOMS MODERNIZATION AND TARIFF ACT, INCLUDING DUTIES AND
TAXES, OF THE ARTICLES IS MORE THAN FIVE MILLION PESOS (P5,000,000) BUT NOT MORE THAN
FIFTY MILLION PESOS (P50,000,000);

“(F) A FINE OF NOT LESS THAN FIFTEEN MILLION PESOS (P15,000,000) BUT NOT
MORE THAN FIFTY MILLION PESOS (P50,000,000), AND SUFFER IMPRISONMENT OF NOT LESS
THAN TWELVE (12) YEARS AND ONE (1) DAY BUT NOT MORE THAN TWENTY (20) YEARS, IF THE
APPRAISED VALUE, TO BE DETERMINED IN THE MANNER PRESCRIBED IN THE CUSTOMS
MODERNIZATION AND TARIFF ACT, INCLUDING DUTIES AND TAXES, OF THE ARTICLES IS MORE
THAN FIFTY MILLION PESOS (P50,000,000) BUT NOT MORE THAN TWO HUNDRED MILLION PESOS
(P200,000,000); OR

“(G) IF THE APPRAISED VALUE OF THE GOODS UNLAWFULLY IMPORTED TO BE
DETERMINED IN THE MANNER PRESCRIBED IN THE CUSTOMS MODERNIZATION AND
TARIFF ACT, INCLUDING DUTIES AND TAXES, EXCEEDS TWO HUNDRED MILLION PESOS
(P200,000,000) OR IF THE AGGREGATE AMOUNT OF THE APPRAISED VALUE OF THE GOODS


WHICH ARE THE SUBJECT OF UNLAWFUL IMPORTATION COMMITTED IN MORE THAN ONE
INSTANCE, INCLUDING DUTIES AND TAXES, EXCEEDS TWO HUNDRED MILLION PESOS
(P 200,000,000), THE SAME SHALL BE PUNISHABLE WITH A PENALTY OF TWENTY (20) YEARS AND
ONE (1) DAY BUT NOT MORE THAN THIRTY (30) YEARS AND A FINE OF NOT LESS THAN FIFTY
MILLION PESOS (P50,000,000).

“Any person who is found in possession of locally manufactured articles subject to excise tax, the tax
‘on which has not been paid in accordance with law, or any person who is found in possession of such articles
which are exempt from excise tax other than those to whom the same is lawfully issued shall be punished
with a fine of not fess than ten (10) times the amount of excise tax due on the articles found but not less than
{Five hundred pesos (P500)] TWENTY-FIVE THOUSAND PESOS (P25,000) and suffer imprisonment of not
less than two (2) years but not more than four (4) years.

“Any manufacturer, owner or person in charge of any article subject to excise tax who removes or
allows or causes the unlawful removal of any such afticles trom the place of production or bonded
warehouse, upon which the excise tax has not been paid at the time and in the manner required, and any
person who knowingly aids or abets in the removal of such articles as aforesaid, or conceals the same after
ilegal removal shall, for the fist offense, be punished with a fine of not less than ten (10) times the amount of
excise tax due on the articles but not less than [One thousand pesos (P1,000)] TWENTY-FIVE THOUSAND
PESOS (P25,000) and suffer imprisonment of not less than fone (1) year but not more than two (2) years}
TWO (2) YEARS BUT NOT MORE THAN FOUR (4) YEARS.

“The mere unexplained possession of articles subject to excise tax, the tax on which has not been
paid in accordance with law, shall be punishable under this Section.”

SEC. 27. Section 264 of the National Internat Revenue Code of 1997, as amended, is hereby amended to read as
follows:

“SEC. 264, Failure or Refusal to Issue Receipts or Sales or Commercial Invoices, Violations Related
to the Printing of such Receipts or Invoices and Other Violations.

(a) Any person who, being required under Section 237 to issue receipts or sales or commercial
invoices, fails or refuses to issue such receipts or invoices, issues receipts or invoices that do not truly reflect
andlor contain all the information required to be shown therein, or uses multiple or double receipts or
invoices, shall, upon conviction for each act or omission, be punished by a fine of not less than [One
thousand pesos (P1,000) but not more than Fifty thousand pesos (P50,000)] ONE HUNDRED THOUSAND
PESOS (P100,000) BUT NOT MORE THAN FIVE HUNDRED THOUSAND PESOS (P500,000) and suffer
imprisonment of not less than [two (2) years but not more than four (4) years] FOUR (4) YEARS BUT NOT
MORE THAN EIGHT (8) YEARS.

*(b) Any person who commits any of the acts enumerated hereunder shall be penalized in the same
manner and to the same extent as provided for in this Section:

“(1)_ Printing of receipts or sales or commercial invoices without authority from the Bureau of Internal
Revenue; or

“{2)_ Printing of double or multiple sets of invoices or receipts; or


(3). Printing of unnumbered receipts or sales or conimescial invoices, not bearing the name, business

style, Taxpayer Identification Number, and business address of the person or entity.”

SEC. 28. Section 265 of the National Internal Revenue Coue of 1997, as amended, is hereby amended to read as
follows:

“SEC. 265. Offenses Relating to Stamps. - Any person who commits any of the acts enumerated
hereunder shall, upon conviction thereof, be punished by a fine of not less than [Twenty thousand pesos
(P20,000)] SEVEN HUNDRED THOUSAND PESOS (P700,000) but not more than (Fifty thousand pesos
(P50,000)] ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000) and sutter imprisonment of
not less than four (4) years but not more than eight (8) years:

“(a)_ Making, importing, selling, using or possessing without express authority from the Commissioner,
any die for printing or making stamps, labels, tags or playing cards;

“(b) Erasing the cancellation marks of any stamp previously used, or altering the written figures or
letters or cancellation marks on intemal revenue stamps;

“(c) Possessing false, counterfeit, restored or altered stamps, labels or tags or causing the
commission of any such offense by another,

“(é)_ Selling or offering for sale any box or package containing articles subject to excise tax with false,
spurious or counterfeit stamps or labels or selling from any such fraudulent box, package or container as
aforementioned; or

“(e) Giving away or accepting from another, or seling, buying or using containers on which the
stamps are not completely destroyed.”

SEC. 29. Section 266 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as
follows:

“SEC. 266. Failure to Obey Summons. - Any person who, being duly summoned to appear to testy,

Cr to appear and produce books of accounts, records, memoranda or other papers, oF to furnish information

aS required under the pertinent provisions of this Code, neglects to appear or to produce such books of
‘accounts, records, memoranda or other papers, or to furnish such information, shall, upon conviction, be
punished by a fine of not less than [Five thousand pesos (P5,000)] ONE HUNDRED THOUSAND PESOS
(100,000) but not more than [Ten thousand pesos (P10,000)] THREE HUNDRED THOUSAND PESOS
(300,000) and suffer imprisonment of not less than one (1) year but not more than two (2) years.”

SEC. 30. Section 275 of the National internal Revenue Code of 1997, as amended, is hereby amended to read as

follows:

“SEC. 275. Violation of Other Provisions of this Code or Rules and Regulations in General. ~ Any
person who violates any provision of this Code or any rule or regulation promulgated by the Department of
Finance, for which no specific penalty is provided by law, shall, upon conviction for each act or omission, be
punished by a fine of not more than [One thousand pesos (P'1,000)] TEN THOUSAND PESOS (P10,000) or
suffer imprisonment of not more than {six (6) months] TWO (2) YEARS, or both.”

SEC. 31. A new section is hereby inserted after Section 282 of the National internal Revenue Code of 1997, as
amended, to read as follows:


“SEC. 282-A. VIOLATION OF THE PROVISIONS OF THIS CODE AMOUNTING TO ECONOMIC
SABOTAGE. ~ ANY VIOLATION OF SECTION 254 OF THIS CODE THAT UNDERMINES, WEAKENS OR
RENDERS INTO DISREPUTE THE ECONOMIC SYSTEM OR VIABILITY OF THE COUNTRY OR TENDS
TO BRING OUT SUCH EFFECTS, IN LIEU OF THE PENALTY SET IN THE PRECEDING PROVISIONS,
SHALL CONSTITUTE ECONOMIC SABOTAGE, AND, UPON CONVICTION FOR EACH ACT OR
OMISSION, BE PUNISHED BY A FINE OF NOT LESS THAN FIFTY MILLION PESOS (P50,000,000) AND
IMPRISONMENT OF TWELVE (12) YEARS AND ONE (1) DAY BUT NOT MORE THAN TWENTY (20)
YEARS.”

SEC. 32. Section 288 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as
follows:

“SEC. 288. Disposition of Incremental Revenue. —

4A) XXX

48) XXX

“(C) XXX

0) XXX

“€) XXX

4F) XXX

“(G) STUDENT VOUCHERS. - INCREMENTAL REVENUE FROM TAX PAYMENTS OF
EDUCATIONAL INSTITUTIONS THAT FAIL TO MEET THE ESTABLISHED PERFORMANCE CRITERIA
SHALL FUND A STUDENT VOUCHER PROGRAM TO BE IMPLEMENTED UNDER THE COMMISSION
ON HIGHER EDUCATION (CHED) OR THE DEPARTMENT OF EDUCATION (DEPED).

“{H) UNIVERSAL HEALTHCARE. - INCREMENTAL REVENUE FROM TAX PAYMENTS OF
HOSPITALS THAT FAIL TO MEET THE ESTABLISHED PERFORMANCE CRITERIA SHALL FUND THE
UNIVERSAL HEALTHCARE PROGRAM TO BE IMPLEMENTED UNDER THE DEPARTMENT OF
HEALTH (DOH).

“(l) HOUSING VOUCHERS. - INCREMENTAL REVENUES FROM TAX PAYMENTS OF REAL
ESTATE DEVELOPERS SHALL FUND A HOUSING VOUCHER PROGRAM TO BE IMPLEMENTED
UNDER THE NATIONAL HOUSING AUTHORITY.”

SEC. 33. Section 290 of the National Intemal Revenue Code of 1997, as amended, is hereby further amended to
read as follows:

"SEC. 290. Congressional Oversight Committee. ~

OOK

“The Committee shail, among others, in aid of legislation

(1) xxx;

"(Q) xxx,

8) xxx; [and]

"4) xxxE]; AND


“(8) REVIEW THE PERFORMANCE OF FUNCTIONS OF THE INVESTMENT PROMOTION
AGENCIES AND THE FISCAL INCENTIVES REVIEW BOARD, PARTICULARLY —_ IN THE GRANT OF
INCENTIVES TO REGISTERED ENTERPRISES AND IN THE REVIEW AND EVALUATION OF GRANTED
INCENTIVES, RESPECTIVELY, AS WELL AS IN THE FORMULATION OF THE STRATEGIC
INVESTMENT PRIORITY PLAN.

“KKK”

SEC. 34. A new title is hereby inserted beginning Section 291, Title Xill of the National intemal Revenue Code of
1997, as amended, to read as follows:
“TITLE Xill
‘CHAPTER |
“GENERAL PROVISIONS ON TAX INCENTIVES

“SEC 291. SCOPE AND COVERAGE. - THIS TITLE SHALL COVER ALL EXISTING
INVESTMENT PROMOTION AGENCIES (IPAS) AS DEFINED IN THIS CODE OR RELATED LAWS, AND
ALL OTHER IPAS AND OTHER SIMILAR AUTHORITIES THAT MAY BE CREATED BY LAW.

“THE IPAS SHALL MAINTAIN THEIR FUNCTIONS AND POWERS AS PROVIDED UNDER THE
SPECIAL LAWS GOVERNING THEM EXCEPT ON THE EXTENT MODIFIED BY THE PROVISIONS OF
THIS CODE.

