THIRTEENTH CONGRESS OF THE} 
REPUBLIC OF THE PHILIPPINES } 
5 F@ -9 
;a* ;: :yj 
First Regular Session 
1 
S.B. NO. 
E N  A TB 
1. iJ 
Introduced by Senator Biazon 
EXPLANATORY NOTE 
Fiscal incentives are valuable tools of the government in implementing its socio-economic 
goals. These incentives vary in terms of impacts but are generally aimed at spurring growth in 
selected industries. However, depending on the condition of the country, the efficacy of incentives 
must be reviewed I order to gauge the overall cost-benefit ratio. Today, it must be considered along 
with other measures as a means of generating much needed revenue for the State. 
The current fiscal incentives in the country are diverse, even fragmented, and at times 
inefficient to the detriment of government. In effect, the difficult task of selecting which incentives 
must be continued and which must he repealed is inevitable. 
' 
Notwithstanding the gains in the past, several laws must now be set aside in order to explore 
other prospects of generating additional revenue for the government. The Board of Investments 
(1301) incentives and other special laws granting fiscal incentives would have to be retained due to 
greater gains that are inherent in its existence. To date, there are 124 laws, and provisions of laws, 
granting tax and duty exemption privileges to private and government sectors. Amongst these, 
however, selected laws with minimal impact must be repealed for the greater good of the country. 
On top of the problems posed by the grant of fiscal incentives on monitoring and 
management, is the problem of revenues foregone by the National Govemment. Last year, the cost 
to the government of the grant of fiscal incentives amounted to Php 229.4 Billion Pesos or 5.33 % 
of GDP. The grant of fiscal incentives grew by 61% from 2002 to 2003 while the GDP grew by a 
nieasly 9%. 
Considering that the government is presently faced with serious budgetary constraints to 
finance its programs and operations, it is deemed essential and imperative to repeal the laws 
enumerated in this proposed bill. This bill proposes a radical reform in the fiscal incentives, 
s:pecifically on special laws and provisions of laws granting fiscal incentives. This proposed 
legislation on the fiscal incentives will generate considerable revenues that are direly needed by the 
National Government. 
For these reasons, early passage is earnestly requested, 
Senator 


THIRTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
1 
S.B. NO. 
E N  A TB91 0 
Introduced by Senator Biazon 
___________________________
AN ACT ADOPTING 
A CONSOLIDATED INVESTMENTS AND INCENTIVES CODE OF THE PHILIPPlNES 
Be it enacted by the Senate and the Home of Representatives of the Philippines in congress 
a.rsembled: 
PRELlMINARY TITLE 
TITLE AND DECLARATION OF POLICY 
SEC. 1. Title, - This Act shall be known as “The Consolidated Investments and Incentives Code of 
~ 
the Philippines”. 
b 
SEC, 2. Declaration of Investment Policies. - The national economy shall be developed so as to 
enhance its competitiveness in the global economy and encourage investments that promote 
countrywide development and generate employment. Accordingly, the following are declared 
policies of the State: 
(1) The State shall pursue a market responsive investment regime and to that end shall ensure 
that the incentives it provides do not cause market distortion. 
(2) The State shall grant incentives that are simple to administer, time bound and performance 
based. 
(3) The State shall vigorously promote investments in basic infrastructure such as, but not 
limited to, power, roads, water and housing. 
(4) The State recognizes that industrial peace is essential to attracting investments. 
(5) The State shall undertake investment promotion activities. 
TITLE I 
ORGANIZATION AND FUNCTIONS OF THE BOARD OF INVESTMENTS 
SEC. 3. The Board of Investments (Bog. - The Board o f  Investments hereinafter referred to as the 
“BOI” shall implement the provisions of this Code except as otherwise provided herein. 
2 