“SEC. 292. GOVERNING PROVISION FOR IPAS. - ALL IPAS VESTED WITH THE POWER TO
CONFER AND ADMINISTER INCENTIVES SHALL GRANT TAX INCENTIVES PROVIDED IN THIS TITLE
TO REGISTERED ENTERPRISES ONLY TO THE EXTENT OF THEIR APPROVED REGISTERED
PROJECTS OR ACTIVITIES UNDER THE STRATEGIC INVESTMENT PRIORITY PLAN (SIP). THE
PERIOD OF AVAILMENT OF INCENTIVES SHALL BE RECKONED FROM THE START OF
COMMERCIAL OPERATION.

“SALES RECEIPTS AND/OR OTHER INCOME DERIVED FROM NON-REGISTERED ACTIVITY OR
PROJECT SHALL BE SUBJECT TO APPROPRIATE TAXES UNDER THIS CODE.

“UNLESS OTHERWISE PROVIDED IN THIS CODE, DIRECT EXPORTS ARE SUBJECT TO
VALUE-ADDED TAX (VAT) ZERO-RATING AND DOMESTIC SALES ARE SUBJECT TO THE REGULAR
VALUE-ADDED TAX RATE.

“SEC. 293. DEFINITIONS. - WHEN USED IN THIS TITLE:

“(A) THE TERM ‘CAPITAL EQUIPMENT’ REFERS TO MACHINERY, EQUIPMENT, MAJOR
COMPONENTS THEREOF, FITTINGS AND ACCOMPANIMENTS WHICH ARE DIRECTLY AND
REASONABLY NEEDED IN THE REGISTERED ACTIVITY OF THE REGISTERED ENTERPRISE.

“(B) THE TERM ‘EXPORT SALES OF GOODS’ SHALL MEAN THE SALES OF AN EXPORT
ENTERPRISE PAID FOR IN FREELY CONVERTIBLE FOREIGN CURRENCY INWARDLY REMITTED
‘TO THE PHILIPPINES, FROM THE FOLLOWING:

“(1) THE SALE AND ACTUAL SHIPMENT OF GOODS FROM THE PHILIPPINES TO A FOREIGN
COUNTRY BY AN EXPORT ENTERPRISE INCLUDING OURSOURCED SERVICES USED TO
PRODUCE FINAL EXPORT GOODS;


“{2) SALES TO DIPLOMATIC MISSIONS AND INSTITUTIONS COVERED BY INTERNATIONAL
TREATY;

*(3) SALES OF AN EXPORT ENTERPRISE TO ‘AN INTERNATIONAL SEA OR AIR
TRANSPORT OPERATIONS OF GOODS, EQUIPMENT, SPARE PARTS, AND SUPPLIES, EXCEPT
FUEL, FORMING PART OF DIRECT COSTS AND TO BE USED IN THE AIRCRAFT OR SEACRAFT, AND
CAPITAL EQUIPMENT NEEDED FOR THE SHIPPING OR AIR TRANSPORT OPERATIONS.

“(C) THE TERM ‘EXPORT SALES OF SERVICES’ SHALL MEAN THE SALES OF AN EXPORT
ENTERPRISE, PAID FOR IN FREELY CONVERTIBLE FOREIGN CURRENCY INWARDLY REMITTED TO
THE PHILIPPINES, FOR THE FOLLOWING:

“(1) SERVICES RENDERED TO NON-RESIDENT FOREIGN CLIENTS BY EXPORT
ENTERPRISES;

“(2) SERVICES RENDERED TO DIPLOMATIC MISSIONS AND INSTITUTIONS COVERED BY
INTERNATIONAL TREATY;

“(3) SERVICES FOR THE OVERHAUL, REPAIR, AND MAINTENANCE OF INTERNATIONAL
SHIPPING, OR AIR TRANSPORT OPERATIONS.

“(0) THE TERM ‘INVESTMENT PROMOTION AGENCIES’ (IPAS) SHALL REFER TO
GOVERNMENT ENTITIES CREATED BY LAW, EXECUTIVE ORDER, DECREE OR OTHER ISSUANCE,
IN CHARGE OF PROMOTING INVESTMENTS, ADMINISTERING TAX AND NON-TAX INCENTIVES,
ANDIOR OVERSEEING THE OPERATIONS FOR THE DIFFERENT ECONOMIC ZONES AND
FREEPORTS IN ACCORDANCE WITH THEIR RESPECTIVE CHARTERS. THESE INCLUDE THE BOARD
OF INVESTMENTS (BOI), REGIONAL BOARD OF INVESTMENTS AUTONOMOUS REGION IN MUSLIM
MINDANAO (RBOI-ARMM), PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA), BASES CONVERSION
AND DEVELOPMENT AUTHORITY (BCDA), SUBIC BAY METROPOLITAN AUTHORITY (SBMA), CLARK
DEVELOPMENT CORPORATION (CDC), JOHN HAY MANAGEMENT CORPORATION (JHMC), PORO
POINT MANAGEMENT CORPORATION (PPMC), CAGAYAN ECONOMIC ZONE AUTHORITY (CEZA),
ZAMBOANGA CITY SPECIAL ECONOMIC ZONE AUTHORITY (ZCSEZA), PHIVIDEC INDUSTRIAL
AUTHORITY (PIA), AURORA PACIFIC ECONOMIC ZONE AND FREEPORT AUTHORITY (APECO),
AUTHORITY OF THE FREEPORT AREA OF BATAAN (AFAB), TOURISM INFRASTRUCTURE AND
ENTERPRISE ZONE AUTHORITY (TIEZA), AND ALL OTHER SIMILAR AUTHORITIES EXISTING OR
THAT MAY BE CREATED BY LAWIN THE FUTURE.

“(E) THE TERM ‘REGISTERED ENTERPRISE’ SHALL MEAN ANY INDIVIDUAL, PARTNERSHIP,
CORPORATION, PHILIPPINE BRANCH OF A FOREIGN CORPORATION, OR OTHER ENTITY
ORGANIZED AND EXISTING UNDER PHILIPPINE LAWS AND REGISTERED WITH AN INVESTMENT
PROMOTION AGENCY (IPA) AS DEFINED UNDER REPUBLIC ACT NO. 10708, OR THE TIMTA LAW:
PROVIDED, HOWEVER, THAT THE TERM ‘REGISTERED ENTERPRISE’ SHALL NOT INCLUDE ANY OF
THE FOLLOWING SERVICE ENTERPRISES SUCH AS, BUT NOT LIMITED TO, THOSE ENGAGED IN
CUSTOMS BROKERAGE, TRUCKING OR FORWARDING SERVICES, JANITORIAL SERVICES,
SECURITY SERVICES, INSURANCE, BANKING, AND OTHER FINANCIAL SERVICES, CONSUMERS’


COOPERATIVES, CREDIT UNIONS, CONSULTANCY SERVICES, RETAIL BUSINESS, RESTAURANTS,
OR SUCH OTHER SIMILAR SERVICES, AS MAY BE DETERMINED BY THE IPA BOARD,
IRRESPECTIVE OF LOCATION, WHETHER INSIDE OR OUTSIDE THE ZONES, DULY ACCREDITED
ANDIOR LICENSED BY ANY OF THE IPAS AND WHOSE INCOME DELIVERED WITHIN THE
ECONOMIC ZONES SHALL BE SUBJECT TO TAXES UNDER THE NATIONAL INTERNAL REVENUE
CODE OF 1997, AS AMENDED.

“(F) THE TERM ‘SPECIAL ECONOMIC ZONE’ OR ‘ECOZONE’ SHALL REFER TO A SELECTED
‘AREA, WHICH SHALL BE OPERATED AND MANAGED AS A SEPARATE CUSTOMS TERRITORY THAT
IS HIGHLY DEVELOPED — OR HAS THE POTENTIAL TO BE DEVELOPED INTO AN
AGRO-INDUSTRIAL, INDUSTRIAL, INFORMATION TECHNOLOGY, OR TOURIST/RECREATIONAL,
WHOSE METES AND BOUNDS ARE FIXED OR DELIMITED BY PRESIDENTIAL PROCLAMATIONS AND
WITHIN A SPECIFIC GEOGRAPHICAL AREA: PROVIDED, THAT FOR THE ECOZONE TO QUALIFY AS
A SEPARATE CUSTOMS TERRITORY, IT SHALL HAVE A PERMANENT CUSTOMS CONTROL OR
CUSTOMS OFFICE AT ITS PERIMETER. AN ECOZONE MAY CONTAIN ANY OR ALL OF THE
FOLLOWING: INDUSTRIAL ESTATES (IES), EXPORT PROCESSING ZONES (EPZS), ICT PARKS AND
CENTERS, AND FREE TRADE ZONES: PROVIDED, HOWEVER, THAT AREAS WHERE MINING
EXTRACTIONS ARE UNDERTAKEN SHALL NOT BE DECLARED AS ECOZONES: PROVIDED,
FURTHER, THAT VERTICAL ECONOMIC ZONES, SUCH AS, BUT NOT LIMITED TO, BUILDINGS,
‘SELECTED FLOORS WITHIN BUILDINGS, AND SELECTED AREAS ON A FLOOR, SHOULD COMPLY
WITH THE MINIMUM CONTIGUOUS LAND AREA AS DETERMINED BY THE FISCAL INCENTIVES
REVIEW BOARD (FIRB).

“(G) THE TERM ‘FREEPORT ZONES’ REFERS TO AN ISOLATED AND POLICED AREA
ADJACENT TO A PORT OF ENTRY, WHICH SHALL BE OPERATED AND MANAGED AS A SEPARATE
CUSTOMS TERRITORY TO ENSURE FREE FLOW OR MOVEMENT OF GOODS, EXCEPT THOSE
EXPRESSLY PROHIBITED BY LAW, WITHIN, INTO, AND EXPORTED OUT OF THE FREEPORT ZONE
WHERE IMPORTED GOODS MAY BE UNLOADED FOR IMMEDIATE TRANSSHIPMENT OR STORED,
REPACKED, SORTED, MIXED, OR OTHERWISE MANIPULATED WITHOUT BEING SUBJECT TO
IMPORT DUTIES. HOWEVER, MOVEMENT OF THESE IMPORTED GOODS FROM THE FREE-TRADE
AREA TO A NON-FREE TRADE AREA IN THE COUNTRY SHALL BE SUBJECT TO ALL APPLICABLE
INTERNAL REVENUE TAXES AND DUTIES: PROVIDED, THAT FOR THE FREEPORT ZONE TO
QUALIFY AS A SEPARATE CUSTOMS TERRITORY, IT SHALL HAVE A PERMANENT CUSTOMS
CONTROL OR CUSTOMS OFFICE AT ITS PERIMETER.

“CHAPTER II
“TAX AND DUTY INCENTIVES

“SEC. 294. INCENTIVES. - REGISTERED PROJECTS OR ACTIVITIES UNDER THE STRATEGIC
INVESTMENT PRIORITY PLAN SHALL BE QUALIFIED TO ANY OF THE FOLLOWING INCENTIVES:

“(A) INCOME TAX INCENTIVES


“(1) INCOME TAX HOLIDAY (ITH). - THE ITH SHALL BE GRANTED FOR A PERIOD NOT
EXCEEDING THREE (3) YEARS: PROVIDED, THAT AFTER THE EXPIRATION OF THE ITH, THE
FOLLOWING INCENTIVES MAY BE APPLIED FOR A PERIOD NOT EXCEEDING FIVE (5) YEARS,
WHICH INCLUDES THE PERIOD OF ITH AVAILMENT, EXCEPT THOSE PROVIDED UNDER SECTIONS
294(7) and (8), 295, 296, AND 297.

“(@2) REDUCED CORPORATE INCOME TAX. - A REDUCED TAX RATE OF EIGHTEEN
PERCENT (18%) OF THE TAXABLE INCOME AS DEFINED UNDER SECTION 31 OF THIS CODE:
PROVIDED, THAT THE RATE OF CORPORATE INCOME TAX SHALL BE SEVENTEEN PERCENT (17%)
BEGINNING JANUARY 1, 2021; SIXTEEN PERCENT (16%) BEGINNING JANUARY 1, 2023; FIFTEEN
PERCENT (15%) BEGINNING JANUARY 1, 2025; FOURTEEN PERCENT (14%) BEGINNING JANUARY
1, 2027; AND THIRTEEN PERCENT (13%) BEGINNING JANUARY 1, 2029: PROVIDED, FURTHER, THAT
IN THE CASE OF REGISTERED ENTERPRISES WITHIN ECONOMIC ZONES AND FREEPORTS, THE
TAX SHALL BE DIRECTLY REMITTED AS FOLLOWS:

“FIFTEEN PERCENT (15%) TO THE NATIONAL GOVERNMENT IN 2019 AND 2020; FOURTEEN
PERCENT (14%) TO THE NATIONAL GOVERNMENT IN 2021 ‘AND 2022; THIRTEEN PERCENT
(13%) TO THE NATIONAL GOVERNMENT IN 2023 AND 2024; TWELVE PERCENT (12%) TO THE
NATIONAL GOVERNMENT IN 2025 AND 2026; ELEVEN PERCENT (11%) TO THE NATIONAL
GOVERNMENT IN 2027 AND 2028; AND TEN PERCENT (10%) TO THE NATIONAL GOVERNMENT IN
2029 AND THEREAFTER;

“ONE POINT FIVE PERCENT (1.5%) TO THE TREASURER'S OFFICE OF THE PROVINCE
WHERE THE ENTERPRISE IS LOCATED, IN LIEU OF THE LOCAL BUSINESS TAX;

“ONE POINT FIVE PERCENT (1.5%) TO THE TREASURER'S OFFICE OF THE MUNICIPALITY OR
COMPONENT CITY WHERE THE ENTERPRISE IS LOCATED, IN LIEU OF THE LOCAL BUSINESS TAX;

“PROVIDED, THAT IF THE ENTERPRISE 1S UNDER THE JURISDICTION OF A HIGHLY
URBANIZED CITY (HUC) OR INDEPENDENT COMPONENT CITY (ICC), THE THREE PERCENT (3%)
‘SHARE OF THE LGU SHALL BE DIRECTLY REMITTED TO THE TREASURER’S OFFICE OF THE HUC
ORICC.

“(3) DEPRECIATION ALLOWANCE OF THE ASSETS ACQUIRED FOR THE ENTITY'S
PRODUCTION OF GOODS AND SERVICES (QUALIFIED CAPITAL EXPENDITURE) - TEN PERCENT
(10%) FOR BUILDINGS; AND TWENTY PERCENT (20%) FOR MACHINERIES AND EQUIPMENT:
PROVIDED, THAT DEPRECIATION MAY BE COMPUTED USING ACCELERATED DEPRECIATION
METHOD ON A RATE NOT EXCEEDING TWICE THE RATE WHICH WOULD HAVE BEEN
USED HAD THE ANNUAL ALLOWANCE BEEN COMPUTED IN ACCORDANCE WITH THE RULES
‘AND REGULATIONS PRESCRIBED BY THE SECRETARY OF FINANCE AND THE PROVISIONS
OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED: PROVIDED, FURTHER,
THAT THE ASSETS ARE ACQUIRED DIRECTLY FOR THE REGISTERED ENTERPRISE’S
PRODUCTION OF GOODS AND SERVICES OTHER THAN ADMINISTRATIVE AND OTHER SUPPORT
SERVICES.


0

“(4) UP TO FIFTY PERCENT (50%) ADDITIONAL DEDUCTION ON THE LABOR EXPENSE IN
THE TAXABLE YEAR AS A CONSEQUENCE OF AN INCREASE IN DIRECT LOCAL
EMPLOYMENT: PROVIDED, THAT THIS DOES NOT INCLUDE INDIRECT LABOR, SALARIES AND
WAGES, AND OTHER PERSONNEL COSTS INCURRED FOR ADMINISTRATIVE AND OTHER
SUPPORT SERVICES.

“(8) UP TO ONE HUNDRED PERCENT (100%) ADDITIONAL DEDUCTION ON THE INCREMENT
OF RESEARCH AND DEVELOPMENT INCURRED IN THE TAXABLE YEAR: PROVIDED, THAT IT |S
DIRECTLY RELATED TO THE REGISTERED ACTIVITYIIES OF THE ENTITY.

*(6) UP TO ONE HUNDRED PERCENT (100%) ADDITIONAL DEDUCTION ON TRAININGS
INCURRED: PROVIDED, THAT IT IS GIVEN TO THE EMPLOYEES ENGAGED DIRECTLY IN THE
ENTITY'S PRODUCTION OF GOODS AND SERVICES: PROVIDED, FURTHER, THAT THE
CONCERNED IPA HAS ISSUED A CORRESPONDING CERTIFICATE OF ENTITLEMENT UPON
APPLICATION, AND A CERTIFICATE OF APPROVAL AFTER A REVIEW OF DOCUMENTATION OF
TRAININGS SUBMITTED BY THE ENTERPRISE AT THE END OF THE TAXABLE YEAR, OTHERWISE,
THIS INCENTIVE SHALL BE DEEMED WAIVED.

“(7) UP TO ONE HUNDRED PERCENT (100%) DEDUCTION ON INFRASTRUCTURE
DEVELOPMENT. ~ REGISTERED ENTERPRISES ESTABLISHING THEIR ACTIVITY IN AN AREA THAT
‘THE STRATEGIC INVESTMENT PRIORITY PLAN (SIPP) DESIGNATES AS NECESSARY FOR
COUNTRYWIDE DEVELOPMENT OR IN AN AREA FOUND TO BE DEFICIENT IN
INFRASTRUCTURE, PUBLIC UTILITIES, AND OTHER FACILITIES, SUCH AS IRRIGATION, DRAINAGE,
OR OTHER SIMILAR WATERWORKS INFRASTRUCTURE, MAY DEDUCT FROM THE GROSS
INCOME AN AMOUNT EQUIVALENT TO UP TO ONE HUNDRED PERCENT (100%) OF
NECESSARY AND MAJOR INFRASTRUCTURE WORKS IT MAY HAVE UNDERTAKEN WITH THE
PRIOR APPROVAL AND RECOMMENDATION OF THE IPA CONCERNED: PROVIDED, THAT THE
INFRASTRUCTURE SHALL BE OPEN FOR USE BY THE GENERAL PUBLIC: PROVIDED, FURTHER,
THAT THE TITLE TO ALL SUCH INFRASTRUCTURE WORKS SHALL UPON COMPLETION, BE
TRANSFERRED TO THE PHILIPPINE GOVERNMENT: PROVIDED, FINALLY, THAT ANY AMOUNT NOT
DEDUCTED FOR A PARTICULAR YEAR MAY BE CARRIED OVER FOR DEDUCTION FOR
SUBSEQUENT YEARS NOT EXCEEDING FIVE (5) YEARS FROM COMMERCIAL OPERATION.

“(8) DEDUCTION FOR REINVESTMENT ALLOWANCE TO MANUFACTURING INDUSTRY. -
WHEN A MANUFACTURING REGISTERED ENTERPRISE REINVESTS ITS UNDISTRIBUTED PROFIT
OR SURPLUS IN ANY OF THE ACTIVITIES LISTED IN THE SIPP, THE AMOUNT SO REINVESTED TO A
MAXIMUM OF FIFTY PERCENT (50%) SHALL BE ALLOWED AS A DEDUCTION FROM ITS TAXABLE
INCOME WITHIN A PERIOD OF FIVE (5) YEARS FROM THE TIME OF SUCH REINVESTMENT:
PROVIDED, THAT PRIOR APPROVAL AND RECOMMENDATION BY THE IPA CONCERNED OF SUCH
REINVESTMENT WAS OBTAINED BY THE REGISTERED ENTERPRISE PLANNING SUCH
REINVESTMENT.


(9) ENHANCED NET OPERATING LOSS CARRY-OVER (NOLCO). - THE NET
OPERATING LOSS OF THE REGISTERED ACTIVITY DURING THE FIRST THREE (3) YEARS FROM
THE START OF COMMERCIAL OPERATION WHICH HAD NOT BEEN PREVIOUSLY OFFSET AS
DEDUCTION FROM GROSS INCOME MAY BE CARRIED OVER AS DEDUCTION FROM GROSS
INCOME WITHIN THE NEXT FIVE (5) CONSECUTIVE TAXABLE YEARS IMMEDIATELY FOLLOWING
THE YEAR OF SUCH LOSS.

(10) UP TO FIFTY PERCENT (50%) ADDITIONAL DEDUCTION ON THE INCREMENT OF THE
DOMESTIC INPUT EXPENSE INCURRED IN THE TAXABLE YEAR: PROVIDED, THAT IT IS DIRECTLY
RELATED TO AND ACTUALLY USED IN THE REGISTERED EXPORT ACTIVITY OF THE REGISTERED
ENTITY.

“PROVIDED, THAT IN LIEU OF THE ITH UNDER SECTION 294(A)(1) OR THE REDUCED TAX
RATE OF EIGHTEEN PERCENT (18%) UNDER SECTION 294(A)(2), THE TAX INCENTIVES UNDER
SECTION 294(A)(3), (4), (5), (6), (7), (8), (9), AND (10) MAY BE GRANTED ON AN INDUSTRY-SPECIFIC
BASIS AS DETERMINED BY THE BOI IN THE STRATEGIC INVESTMENT PRIORITY PLAN. THE BO!
SHALL PRESCRIBED THE LEVEL OF ADDITIONAL DEDUCTION FOR SELECTED INDUSTRIES,

“PROVIDED, FURTHER, THAT IN NO SUCH CASE SHALL AN INCOME TAX INCENTIVE BE
EXTENDED BEYOND THE INITIAL GRANT OF FIVE (5) YEARS, EXCEPT THOSE PROVIDED UNDER
SECTION 294(A)(7) AND (9), SECTIONS 295, 296, AND 297.

(8) EXEMPTION FROM CUSTOMS DUTY ON IMPORTATION OF CAPITAL EQUIPMENT AND
RAW MATERIALS DIRECTLY AND EXCLUSIVELY USED IN THE REGISTERED ACTIVITY BY
REGISTERED ENTERPRISES: PROVIDED, THAT THE FIVE (5) YEARS LIMIT IN THIS SUBSECTION
‘SHALL NOT APPLY TO FREEPORT ZONES AS DEFINED UNDER THIS TITLE.

“PROVIDED, FURTHER, THAT EXPANSION OF REGISTERED ACTIVITIES MAY BE GRANTED
DUTY EXEMPTION ON CAPITAL EQUIPMENT ONLY, SUBJECT TO THE FOLLOWING CONDITIONS:

“(1) THE ACTIVITY IS STILL COVERED BY THE STRATEGIC INVESTMENT PRIORITY PLAN
(SIPP) OR IS AN INNOVATION PROJECT AS DEFINED IN THE STRATEGIC INVESTMENT PRIORITY
PLAN;

*(2) CUSTOMS DUTY EXEMPTION WILL ONLY APPLY ON THE INCREMENTAL PORTION OF
THE ACTIVITY; AND

*(3) THE CUSTOMS DUTY EXEMPTION EXTENSION SHALL NOT EXCEED FIVE (5) YEARS.