SEC. 4. The Board of Governors. - The BO1 Board of Governors shall be composed of seven 
governors: the Secretary of the Department of Trade and Industry (DTI); three Undersecretaries of 
Trade and Industry; and three representatives from the private sector to be appointed by the 
President, The Secretary of Trade and Industry shall concurrently be the Chairman of the Board 
and the Undersecretary of the Department of Trade and Industry for Industry and Investments shall 
be the ex oflcio Vice Chairman of the Board and its Managing Governor. 
The other two 
Undersecretaries of Trade and Industry may designate their representatives in cases of absence. 
The three representatives from the private sector shall be appointed by the President for a term not 
exceeding four years: Provided, That a governor shall serve as such until his successor shall have 
been appointed and qualified. 
SEC. 5 .  Qualifications of Governors of the Board. -The governors of the Board shall be citizens of 
the Philippines, at least thirty (30) years old, of good moral character and recognized competence in 
my of the following fields: law, economics, finance, banking, commerce, industry, agriculture, 
engineering, management or labor. 
SEC. 6. Appointment of Board Personnel. - The Board shall appoint its technical staff and other 
persoimel subject to civil service laws, rnles and regulations. 
SEC. 7. Powers and Duties of the Board. - The Board shall be responsible for the regulation and 
promotion of investments. It shall meet as often as necessary. Notice of regular and special 
meetings shall be given to all members of the Board. The presence of four members of the Board 
shall constitute a quorum and the affirmative vote of four members of the Board in a meeting 
validly held shall be necessary to exercise its powers and perform its duties, which shall include but 
not be limited to the following: 
I 
; 
(1) Promulgate rules and regulations to implement the purposes of this Act and such other 
laws as the Board is mandated to implement; 
(2) Process and approve, deny, suspend, revoke applications for registration with the Board, 
imposing terms and conditions as it may deem necessary to promote the purposes of this Act, 
including the refund and forfeiture of incentives when appropriate, restricting availment of 
incentives not needed by the project as determined by the Board, requiring performance bonds from 
BOI-accredited bonding companies, and payment of application, registration, publication and other 
fi:es when warranted; 
3 


(3) Delegate when appropriate some of its functions to the BO1 Management Committee, or 
to any official of the Board with the rank equivalent to not less than a Department Director; 
(4) After due hearing, decide controversies arising from the implementation of this Act that 
may arise between BOI-registered enterprises or investors therein and government agencies, within 
thirty (30) days after the controversy has been submitted for decision: Provided, That the investor 
or the registered enterprise may appeal the decision for registration by the Board within thirty (30) 
days from receipt thereof to the President. The Board shall have the power to subpoena witnesses, 
administer oaths, and compel the production of books, papers, and other evidence, and to cite for 
contempt any persodorganization that fails to comply with the aforestated processes: Provided, 
ftivther, That the Board may grant immunity from prosecution to any person whose testimony or 
documents or other evidence is necessary or relevant to the case; 
(5) Recommend to the Commissioner of Immigration the employment of foreign nationals in 
registered enterprises; 
(6) Ascertain semi-annually, by inspection or verified reports, the proportion of the 
participation of Philippine nationals in a registered enterprise to ensure compliance with its 
qualification to retain its registration under this Code; 
(7) Verify annually the compliance by registered enterprises with the terms and conditions of 
its registration; 
(8) After due notice and hearing, cancel the registration or suspend the incentives of a 
registered enterprise and/or require refund of incentives including interests and monetary penalties. 
The Board shall recommend to the appropriate bureau of the Department of Finance to levy 
properties of the registered enterprise for grave failure to comply with the substantive terms and 
conditions of registration: Provided, That the registration of an enterprise whose project timetable 
for implementation, as approved by the Board, shall be considered automatically cancelled if it is 
delayed by one year, unless otherwise reinstated as a registered enterprise by the Board; 
' 
(9) Determine the organizational structure of the BO1 taking into account Section 6 of this 
Act; appoint, discipline or remove its personnel consistent with the provisions of civil service laws, 
niles and regulations; 
(10)Prepare feasibility and other pre-investment studies, on its own initiatives or on the 
rcquest ofan investor under terms and conditions mutually agreed upon; 
4 


(1 1) Grant, as specified under Section 16, the special incentives therein provided to registered 
enterprises that list their shares of stock in the Philippine Stock Exchange or directly offer a portion 
of their capital stock to the public andor their employees; 
(12)The Board as the national authority on investments shall have monitoring functions and 
shall coordinate investment promotion activities of all Investment Promotion Agencies (PAS); 
(13) Formulate and implement industrial programs to hasten economic development including 
those relating to the implementation of international trade, investments and environmental 
agreements and protocols; 
(14) Recommend to the President the restriction of imported goods covered by rationalization 
programs; 
(1 5) Recommend to the President, subject to constitutional limitations and other 
nationalization laws, the suspension of the nationality requirement provided for in this Act in cases 
involving bilateral or regional investments or trading agreements of the Philippines with other 
countries or when the existing laws of another country where the investor comes from provides no 
nationality restrictions for Filipino investors or provides for reciprocal nationality accommodations; 
(16) The Board may establish offices in the Philippines and abroad; 
(17) Prepare industry and sectoral development programs, the National Plan for Investment 
Promotions (NF'IP) and gather and compile data required for the effective implementation of this 
A.ct; 
(18) Within four months after the close of the fiscal year, submit an annual report to the 
President on the Board's administration of this Act, including recommendations on investment 
policies; 
i 
(19) Prepare the Investment Priorities Plan; 
(20)Enter into agreements with other agencies for the simplification of systems and 
procedures involved in the promotion of investments, operation of economic zones and registered 
enterprises, and other activities necessary for the effective implementation of this Act; 
5 