(C) VALUE-ADDED TAX (VAT)

“(1) REGISTERED ENTERPRISES WHOSE EXPORT SALES MEET THE NINETY PERCENT
(90%) THRESHOLD AND ARE LOCATED WITHIN AN ECOZONE, FREEPORT, OR THOSE UTILIZING
CUSTOMS BONDED MANUFACTURING WAREHOUSE: VAT EXEMPTION ON IMPORTATION AND VAT
ZERO-RATING ON DOMESTIC PURCHASES OF CAPITAL EQUIPMENT AND RAW MATERIALS USED
IN THE MANUFACTURING AND PROCESSING OF PRODUCTS AND IMPORTATION OF SOURCE
DOCUMENTS SHALL APPLY.



“(2) REGISTERED ENTERPRISES WHOSE EXPORT SALES ARE BELOW THE NINETY
PERCENT (90%) THRESHOLD AND ARE LOCATED WITHIN AN ECOZONE, FREEPORT, OR THOSE
UTILIZING CUSTOMS BONDED MANUFACTURING WAREHOUSE: VAT EXEMPTION ON
IMPORTATION AND VAT ZERO-RATING ON DOMESTIC PURCHASES OF CAPITAL EQUIPMENT AND
RAW MATERIALS USED IN THE MANUFACTURING AND PROCESSING OF PRODUCTS AND
IMPORTATION OF SOURCE DOCUMENTS: PROVIDED, THAT THEY COMPLY WITH THE ELECTRONIC
RECEIPTS OR INVOICING UNDER SECTIONS 237 AND 237-A OF THIS CODE.

“(3) REGISTERED ENTERPRISES WHOSE EXPORT SALES ARE BELOW NINETY PERCENT
(90%) OR ARE LOCATED OUTSIDE AN ECOZONE OR FREEPORT REGARDLESS OF EXPORT SALES
THRESHOLD: THE VALUE-ADDED TAX PROVISION IN TITLE IV OF THIS CODE AND SECTION 307 OF
THIS ACT SHALL APPLY.

“FOR THIS PURPOSE, ‘PROCESSING’ SHALL REFER TO THE CONVERSION 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 A
PRODUCT. MERE PACKING OR PACKAGING SHALL NOT CONSTITUTE PROCESSING.

“SOURCE DOCUMENTS’ REFER TO INPUT MATERIALS AND DOCUMENTS REASONABLY
NEEDED BY |.T. AND IT.ENABLED INDUSTRIES SUCH AS, BUT NOT LIMITED TO, BOOKS,
DIRECTORIES, MAGAZINES, NEWSPAPERS, BROCHURES, PAMPHLETS, MEDICAL
RECORDSIFILES, LEGAL = RECORDSIFILES, INSTRUCTION MATERIALS, AND.
DRAWINGS/BLUEPRINTS/OUTLINES.

“SEC. 295. INCENTIVES FOR AGRIBUSINESS. -AGRIBUSINESS PROJECTS OR ACTIVITIES
OF REGISTERED ENTERPRISES LOCATED OUTSIDE METRO MANILA AND OTHER URBAN AREAS
‘AS IDENTIFIED IN THE STRATEGIC INVESTMENT PRIORITY PLAN SHALL BE ENTITLED TO
ADDITIONAL TWO (2) YEARS OF INCENTIVE UNDER SECTION 294, OF WHICH ONE (1) YEAR MAY
BE AN ADDITIONAL YEAR OF INCOME TAX HOLIDAY.

"SEC. 296. PROJECTS OR ACTIVITIES LOCATED IN LESS DEVELOPED AREAS OR THOSE
RECOVERING FROM ARMED CONFLICT OR A MAJOR DISASTER. - PROJECTS OR ACTIVITIES OF
REGISTERED ENTERPRISES LOCATING IN LESS DEVELOPED AREAS AS IDENTIFIED IN THE
STRATEGIC INVESTMENT PRIORITY PLAN, OR THOSE RECOVERING FROM ARMED CONFLICT
ANDIOR A MAJOR DISASTER AS DETERMINED BY THE OFFICE OF THE PRESIDENT SHALL BE
ENTITLED TO ADDITIONAL TWO (2) YEARS OF INCENTIVE UNDER SECTION 294, OF WHICH ONE (1)
YEAR MAY BE AN ADDITIONAL YEAR OF INCOME TAX HOLIDAY.

“SEC. 297. RELOCATION PROJECTS OR ACTIVITIES. - PRIOR TO THE EFFECTIVITY OF THIS
ACT, REGISTERED PROJECTS OR ACTIVITIES RELOCATING FROM METRO MANILA AND
SELECTED URBANIZED AREAS ADJACENT TO METRO MANILA TO OTHER AREAS OF
THE COUNTRY SHALL BE ENTITLED TO ADDITIONAL TWO (2) YEARS OF INCENTIVE


UNDER SECTION 294, OF WHICH ONE (1) YEAR MAY BE AN ADDITIONAL YEAR OF INCOME TAX
HOLIDAY.
“CHAPTER Il
“THE FISCAL INCENTIVES REVIEW BOARD

“SEC. 298. EXPANDED FUNCTIONS OF THE FISCAL INCENTIVES REVIEW BOARD. - THE
FUNCTIONS AND POWERS OF THE FISCAL INCENTIVES REVIEW BOARD OR FIRB CREATED
UNDER PRESIDENTIAL DECREE (PD) NO. 776, AS AMENDED BY PD NO. 1931 AND PD NO. 1955,
OFFICE OF THE PRESIDENT MEMORANDUM ORDER NO. 23, SERIES OF 1986 AND EXECUTIVE
ORDER NO. 93, SERIES OF 1986, SHALL BE EXPANDED AS FOLLOWS:

“(A)_ TO EXERCISE OVERSIGHT FUNCTIONS OVER IPAS.

*(B) TO REQUIRE THE IPAS TO SUBMIT THE FOLLOWING:

“(1) LIST OF REGISTERED ENTERPRISES ANNUALLY WITH CORRESPONDING FIRM-LEVEL
DATA AS MANDATED UNDER THE TAX INCENTIVES MANAGEMENT AND TRANSPARENCY ACT OR
TIMTA LAW;

*(2) APPROVED AMOUNT OF INVESTMENTS AND EMPLOYMENT GENERATION AND OTHER
BENEFITS ON A FIRM-LEVEL BASIS ANNUALLY; AND

“(3) APPROVED AMOUNT OF TAX INCENTIVES, BOTH INCOME AND NON-INCOME TAX
BASED INCENTIVES, ON A FIRM-LEVEL BASIS ANNUALLY.

“(C) FOR PROJECTS OR ACTIVITIES THAT POSE RISK TO THE ENVIRONMENT, HEALTH,
AND ECONOMIC STABILITY AND PROJECTS OR ACTIVITIES THE APPROVAL OF WHICH
ENCOUNTERS A DEADLOCK IN THE IPAS BOARD, THE FIRB:

“(1) SHALL FORMULATE POLICIES ON TAX INCENTIVES IN ACCORDANCE WITH THE
PROVISIONS OF THIS CODE;

*(2) SHALL REVIEW IPAS' COMPLIANCE WITH THE POLICIES SET FORTH IN THIS CODE:
PROVIDED, THAT THE FIRB MAY CANCEL OR SUSPEND THE POWER OF IPAS TO GRANT
INCENTIVES FOR VIOLATIONS OF SUCH POLICIES;

“(3) SHALL APPROVE THE GRANT OF INCENTIVES ON THE ABOVE INSTANCES; AND

“(4) ON THE ABOVE INSTANCES MAY SUSPEND OR CANCEL THE TAX INCENTIVES
GRANTED TO REGISTERED ENTERPRISES WHICH ARE NOT COMPLIANT WITH THE CONDITIONS
ON THE AVAILMENT OF TAX INCENTIVES AS WELL AS THE POLICIES SET FORTH BY THE IPAS.

“(0) TO PUBLISH THE NAMES OF THE REGISTERED ENTERPRISES OR BENEFICIARIES OF
TAX INCENTIVES WITH APPROVED ESTIMATED AMOUNT OF THE CORRESPONDING TAX
INCENTIVES.

‘{E) TO GRANT TAX SUBSIDIES TO GOVERNMENT -OWNED ANDIOR -CONTROLLED
CORPORATIONS (GOCCS), GOVERNMENT INSTRUMENTALITIES (GIS), GOVERNMENT
COMMISSARIES, AND STATE UNIVERSITIES AND COLLEGES (SUCS) AS MAY BE PROVIDED
UNDER THE ANNUAL GENERAL APPROPRIATIONS ACT.


“PROVIDED, THAT, AS CHAIR OF THE FIRB AND AS THE CUSTODIAN OF FISCAL
PRUDENCE AND RESPONSIBILITY, THE SECRETARY OF FINANCE SHALL EXERCISE
OVERSIGHT FUNCTIONS AND SHALL HAVE VETO POWER OVER THE APPROVAL AND
CANCELLATION OF TAX INCENTIVES UNDER SECTION 298 (C).

“PROVIDED, FURTHER, THAT THE SECRETARY OF FINANCE SHALL AUTOMATICALLY BE
‘THE CO-CHAIR OF ALL THE EXISTING AND FUTURE IPAS.

“PROVIDED, FINALLY, THAT THE NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY
(NEDA) AND THE DEPARTMENT OF TRADE AND INDUSTRY (OT!) SHALL BE MEMBERS OF ALL THE
EXISTING AND FUTURE IPAS.

“SEC. 299. COMPOSITION OF THE FIRB. - THE FIRB SHALL BE RECONSTITUTED AS
FOLLOWS:

“BOARD PROPER:
“CHAIRPERSON - SECRETARY OF FINANCE.
“MEMBERS: - SECRETARY OF TRADE AND INDUSTRY
- DIRECTOR GENERAL OF THE NATIONAL ECONOMIC AND
DEVELOPMENT AUTHORITY (NEDA)
- SECRETARY OF BUDGET AND MANAGEMENT
- EXECUTIVE SECRETARY OF THE OFFICE OF THE PRESIDENT
“TECHNICAL COMMITTEE:
“CHAIRPERSON - UNDERSECRETARY OF FINANCE.
“MEMBERS - UNDERSECRETARY OF TRADE AND INDUSTRY/BOARD OF

INVESTMENTS MANAGING HEAD

UNDERSECRETARY OF BUDGET AND MANAGEMENT

- DEPUTY DIRECTOR GENERAL OF THE NATIONAL ECONOMIC AND
DEVELOPMENT AUTHORITY

COMMISSIONER OF INTERNAL REVENUE

COMMISSIONER OF CUSTOMS:


8

* EXECUTIVE DIRECTOR OF THE NATIONAL TAX RESEARCH
CENTER (NTRC)

“SECRETARIAT: - NATIONAL TAX RESEARCH CENTER
“CHAPTER IV
“QUALIFIED ACTIVITIES FOR TAX INCENTIVES
“SEC. 300. STRATEGIC INVESTMENT PRIORITY PLAN (SIPP). - THE BOARD OF

INVESTMENTS (BO!) IN COORDINATION WITH THE OFFICE OF THE PRESIDENT, THE FISCAL
INCENTIVES REVIEW BOARD, THE CONCERNED IPAS, AND OTHER GOVERNMENT AGENCIES AND
THE PRIVATE SECTOR, SHALL FORMULATE THE SIPP TO BE SUBMITTED TO THE PRESIDENT FOR
HIS APPROVAL NOT LATER THAN DECEMBER OF THE THIRD YEAR SET FOR PERIODIC REVIEW.
THE PLAN SHALL BE VALID FOR A PERIOD OF THREE (3) YEARS SUBJECT TO REVIEW AND
‘AMENDMENT AS THE NEED ARISES. ALL SECTORS OR INDUSTRIES THAT MAY BE INCLUDED IN
THE SIPP SHALL UNDERGO AN EVALUATION PROCESS TO DETERMINE THE SUITABILITY AND
POTENTIAL OF THE INDUSTRY OR THE SECTOR IN PROMOTING LONG-TERM GROWTH AND
DEVELOPMENT, AND THE NATIONAL INTEREST.

"THE SIPP SHALL:

4A). INCLUDE ACTIVITIES THAT COMPLY WITH THE FOLLOWING:

(1) THE ACTIVITY SHALL BE COVERED BY THE PHILIPPINE DEVELOPMENT PLAN OR ITS
EQUIVALENT AND OTHER GOVERNMENT PROGRAMS;

“(2) THE ACTIVITY SHALL TAKE INTO ACCOUNT ANY OF THE FOLLOWING:

“(i) SUBSTANTIAL AMOUNT OF INVESTMENTS;

“qii) CONSIDERABLE GENERATION OF EMPLOYMENT;

“(ii) ADOPT INCLUSIVE BUSINESS ACTIVITIES AND VALUE-ADDING PRODUCTION BY
MSMES;

iv) USE OF MODERN OR NEW TECHNOLOGY;

“(v) ADOPTION OF ADEQUATE ENVIRONMENTAL PROTECTION SYSTEMS;

“(vi) ADDRESS MISSING GAPS IN THE SUPPLY/VALUE CHAIN OR MOVE UP THE VALUE
CHAIN OR PRODUCT LADDER; OR

(vii) PROMOTION OF MARKET COMPETITIVENESS.

“(B) IDENTIFY AGRIBUSINESS ACTIVITIES, THE LESS DEVELOPED AREAS OR THOSE
RECOVERING FROM ARMED CONFLICT OR A MAJOR DISASTER.

“(C) DETERMINE SERVICES AND ACTIVITIES THAT CAN SPUR REGIONAL OR GLOBAL
OPERATIONS IN THE COUNTRY.

“(0) INCLUDE EXISTING REGISTERED PROJECTS OR ACTIVITIES THAT SHALL RELOCATE
FROM METRO MANILA TO OTHER AREAS OF THE COUNTRY.

“THE ACTIVITIES MUST COMPLY WITH THE SPECIFIC QUALIFICATION REQUIREMENTS OR
CONDITIONS FOR A PARTICULAR SECTOR OR INDUSTRY AND OTHER LIMITATIONS AS SET AND
DETERMINED BY THE BOI.


wo

“THE THRESHOLD AMOUNT OF INVESTMENTS AND EMPLOYMENT GENERATION REQUIRED
FOR A SPECIFIC ACTIVITY SHALL BE SUBJECT TO A PERIODIC REVIEW EVERY THREE (3) YEARS
TAKING INTO CONSIDERATION INTERNATIONAL STANDARDS AND OTHER INDICATORS.

“SEC. 301. POWER OF THE PRESIDENT TO GRANT INCENTIVES. - THE PRESIDENT MAY, IN
THE INTEREST OF NATIONAL ECONOMIC DEVELOPMENT AND UPON THE RECOMMENDATION OF
‘THE FISCAL INCENTIVES REVIEW BOARD, GRANT INCENTIVES IN ADDITION TO THOSE THAT ARE
PROVIDED UNDER THIS CODE, INCLUDING A LONGER PERIOD, TO HIGHLY DESIRABLE
PROJECTS: PROVIDED, THAT THE BENEFITS THAT THE GOVERNMENT MAY DERIVE FROM SUCH
INVESTMENT THERETO IS CLEAR AND CONVINCING AND FAR OUTWEIGH THE COST OF
INCENTIVES THAT WILL BE GRANTED."

“SEC. 301-A. CRITERIA FOR AVAILMENT. - THE BOARD OF INVESTMENTS SHALL
CONSIDER THE FOLLOWING CRITERIA IN DETERMINING THE TYPES OF INCENTIVES AND THE
DURATION THEREOF THAT MAY BE GRANTED:

“(A) THE PROJECT HAS A COMPREHENSIVE SUSTAINABLE DEVELOPMENT PLAN WITH
CLEAR INCLUSIVE BUSINESS APPROACHES AND INNOVATIONS; OR

*(B) MINIMUM INVESTMENT OF TWO HUNDRED MILLION US DOLLARS (US$200,000,000) OR A
MINIMUM DIRECT EMPLOYMENT GENERATION OF AT LEAST ONE THOUSAND FIVE HUNDRED
(1,500) WITHIN THREE (3) YEARS FROM THE START OF COMMERCIAL OPERATION.

“THE THRESHOLD SHALL BE SUBJECT TO A PERIODIC REVIEW EVERY THREE (3) YEARS
TAKING INTO CONSIDERATION INTERNATIONAL STANDARDS AND OTHER INDICATORS.

“THE BO! MAY IMPOSE OTHER TERMS AND CONDITIONS TAKING INTO CONSIDERATION THE
AMOUNT OR KIND OF INCENTIVES THAT WILL BE GRANTED TO SUCH INVESTMENTS.”

“SEC. 301-8. USE OF RESOURCES. - IN THE EXERCISE OF THE POWER OF THE
PRESIDENT TO GRANT INCENTIVES, THE GOVERNMENT MAY UTILIZE ITS RESOURCES SUCH AS
LAND USE, WATER APPROPRIATION, POWER PROVISION, AMONG OTHERS, AS MAY BE
IDENTIFED BY THE BOI.”

“SEC. 302. AMENDMENTS. - SUBJECT 10
PUBLICATION REQUIREMENTS AND THE CRITERIA FOR INVESTMENT PRIORITY DETERMINATION,
THE BOI MAY, AT ANY TIME, INCLUDE ADDITIONAL AREAS IN THE SIPP, ALTER ANY OF THE
TERMS OF THE DECLARATION OF AN INVESTMENT AREA, AND TEMPORARILY OR PERMANENTLY
SUSPEND ACTIVITIES ON THE SIPP IF IT CONSIDERS THAT SUCH ACTIVITY IS NO LONGER A
PRIORITY. IN NO CASE SHALL THE IPAS ACCEPT APPLICATIONS UNLESS THE ACTIVITY IS LISTED
INTHE SIP.”

“SEC. 303. PUBLICATION. - UPON APPROVAL OF THE PLAN, IN WHOLE OR IN PART, OR
UPON APPROVAL OF AN AMENDMENT THEREOF, THE PLAN OR THE AMENDMENT, SPECIFYING
AND DECLARING THE AREAS OF INVESTMENTS SHALL BE PUBLISHED IN AT LEAST ONE (1)
NEWSPAPER OF GENERAL CIRCULATION OR THE OFFICIAL GAZETTE AND ALL SUCH AREAS


SHALL BE OPEN FOR APPLICATION UNTIL PUBLICATION OF AN AMENDMENT OR DELETION
THEREOF.”

“SEC. 304. QUALIFICATIONS OF A REGISTERED ENTERPRISE FOR TAX INCENTIVES. ~ IN
THE REVIEW AND GRANT OF TAX INCENTIVES, A REGISTERED ENTERPRISE MUST:

“(A) BE ENGAGED IN AN ACTIVITY INCLUDED IN THE SIPP;

“(B) INSTALL AN ADEQUATE ACCOUNTING SYSTEM THAT SHALL IDENTIFY THE
INVESTMENTS, REVENUES, COSTS AND PROFITS OR LOSSES OF EACH REGISTERED PROJECT
UNDERTAKEN BY THE ENTERPRISE SEPARATELY FROM THE AGGREGATE INVESTMENTS,
REVENUES, COSTS AND PROFITS OR LOSSES OF THE WHOLE ENTERPRISE; OR ESTABLISH A
SEPARATE CORPORATION FOR EACH REGISTERED PROJECT IF THE IPA SHOULD SO REQUIRE;

“(C) COMPLY WITH THE E-INVOICE AND E-SALES REQUIREMENT IN ACCORDANCE WITH
‘SECTION 237-A OF THIS CODE.”

“CHAPTER V
“AVAILMENT OF TAX INCENTIVES.
“SEC. 305. INCOME TAX-BASED INCENTIVES. -
ALL REGISTERED ENTERPRISES ARE REQUIRED TO

FILE ALL THEIR TAX RETURNS USING THE ELECTRONIC/ONLINE FACILITIES OF THE BUREAU OF
INTERNAL REVENUE (BIR). IN AVAILING THE INCOME TAX-BASED INCENTIVES, THE REGISTERED
ENTERPRISE SHALL BE REQUIRED TO SECURE A CERTIFICATE OF ENTITLEMENT ISSUED BY THE
IPA AND ATTACH ‘THE SAME TO ITS INCOME TAX RETURN (ITR) OR ANNUAL INFORMATION
RETURN (AIR), WHICHEVER IS APPLICABLE. THEREAFTER, THE REGISTERED
ENTERPRISE SHALL FILE ITS CLAIM WITH THE BIR FOR VALIDATION.

“FAILURE TO SECURE AND ATTACH THE CERTIFICATION TO THE ITR OR AIR, ANDIOR FILE
THE INCENTIVE AVAILMENT APPLICATION SHALL CAUSE THE FORFEITURE OF THE INCENTIVE
FOR THAT TAXABLE PERIOD.”

“SEC. 306. CUSTOMS DUTY EXEMPTION ON CAPITAL EQUIPMENT. - IMPORTATION OF
CAPITAL EQUIPMENT, MACHINERY AND SPARE PARTS EXCLUSIVELY USED FOR CAPITAL
EQUIPMENT AND MACHINERY INCLUDING CONSIGNMENT THEREOF BY REGISTERED
ENTERPRISES MAY BE EXEMPTED TO THE EXTENT OF ONE HUNDRED PERCENT (100%) OF THE
CUSTOMS DUTY: PROVIDED, THAT THE FOLLOWING CONDITIONS ARE COMPLIED WITH:

“(A) THE CAPITAL EQUIPMENT ANDIOR SPARE PARTS ARE DIRECTLY AND REASONABLY
NEEDED AND WILL BE USED EXCLUSIVELY IN AND AS PART OF ‘THE DIRECT COST OF
THE REGISTERED ACTIVITY OF THE REGISTERED ENTERPRISE, AND ARE NOT MANUFACTURED
DOMESTICALLY IN SUFFICIENT QUANTITY, OF COMPARABLE QUALITY AND AT REASONABLE
PRICES. PRIOR APPROVAL OF THE IPA MAY BE SECURED FOR THE PART-TIME UTILIZATION OF
‘SAID EQUIPMENT IN A NON-REGISTERED ACTIVITY TO MAXIMIZE USAGE THEREOF: PROVIDED,
THAT THE PROPORTIONATE TAXES AND DUTIES ARE PAID ON A SPECIFIC EQUIPMENT AND
MACHINERY IN PROPORTION TO ITS UTILIZATION FOR NON-REGISTERED ACTIVITIES. IN THE


EVENT THAT Iv SHALL BE USED FOR A
NON-REGISTERED ACTIVITY OF THE REGISTERED ENTERPRISE AT ANY TIME WITHIN THE FIRST
FIVE (5) YEARS FROM DATE OF IMPORTATION, THE REGISTERED ENTERPRISE SHALL FIRST SEEK
PRIOR APPROVAL OF THE AUTHORITY, AND PAY THE TAXES AND CUSTOMS DUTIES THAT WERE
NOT PAID UPON ITS IMPORTATION; AND

*(B) THE APPROVAL OF THE IPA WAS OBTAINED BY THE REGISTERED ENTERPRISE PRIOR
TO THE IMPORTATION OF SUCH CAPITAL EQUIPMENT ANDIOR SPARE PARTS.