(21) The Board of Investments, in consultation with the National Economic and Development 
Authority (NEDA), shall prepare an annual list of products/services that are not sufficiently 
rrlanufacturedirendered locally; and 
(22) Generally, exercise all powers necessary or incidental to attain the purposes of this Act 
and other laws vesting additional functions on the Board. 
L 
SEC. 8. Powers and Duties of the Chairman. - The Chairman shall have the following powers and 
duties: 
(1) Preside over the meetings of the Board of Governors; 
(2) Sign annual and special reports to the President; 
(3) Act as liaison between investors seeking joint venture arrangements in preferred areas of 
investments; 
(4) Recommend to the Board of Governors policies and measures necessary to carry out the 
objectives of this Act; and 
(5) Generally exercise other powers and perform other duties as may be directed by the Board 
of Governors. 
SEC. 9. Powers and Duties of the Vice Chairman. - The Vice Chairman shall have the following 
powers and duties: 
(1) Act as Managing Governor of the Board, thereby executing all acts of administration; 
(2) Preside over the meetings of the Board of Governors in the absence of the Chairman; 
(3)Prepare the Agenda for the meetings of the Board of Governors and submit for its 
consideration and approval the policies and measures which the Chairman deems necessary and 
proper to carry out the provisions of this Act; 
(4) Assist registered enterprises and prospective investors to have their papers processed 
t 
i 
quickly by all government o€fices, agencies, instrumentalities and financial institutions; and 
(5) Perform the other duties of the Chairman in his absence, and such other duties as may be 
assigned to him by the Board of Governors. 
6 


TITLE I1 
DEFINITION OF TERMS 
SEC. 10. Definition of Terms. -As used herein, the following shall mean: 
(a) “BOI” or “Board” shall mean the Board of Investments (BOI) created under this Act. 
(b) “Investment Promotion Agencies (PAS)” shall include BOI, Philippine Economic Zone 
Authority (PEZA), Subic Bay Metropolitan Authority (SBMA), Clark Development Corporation 
(CDC), John Hay Management Corporation (JHMC), Poro Point Management Corporation 
(I’PMC), Bataan Technology Park Inc. (BTPI), Cagayan Economic Zone Authority (CEZA), 
Zamboanga City Special Economic Zone Authority (ZCSEZA), PHIVIDEC Industrial Authority 
(PIA) and all other government agencies administering incentives to specific sectors under special 
la.ws. 
, 
4 
(c) “Registered enterprise” shall mean any individual, partnership, corporation, Philippine 
branch of a foreign corporation or other entity incorporated and/or organized and existing under 
Philippine laws engaged in any of the activities listed in the IPP as hereinafter defined; and 
registered for such activity with the Board or with other investment promotion agencies, in 
accordance with this Act: 
Provided, howevev, That the term “registered enterprise” shall not 
include commercial banks, savings and mortgage banks, rural banks, savings and loan associations, 
building and loan associations, developmental banks, trust companies, investment banks, finance 
companies, brokers and dealers in securities, consumers cooperatives and credit unions, and other 
business organizations whose principal purpose or principal source of income is to receive deposits, 
lend or borrow money, buy and sell or otherwise deal, trade or invest in common or preferred 
stocks, debentures, bonds or other marketable instruments generally recognized as securities, or 
discharge other similar intermediary, trust or fiduciary functions. The cessation or substantial 
rcduction by the registered enterprise of the activity for which it was registered shall cause the loss 
of its registered status upon declaration of the Board. 
(d) “Investment Priorities Plan (IPP)” shall refer to the list of industries, services and other 
xtivities, which will be eligible for incentives under this Act, prepared and determined as priority 
activities by the BOI, in consultation with the Department of Finance, National Economic and 
L3levelopment Authority, the Office of the President and other appropriate government agencies and 
the private sector and is certified in writing by NEDA and DOF in accordance with Title 111, 
Chapter 1 of this Act. 
7 