“APPROVAL OF THE IPA MUST BE SECURED BEFORE THE SALE, TRANSFER OR
DISPOSITION OF THE CAPITAL EQUIPMENT ANDIOR SPARE PARTS WHICH WERE GRANTED TAX
‘AND CUSTOMS DUTY EXEMPTION HEREUNDER, AND SHALL BE ALLOWED ONLY UNDER THE
FOLLOWING CIRCUMSTANCES:

“(1) IF MADE TO ANOTHER ENTERPRISE ENJOYING CUSTOMS DUTY EXEMPTION ON
IMPORTED CAPITAL EQUIPMENT ANDIOR SPARE PARTS;

“(2) IF MADE TO ANOTHER ENTERPRISE NOT DUTY EXEMPTION ON IMPORTED CAPITAL
EQUIPMENT ANDIOR SPARE PARTS, UPON PAYMENT OF ANY TAXES AND DUTIES DUE ON THE
NET BOOK VALUE OF THE CAPITAL EQUIPMENT ANDIOR SPARE PARTS TO BE SOLD;

“(3) EXPORTATION OF CAPITAL EQUIPMENT, MACHINERY, SPARE PARTS OR SOURCE
DOCUMENTS, OR THOSE REQUIRED FOR POLLUTION ABATEMENT AND CONTROL; OR

“(4) FOR REASONS OF PROVEN TECHNICAL OBSOLESCENCE.

“PROVIDED, THAT IF THE REGISTERED ENTERPRISE SELLS, TRANSFERS OR DISPOSES THE
AFOREMENTIONED IMPORTED ITEMS WITHOUT PRIOR APPROVAL, THE REGISTERED ENTERPRISE
AND THE VENDEE, TRANSFEREE, OR ASSIGNEE SHALL BE SOLIDARILY LIABLE TO PAY TWICE
THE AMOUNT OF THE DUTY EXEMPTION THAT SHOULD HAVE BEEN PAID DURING ITS
IMPORTATION: PROVIDED, FURTHER, THAT EVEN IF THE SALE, TRANSFER OR DISPOSITION OF
THE CAPITAL EQUIPMENT WAS MADE AFTER FIVE (5) YEARS FROM DATE OF IMPORTATION WITH
THE APPROVAL OF THE IPA, THE REGISTERED ENTERPRISE IS STILL LIABLE TO PAY THE DUTIES
BASED ON THE NET BOOK VALUE OF THE CAPITAL EQUIPMENT IF IT HAS VIOLATED ANY OF ITS
REGISTRATION TERMS AND CONDITIONS."

“SEC. 307. VAT REFUND MECHANISM ON IMPORTATION OF CAPITAL EQUIPMENT AND
RAW MATERIALS. ~ THE VAT ON IMPORTATION OF CAPITAL EQUIPMENT AND RAW MATERIALS
PAID BY EXPORT REGISTERED ENTERPRISES THAT DID NOT MEET THE NINETY PERCENT (90%)
EXPORT SALES THRESHOLD OR ARE LOCATED OUTSIDE THE ECOZONE, FREEPORT, OR THOSE
UTILIZING THE CUSTOMS BONDED MANUFACTURING WAREHOUSE REGARDLESS OF THE
THRESHOLD SHALL BE REFUNDED PURSUANT TO THE ENHANCED VAT REFUND SYSTEM UNDER
‘SECTIONS 106 AND 108 OF THIS CODE.”

“CHAPTER VI
“FINAL PROVISIONS


“SEC. 308. NO DOUBLE REGISTRATION OF ENTERPRISES. - REGISTERED ENTERPRISES
SHALL NOT BE ALLOWED TO REGISTER THEIR ACTIVITIES IN MORE THAN ONE (1) IP)

“SEC. 309. GOVERNANCE RULES. - THE DIFFERENT IPAS MAY REQUIRE DOMESTIC
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 ANDIOR
‘THEIR EMPLOYEES WITHIN FIVE (5) YEARS FROM DATE OF REGISTRATION.”

“SEC. 310. INVESTMENTS PRIOR TO THE EFFECTIVITY OF THIS ACT. - EXISTING
REGISTERED ACTIVITIES GRANTED THE INCOME TAX HOLIDAY SHALL BE ALLOWED TO
CONTINUE WITH THE AVAILMENT OF THE SAID INCENTIVE FOR THE REMAINING PERIOD OF THE
ITH OR FOR A PERIOD OF FIVE (5) YEARS ONLY, WHICHEVER COMES FIRST: PROVIDED, THAT
OTHER TAX INCENTIVES GRANTED TO EXISTING REGISTERED ACTIVITIES, SUCH AS THE FIVE
PERCENT (5%) TAX ON GROSS INCOME EARNED IN LIEU OF ALL TAXES, BOTH NATIONAL AND
LOCAL, SHALL BE ALLOWED TO CONTINUE FOLLOWING THE SCHEDULE STATED HEREIN:

“(A)_ TWO (2) YEARS FOR ACTIVITIES ENJOYING THE TAX INCENTIVE FOR MORE THAN TEN
(10) YEARS;

“(B) THREE (3) YEARS FOR ACTIVITIES ENJOYING THE TAX INCENTIVE BETWEEN FIVE (5)
AND TEN (10) YEARS;

“(C) FIVE (5) YEARS FOR ACTIVITIES ENJOYING THE TAX INCENTIVE BELOW FIVE (5)
YEARS,

“PROVIDED, THAT THE FIVE PERCENT (5%) TAX ON GROSS INCOME EARNED SHALL
COMMENCE AFTER THE ITH PERIOD HAS LAPSED ONLY FOR THE REMAINING YEARS WITHIN THE
FIVE (5)-YEAR PERIOD.”

“SEC. 311. SUSPENSION AND FORFEITURE OF TAX INCENTIVES OF REGISTERED
ENTERPRISES, REFUND AND PENALTIES; WAIVER AND CONDONATION, ~ THE IPA MAY IMPOSE
FINES AND PENALTIES, SUSPEND ANDIOR FORFEIT THE INCENTIVES GRANTED TO THE
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.

“WHEN THERE IS PROBABLE CAUSE TO BELIEVE THAT THE REGISTERED ENTERPRISE HAS
VIOLATED ITS REGISTRATION TERMS AND CONDITIONS, THE IPA SHALL SUSPEND THE
AVAILMENT OF INCENTIVES UNTIL PROVEN OTHERWISE: PROVIDED, THAT FOR PROJECTS
UNDER SECTION 298(C), THE CONCERNED IPA SHALL RECOMMEND TO THE FIRB THE
SUSPENSION OF ITS AVAILMENT OF INCENTIVES.

“IN CASE OF CANCELLATION OF THE CERTIFICATE OF REGISTRATION, THE CONCERNED
IPA MAY, IN APPROPRIATE CASES, REQUIRE THE PAYMENT OF TAXES, CUSTOMS DUTIES AND
ANY APPLICABLE PENALTIES THEREON TO THE APPROPRIATE AGENCY, AND IMPOSE
ADDITIONAL FINES AND PENALTIES.



40

“FOR THIS PURPOSE, THE IPAS SHALL PREPARE A SCHEDULE OF FEES, FINES AND
PENALTIES TO BE IMPOSED ON ERRING REGISTERED ENTERPRISES DEPENDING ON THE
GRAVITY OF THE VIOLATION INCURRED IN ADDITION TO THE FINES AND PENALTIES IMPOSABLE
UNDER THIS CODE.

‘IN MERITORIOUS CASES, THE IPA MAY WAIVE, CONDONE OR REDUCE FINES OR
PENALTIES IMPOSED ON REGISTERED ENTERPRISES BY THE IPAS: PROVIDED, THAT THE
MINIMUM COMPROMISE RATE, IN CASE OF REDUCTION, SHALL NOT BE LESS THAN FORTY
PERCENT (40%) OF THE BASIC ASSESSED FINES OR PENALTIES.”

“SEC. 312. STRUCTURAL ADJUSTMENT FUND. - THE FOLLOWING AMOUNTS SHALL BE
APPROPRIATED TO COMPENSATE WORKERS THAT MAY BE DISPLACED BY THE
RATIONALIZATION OF FISCAL INCENTIVES TO IMPROVE EMPLOYABILITY OF WORKERS:

“(1) THE AMOUNT OF FIVE HUNDRED MILLION PESOS (P500,000,000) SHALL BE
APPROPRIATED ANNUALLY, IN ADDITION TO ANY ADJUSTMENT FUND APPROPRIATED UNDER
THE BUDGET OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, TO PROVIDE TARGETED
CASH GRANTS OR OTHER SUPPORT PROGRAMS TO DISPLACED WORKERS OF FIRMS THAT MAY
BE AFFECTED BY THE RATIONALIZATION OF FISCAL INCENTIVES;

*(2) THE AMOUNT OF FIVE HUNDRED MILLION PESOS (P500,000,000) SHALL BE
APPROPRIATED ANNUALLY TO PROVIDE TARGETED TRAININGS TO DISPLACED WORKERS OF
FIRMS THAT MAY BE AFFECTED BY THE RATIONALIZATION OF FISCAL INCENTIVES;

“(3) THE AMOUNT OF FIVE BILLION PESOS (P5,000,000,000) SHALL BE ALLOCATED
ANNUALLY FOR THE SKILLS UPGRADE PROGRAM OF THE IT-BPO INDUSTRY. THE FUND SHALL
BE SOLELY USED TO PAY FOR FORMAL ACADEMIC OR TRAINING PROGRAMS OF ACCREDITED
PRIVATE OR PUBLIC SCHOOLS AND TRAINING CENTERS; AND

“(4) THE AMOUNT OF FIFTEEN BILLION PESOS (P15,000,000,000), IN ADDITION TO ANY
ADJUSTMENT FUND APPROPRIATED UNDER THE BUDGET OF PERTINENT GOVERNMENT
DEPARTMENTSIAGENCIES, SHALL BE APPROPRIATED FOR THE DEVELOPMENT OF
INFRASTRUCTURE SURROUNDING AND WITHIN THE AREASILOCALITIES OF SPECIAL ECONOMIC
ZONES AND FREEPORTS TO BE AFFECTED BY THIS ACT. THIS SUBSIDY SHALL LIKEWISE BE
UTILIZED TO SUPPORT RESEARCH AND DEVELOPMENT; COSTS OF POWER, WATER AND OTHER
UTILITIES; LEASE OF PROPERTIES; AND OTHER ECONOMIC ACTIVITIES RELEVANT
TO DEVELOPING THE ABOVEMENTIONED AREASILOCALITIES.

“PROVIDED, THAT RELEASES TO THE INVESTMENT PROMOTION AGENCIES SHALL BE
GOVERNED BY IMPLEMENTING GUIDELINES TO BE PROMULGATED BY THE DEPARTMENT OF
FINANCE AND THE DEPARTMENT OF BUDGET AND MANAGEMENT.

“PROVIDED, FURTHER, THAT EARMARKING FOR THESE FUNDS IN THIS SECTION SHALL BE
TERMINATED FIVE (5) YEARS AFTER THE EFFECTIVITY OF THIS ACT.”

“SEC. 313. ENHANCED TAX EXPENDITURE FUND SYSTEM. - ALL INTERNAL REVENUE TAX
AND DUTY OBLIGATIONS OF GOVERNMENT-OWNED AND/OR CONTROLLED CORPORATIONS


41

SHALL BE CHARGEABLE TO THE TAX EXPENDITURE FUND OF THE GOVERNMENT UPON THE

ESTABLISHMENT AND IMPLEMENTATION OF AN ENHANCED TAX EXPENDITURE FUND SYSTEM

THAT GRANTS TAX SUBSIDY WITHIN THIRTY (30) DAYS FROM THE FILING OF APPLICATION WITH

THE FIRB.”

"SEC. 314, THE NAME OF RECIPIENTS OF INCENTIVES AND THE AMOUNT OF INCENTIVES

AVAILED SHALL BE REPORTED BY THE INVESTMENT PROMOTION AGENCIES ANNUALLY TO

CONGRESS. THE REPORT SHALL BE MADE AVAILABLE TO THE PUBLIC."

SEC. 35. Title Xill ofthe National intemal Revenue Code of 1997, as amended, is hereby retitled as Title XIV.

SEC. 36. Title XIV of the National Intemal Revenue Code of 1997, as amended, is hereby retitled as Title XV.

SEC. 37. Amendatory Clause. -

To ensure that the DOF, NEDA and DTI are represented in the Goveming Boards of all IPAS, where the OOF shall
automatically serve as Co-chair, and DTI and NEDA as members, pursuant to Section 299 of this Act, the following
provisions, among others, are amended accordingly:

Aticle 4 of Executive Order No. 226, as amended, entitied “The Omnibus investments Code of 1987”;

Sections 9 and —13(c)-—soof,~—Republic. «= Act’ «No. 7227, _— entitled
“An Act Accelerating the Conversion of Military Reservations into Other Productive Uses, Creating the Bases Conversion
‘and Development Authority for this Purpose, Providing Funds Therefor and for Other Purposes”;

Section 3 of Executive Order No. 80, series of 1993, entited “Authorizing the Establishment of the Clark
Development Corporation as the Implementing Arm of the Bases Conversion and Development Authority for the Clark
Special Economic Zone, and Directing all Heads of Departments, Bureaus, Offices, Agencies and Instrumentaiities of
Government to Support the Program’;

Section 6 of Executive Order No. 132, series of 2002, entitled “Authorizing the Creation of the Poro Point
Management Corporation as the Implementing Arm of the Bases Conversion Development Authority Over the Poro Point
Special Economic and Freeport Zone and Renaming the John Hay Poro Point Development Corporation as the John Hay
Management Corporation";

Section 9 of Republic Act No. 7903, entitled “An Act Creating a Special Economic Zone and Freeport in the City of
Zamboanga Creating for this Purpose the Zamboanga City Special Economic Zone Authority, Appropriating Funds
Therefor, and for Other Purposes”;

Section 14 of Republic Act No. 9728, entitied “An Act Converting the Bataan Economic Zone Located in the
Municipality of Mariveles, Province of Bataan, into the Freeport Area of Bataan (FAB), Creating for this Purpose the
‘Authority of the Freeport Area of Bataan (AFAB), Appropriating Funds Therefor and for Other Purposes";

Section 65 of Republic Act No. 9593, entitled “An Act Declaring a National Policy for Tourism as an Engine of
Investment, Employment, Growth and National Development, and Strengthening the Department of Tourism and its
‘Attached Agencies to Effectively and Eticiently Implement that Policy, and Appropriating Funds Therefor";

Section 15 of Republic Act No. 9490, entitled “An Act Establishing the Aurora Special Economic Zone in the
Province of Aurora, Creating for the Purpose the Aurora Special Economic Zone Authority, Appropriating Funds Therefor
and for Other Purposes’, as amended by Republic Act No. 10083;


42

Section 7 of Republic Act No, 7922, entitled “An Act Establishing a Special Economic Zone and Freeport in the
Municipality of Santa Ana and the Neighboring Islands in the Municipality of Apani, Province of Cagayan, Providing Funds
Therefor, and for Other Purposes";

Section 6 of Presidential Decree No. 538, entitled "Creating and Establishing the PHIVIDEC Industrial Authority
‘and Making it a Subsidiary Agency of the Philippine Veterans Investment Development Corporation, Defining its Powers,
Functions and Responsibilities, and for Other Purposes," as amended by Executive Order No. 1031, series of 1985; and

Section 11 of Republic Act No. 7916, entitled “An Act Providing for the Legal Framework and Mechanisms for the
Creation, Operation, Administration, and Coordination of Special Economic Zones in the Philippines, Creating for this
Purpose, the Philippine Economic Zone Authority (PEZA), and for Other Purposes”.

(0) The following laws are hereby amended to mandate all intemal revenue tax and duty obligations of the relevant
entities be chargeable to the Tax Expenditure Fund (TEF) pursuant to Section 313 of this Act:

(a)Section 18 of Republic Act No. 7884, entitled “An Act Creating the National Dairy Authority to Accelerate the
Development of the Dairy Industry in the Philippines, Providing for a Dairy Development Fund, and for Other Purposes";

(2)Section 8 of Republic Act No. 7903, entitled “An Act Creating Special Economic Zone and Freeport in the City of
Zamboanga for this Purpose the Zamboanga City Special Economic Zone Authority, Approprating Funds Therefor, and for
Other Purpose";

(3)Section 12{a) of Republic Act No. 10083, entitled “An Act Amending Republic Act No. 9490, Otherwise Known as
the ‘Aurora Special Economic Zone Act of 2007" *;

(ASections «28,57, 7,85), of~— Republic. «= Act. «No. (9593,
entitled “An Act Declaring Tourism as Engine of Investment, Employment, Growth and National Development and
Strengthening the Department of Tourism or Tourism Act of 2009";

(6)Section 10 of Presidential Decree No. 538, entitled “Creating and Establishing the PHIVIDEC Industrial Authority
and Making it a Subsidiary Agency of the Philippine Veterans Investment Development Corporation, Defining its Powers,
Functions and Responsibilities, and for Other Purposes";

(6)Section 16(a\b) —of,~=— Republic. «= Act «SN. «= 9497, entitled» “An
Act Creating the Civil Aviation Authority of the Philippines, Authorizing the Appropriation of Funds Therefor, and for Other
Purposes",

(7)Section 14 of Republic Act No. 7364, entitled “An Act Creating the Philippine Postal Corporation, Defining its
Powers, Functions and Responsibiliies, Providing for Regulation of the industry and for Other Purposes Connected
Therewith’;

(8)Sections 8 and 14 of Presidential Decree No. 269, ented “Creating the National Electrification Administration as
a Corporation, Prescribing its Powers and Activities, Appropriating the Necessary Funds Therefore and Deciaring a National
Policy Objective for the Total Electrification of the Philippines on an Area Coverage Service Basis, the Organization,
Promotion and Development of Electric Cooperatives to Attain the Said Objective, Prescribing Terms and Conditions for
their Operations, the Repeal of Republic Act No. 6038, and for Other Purposes”;

(9)Sections 2 and 19 of Republic Act No. 9679, entiled “An Act Amending the Home Development Mutual Fund,
Otherwise Known as the Pag-IBIG Fund”;


43

(10)Section 17(c) under Section 8 of Republic Act No. 9576, entitled “An Act Increasing the Maximum Deposit
Insurance Coverage, and in Connection Therewith, to Strengthen the Regulatory and Administrative Authority, and
Financial Capability of the Philippine Deposit Insurance Corporation (PDIC), Amending for this Purpose Republic Act
Numbered Three Thousand Five Hundred Ninety-One, as Amended, Otherwise Known as the PDIC Charter and for Other
Purposes",

(11)Section 13 of Republic Act No. 7820, entitled "An Act Creating the Partido Development Administration, Defining
its Powers and Functions, Providing Funds Therefor, and for Other Purposes";

(12)Section 5() of Republic Act No. 9510, entitled “An Act Establishing the Credit Information System and for Other
Purposes";

(13)Section 13(e) of Presidential Decree No. 857, entitled “Providing for the Reorganization of Port Administrative
‘and Operation Functions in the Philippines, Revising Presidential Decree No. 505 dated July 11, 1974, Creating the
Philippine Port Authority, by Substitution, and for Other Purposes";

(14)Section 19 of Republic Act No. 6847, entitled “An Act Creating and Establishing the Philippine Sports
‘Commission, Defining its Powers, Functions, and Responsibilities, Appropriating Funds Therefor, and for Other Purposes";

(15)Section 8(a)(b) and Section 13 of Republic Act No. 6395, entitled “An Act Revising the Charter of the National
Power Corporation”; and

(16)Section 21 of Republic Act No. 7306, entiled “An Act Providing for the Establishment of the People's Television
Network, Inc, Defining its Powers and Functions, Providing for its Sources of Funding and for Other Purposes.”

SEC. 38. Repealing Clauses. -

(1) The tax treatment provisions of entities covered by the following franchise laws are hereby amended or
repealed effective two (2) years from the implementation of this Act: Provided, That the tax treatment provisions of entities
covered by franchise laws pertaining fo energy and telecommunications shall be deferred for an additional two (2) years:

(2)Section 9 of Republic Act No. 7953, entitled “An Act Amending Republic Act Numbered Sixty-Six Hundred Thirty-
Two, entitled ‘An Act Granting the Philippine Racing Act, Inc., a Franchise to Operate and Maintain a Race Track for Horse
Racing in the Province of Rizal, and Extending the Said Franchise by Twenty-five (25) Years From the Expiration of the
Term Thereof "*;

(B)Section 12 of Republic Act No. 8407, entitled “An Act Amending Republic Act Numbered Sixty-Six Hundred
Thirty-One, entitled ‘An Act Granting Manila Jockey Club, Inc., a Franchise to Construct, Operate and Maintain a Race
Track for Horse Racing in the City of Manila or any Place Within the Provinces of Bulacan, Cavite or Rizal and Extending
the Said Franchise by Twenty-five (25) Years From the Expiration of the Term Thereof **;

(4)Section 9 of Republic Act No. 8298, entitled “An
Act ‘Amending Republic Act Numbered Seventy-Nine Hundred
Seventy-Eight, ented ‘An Act Granting the Metro Manila Turf Club, Inc., a Franchise to Construct, Operate and Maintain a
Racetrack for Horse Racing in the City of Kalookan’*; and

(6)Section 12 of Republic Act No. 8446, entitled “An Act Granting the Fil-Asia Racing Club a Franchise to Construct,
Operate and Maintain a Racetrack for Horse Racing in Rizal or Tarlac, or Pampanga or Batangas or Quezon City”

(0) The provisions of the following laws, including the tax incentives, that are inconsistent with this Act are hereby
‘amended or repealed effective two (2) years from the implementation of this Act: Provided, That the tax


treatment provisions of entities covered by special laws pertaining to energy, agriculture, and telecommunications shall be
deferred for an additional two (2) years:

(A)Section 37 of Republic Act No. 6848, entitled "An Act Providing for the 1989 Charter of the AlAmanah Islamic
Investment Bank of the Philippines, Authorizing its Conduct of Islamic Banking Business, and Repealing for this Purpose
Presidential Decree Numbered Two Hundred and Sixty-Four as Amended by Presidential Decree Numbered Five Hundred
and Forty-Two";

(2)Section 17 of Republic Act No. 7906, entitled “An Act Providing for the Regulation of the Organization and
Operations of Thrift Banks, and for Other Purposes”;

(3)Section 15 of Republic Act No. 7353, entitled “An Act Providing for the Creation, Organization and Operation of
Rural Banks, and for Other Purposes";

(4)Book |, Title Ill, Article 39(A), (B), (C), (D), (E), (G), (I) and (J); Title IV, Article 40; Book Ill, Articles 59, 60, 61;
Book IV Article 69; Book VI, Articles 77 and 78 of Executive Order No. 226, series of 1987, entitled "The Omnibus
Investments Code of 1987";

(6)Section 1 of Republic Act No. 7918, entitled ‘An Act Amending Article 39, Title II of Executive Order No. 226,
Otherwise Known as the Omnibus Investments Code of 1987, as Amended, and for Other Purposes”;

Articles 62, 63, 64, 65, 66, 67, and 69 of Republic Act No. 8756, entitled *An Act Providing for the Terms,
Conditions and Licensing Requirements of Regional or Area Headquarters, Regional Operating Headquarters, Regional
Warehouses of Multinational Companies, Amending for the Purpose Certain Provisions of Executive Order No. 226,
Otherwise Known as the Omnibus Investment Code of 1987";

(7Executive Order No. 22, series of 2017, amending Executive Order No. 70, series of 2012 and Executive Order
No. 528, series of 2006 and Executive Order No. 313, series of 2004, entitled “Reducing the Rates of Duty on Capital
Equipment, Spare Parts and Accessories Imported by Board of Investments - Registered New and Expanding Enterprises";

(8)Section 12 of Republic Act No. 8047, entitled “An Act Providing for the Development of the Book Publishing
Industry Through the Formulation and implementation of a National Book Policy and a National Book Development Pian";

(9)Section 17(1) to (8) insofar as tax exemption and/or VAT zero-rating on domestic merchandise is concerned, and
Section 18(a), (b), (c), and (f) of Presidential Decree No. 66, entitled “Creating the Export Processing Zone Authority and
Revising Republic Act No. 5490";

(10)Section 4(e) and (f, insofar as tax exemption andior VAT zero-rating on domestic merchandise is concemed, of
Republic Act No. 7903, entitled "An Act Creating Special Economic Zone and Freeport in the City of Zamboanga and
Establishing for this Purpose the Zamboanga City Special Economic Zone Authority, Appropriating Funds Therefor, and for
Other Purposes";

(11)Section 4(0y(c), insofar as tax exemption andjor VAT
ero-rating on domestic merchandise is concemed, of Republic Act No. 7922, entitled “An Act Establishing a Special
Economic Zone and Freeport in the Municipality of Santa Ana and the Neighboring Islands in the Municipality of Apari
Province of Cagayan Providing Funds Therefor, and for Other Purposes";

(12)Section 4 of Republic Act No. 8748, entitled ‘An Act Amending Republic Act No. 7916, Otherwise Known as the
Special Economic Zone Act of 1995";


45

(13)Sections 23 and 24 of Republic Act No. 7916, entitled *An Act Providing for the Legal Framework and
Mechanisms for the Creation, Operation, Administration, and Coordination of Special Economic Zones in the Philippines,
Creating for the Purpose the Philippine Economic Zone Authority (PEZA), and for Other Purposes”,

(14)Section 1 of Republic Act No. 9400, amending Section 12(b) of Republic Act No. 7227, insofar as tax
exemption and VAT zero-rating of domestic merchandise and capital equipment are concemed, Section 12(c), Section 2
amending Section 15, second, third and last paragraph of Republic Act No. 7227, Section 3, first and second paragraph;
Sections 4 and 5 entitled “An Act Amending Republic Act No. 7227, as Amended, Otherwise Known as the Bases
Conversion and Development Act of 1982, and for Other Purposes",

(15)Section 1 of Executive Order No. 619, entitled "Creating and Designating Special Economic Zones Pursuant to
Republic Act No. 7916, as Amended by Republic Act No. 8784, in Relation to Republic Act No. 7227, as Amended by
Republic Act No. 9400, Inside the Clark Freeport Zone”;

(16)Sections 5, 6, 7, 8, and 9 of Republic Act No, 9490, entitled “An Act Establishing the Aurora Special Economic
Zone in the Province of Aurora, Creating for the Purpose the Aurora Special Economic Zone Authority, Appropriating Funds
Therefor and for Other Purposes’;

(17)Sections 3(e)(f)(h) and 4 of Republic Act No. 10083, entitled "An Act Amending Republic Act No. 9490";

(18) Section 4(), insofar as tax exemption andior value-added tax or VAT zero-rating on domestic
merchandise and capital equipment are concemed, and Sections 5, 6, and 10 of Republic Act No. 9728, entitled “An Act
Converting the Bataan Economic Zone Located in the Municipaity of Mariveles, Province of Bataan, into the Freeport Area
of Bataan (FAB), Creating for this Purpose the Authority of the Freeport Area of Bataan (AFAB), Appropriating
Funds Therefor and for Other Purposes",

(19)Section 36(e) and (f) of Presidential Decree No. 705, entitled "Revising PD No. 389, Otherwise Known as the
Forestry Reform Code of the Philippines”;

(20)Section (b}(1)(c) of Republic Act No. 9003, entited “An Act Providing for an Ecological Solid Waste
Management Program, Creating the Necessary Institutional Mechanisms and Incentives, Declaring Certain Acts Prohibited
and Providing Penalties, Appropriating Funds Therefor and for Other Purposes”;

(21)Section 26(a)(1)(3) of Republic Act No. 9275, entitled “An Act Providing for Comprehensive Water Quality
Management and for Other Purposes";

(22)Sections 16 and 17 of Republic Act No. 7844, entitled “An Act to Develop Exports as a Key Towards the
‘Achievement ofthe National Goals Towards the Year 2000";

(23)Section 13 of Republic Act No. 10817, entitled “An Act Insttuting the Philippine Halal Export Development and
Promotion Program, Creating for the Purpose the Philippine Halal Export Development and Promotion Board, and for Other
Purposes’,

(24)Section 14 of Republic Act No. 8423, entitled ‘An Act Creating the Philippine Institute of Traditional and
Alternative Health Care (PITAHC) to Accelerate the Development of Traditional and Altemative Health Care in the
Philippines, Providing fora Traditional and Alternative Health Care Development Fund and for Other Purposes”;


46

(25)Section 20(d)(1) to (5) of Republic Act No. 10884, entitled “An Act Strengthening the Balanced Housing
Development Program, Amending for the Purpose Republic Act No. 7279, as Amended, Otherwise Known as the Urban
Development and Housing Act of 1992",

(26)Republic Act No. 7718, entitled “An Act Amending Certain Sections of Republic Act No. 6957, Entitled ‘An Act
‘Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector, and for
Other Purposes’ ";

(27)Section 6(c)(4)(f) and Sections 7 and 8 of Republic Act No. 7103, entitled “An Act to Strengthen the tron and
‘Steel Industry and Promote Philippine Industrialization and for Other Purposes”;

(28)Section 3(a) to (d) and (h) of Republic Act No. 8502, entitled “An Act to Promote the Development of the Jewelry
Manufacturing Industry, Providing Incentives Therefor and for Other Purposes”;

(29)Section 5(a)(b) of Republic Act No. 10771, entitled “An Act Promoting the Creation of Green Jobs, Granting
Incentives and Appropriating Funds Therefor’;

(30)Sections 9(h)(10) of Republic Act No. 9501, entitled “Promoting Entrepreneurship by Strengthening
Development and Assistance Programs to Micro, Small and Medium Scale Enterprises Amending Republic Act No. 6977,
Otherwise Known as the Magna Carta For Small Enterprises”,

(31)Section 7 of Republic Act No. 9178, entitled “An Act to Promote the Establishment of Barangay Micro Business
Enterprises (BMBES), Providing Incentives and Benefits Therefor, and for Other Purposes",

(82)Chapter XV, Section 83; Chapter XVI, Sections 90, 91, 92, and 93 of Republic Act No. 7942, entitled “An Act
Instituting a New System of Mineral Resources Exploration, Development, Utilization and Conservation”;

(33)Chapter Il, Section 4 and Chapter Vili, Section 19 of Republic Act No. 9295, entitled “An Act Promoting the
Development of Philippine Domestic Shipping, Shipbuilding, Ship Repair and Ship Breaking, Ordaining Reforms in
Government Policies Towards Shipping in the Philippines and for Other Purposes”,

(34)Section 6 of Republic Act No. 7471, as amended, entitled “An Act to Promote the Development of Philippine
Overseas Shipping”;

(35)Sections 86, 88, and 95(a) and (b) of Republic Act No. 9593, entitled “An Act Declaring a National Policy for
Tourism as an Engine of Investment, Employment, Growth and National Development, and Strengthening the Department
of Tourism and its Attached Agencies to Effectively and Efficiently Implement That Policy, and Appropriating Funds
Therefor’;

(36)Section 8, insofar as investment incentives are concemed, of Republic Act No. 10816, entitled “An Act Providing
for the Development and Promotion of Farm Tourism in the Philippines”;

(37)Section 8 of Presidential Decree No. 1491, Amending Section 8 of Presidential Decree No. 538 (Philippine
Veterans Investment Development Corporation),

(38)Section 8, insofar as tax exemption and VAT zero-rating of domestic merchandise are concerned, and Section 9
of Presidential Decree No. 538, entitled "Creating and Establishing the PHIVIDEC Industrial Authority and Making it a
Subsidiary Agency of the Philippine Veterans Development Corporation, Defining its Powers, Functions and
Responsibilities, and for Other Purposes”;



wee
4”

(89)Section 1{1.1) of Executive Order No. 97-A, series of 1993, entitled “Further Clarifying the Tax and Duty-Free
Privilege Within the Subic Special Economic and Free Port Zone’;

(40)Sectons 4(f) and 5{c)(K), insofar as tax exemption and/or VAT zero-rating on domestic merchandise is
concemed, and Section 12(b) of Republic Act No. 10083, entited “An Act Amending Republic Act No, 9490,
Otherwise Known as the Aurora Special Economic Zone Act of 2007",

(41)Section 5(6.1) and (6.2) of Executive Order No. 290, series of 2004, entited “Implementing the Natura! Gas
Vehicle Program for Public Transport;

(42)Sections 18 and 20 of Republic Act No. 6847, entiled “An Act Creating and Establishing the Philippine Sports
Commission, Defining its Powers, Functions, and Responsbilies, Appropriating Funds Therefor, and for Other Purposes’.

(43) Section 22 of Republic Act No. $337, entited “An Act Amending Sections 27, 28, 34, 106, 107, 108, 109, 110,
111, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237, and 288 of the National Internal Revenue Code of 1997, as
‘Amended, and for Other Purposes";

(44)Sections 1(6) and 2 of Presidential Decree No. 776, entitled ‘Repealing All Laws, Acts, Decrees, Orders and
Ordinances, Granting Exemptions from Taxes, Duties, Fees, Imposts and Other Charges Under Certain Exceptions and
Creating a Fiscal Incentives Board’

(45)Section 2 of Presidential Decree No. 1931, series of 1984, entiled “Directing the Rationalization of Duty and Tax
Exemption Privileges Granted to Government-Owned or -Controlled Corporations and All Other Units of Government’:

(46) Section 1{c) and (d) of Executve Order No. 93, series of 1986, entited “Withdrawing All Tax and Duty
Incentives, Subject to Certain Exceptions, Expanding the Powers of the Fiscal Incentives Review Board and for Other
Purposes’; and

(47) Section 1(a) and (b) of Presidential Decree No. 1956, entitled "Withdrawing, Subject fo Certain Condtions, the
Duty and Tax Privileges Granted to Private Business Enterprises and/or Persons Engaged in Any Economic Activity and for
Other Purposes’

(c) Memorandum Order No. 23, series of 1986, entited “Expanding the Membership of the Fiscal Incentives Review
Board’, is hereby repeded

(d) In Genera. - All other laws, decrees, executive orders, rules and regulations or parts thereof which are
contrary to or inconsistent with this Code are hereby repeated, amended or modified accordingly.

SEC. 39. Implementing Rules and Regulations. - Within ninety (90) days from the effectivity of this Act, the
‘Secretaries of Finance and Trade and Industry shall, upon consultations with the Commissioner of internal Revenue and
the Board of Investments and other Investment Promotion Agencies, promulgate the necessary rules and regulations for its
effective implementation

SEC. 40. Separabilty Clause. - if any clause, sentence, paragraph, or part ofthis Code shall be adjudged by any
court of competent jurisdiction to be invalid, such judgment shal not affect, impair, or invalidate the remainder of said Code,
Dut shall be confined in its operation to the dause, sentence, paragraph, or part thereof directy involved in the controversy.

‘SEC. 41. Effectivity. - This Act shall take effect on January 1, 2020 folowing its compete publication in the Oficial
Gazette or in a newspaper of genera circulation

Approved,