(e) “New 
producthervice” 
shall 
refer 
to 
any 
producthervice 
not 
locally 
nianufacturedrendered or not sufficiently manufacturedirendered to meet demand. 
(0 ‘‘Gross income earned” refers to gross sales or gross revenues less sales returns, discounts 
and allowances and cost of goods and/or cost of services rendered as defined under Section 27 (E) 
(4) ofthe National Internal Revenue Code of 1997. 
(g) “Tax credit” shall mean any credits against taxes and/or duties equal to those actually paid 
or would have been paid, to evidence which a tax credit certificate shall be issued by the Secretary 
of Finance or his representative, or by the Board or concerned P A ,  if so delegated by the Secretary 
of Finance. The tax credit certificate issued pursuant to this Code shall not be transferable and shall 
be valid only for a period of ten (10) years from date of issuance. 
The tax credit certificate shall be used to pay taxes, duties, charges and fees due to the 
national government. 
b 
(h) “Export sales” shall mean the sales values and/or revenues, determined from invoices, 
bills of lading, inward letters of credit, landing certificates, or other commercial documents, of 
products/services (1) shipped out of the country and sold in the territory of another country by 
registered enterprises (direct exportation); or, (2) sold to other export producers whether registered 
enterprises or not, for further processing to be shipped out of the country and sold in the territory of 
another country by such export producers (indirect exportation); or, (3) sales of export 
products/services by registered enterprise and/or export producers to entities/institutions allowed to 
import tax and duty-free goods for consumption in the country; or, (4) services rendered to clients 
abroad such as application and/or installation of technology and systems in the project sites, 
including but not limited to the fields of engineering and construction design, logistics, repair and 
maintenance, and services provided to international airlinesishipping lines/military aircraft or 
seacraft, or knowledge and/or information, even if rendered locally, excluding mere deployment of 
people or individual practice of profession abroad (constructive exportation). 
The foregoing notwithstanding, services rendered locally by registered enterprises engaged in 
environmental and exploratory development projects that are paid for in freely convertible foreign 
currency shall be considered as “export sales”. 
Sales of locally manufactured or assembled goods for household and personal use under the 
Internal Export Program and similar programs of the government shall be deemed as “export sales”. 
8 


(i) An “export enterprise” shall mean a registered enterprise which is a manufacturer, 
processor or service provider that exports or supplies to exporters fifty percent (50%) or more of its 
output and its activity is listed in the Investments Priorities Plan. 
The Information Technology (IT) industry shall be considered an export enterprise if at least 
fifty percent (50%) of its services are paid for in freely convertible foreign currency. 
An export trader which is a registered enterprise that buys and sells on its account products of 
micro-enterprises and small and medium enterprises and earns one hundred percent (100%) of its 
annual sales from exports of the same shall be deemed to be an export enterprise. 
(i) A “domestic enterprise” shall mean a registered enterprise which produces goods for sale 
or renders services exclusively to the domestic market or does not export fifty percent (50%) or 
more of its output. 
(k) “Service provider” is a registered enterprise engaged or proposing to engage in rendering 
tixhnical, professional or other services listed by the Board. 
3 
(1) “Source documents” are input materials and documents reasonably needed by information 
technology (IT) and IT-enabled industries such as, but not limited to, books, directories, magazines, 
newspapers, brochures, pamphlets, medical recordsifiles, legal recordsifiles, instruction materials, 
drawingslblueprintsioutlines. 
(m)“Processing” shall mean converting raw materials into marketable form through physical, 
mechanical, chemical, electrical, biochemical, biological or other means, or by a special treatment 
or a series of actions, such as slaughtering, milling, pasteurizing, drying or desiccating, quick 
freezing, that results in a change in the nature or state of the products. Merely packing or packaging 
shall not constitute processing. 
(n) “Industrial Estate (IE)” refers to a tract of land subdivided and developed according to a 
comprehensive plan under a unified continuous mauagement and with provisions for basic 
iinfiastructure and utilities, with or without pre-built standard factory buildings and community 
facilities for the use ofa community of industries. 
(0) “Export Processing Zone (EPZ)” refers to a specialized industrial estate located physically 
andlor administratively outside the customs territory and predominantly oriented to export 
9 


production. Enterprises located in export processing zones are allowed to import capital equipment 
and raw materials free from duties, taxes and other import restrictions. 
(p) “Special Economic Zones (SEZ)” are ecozones or industrial estates devoted to exports 
whose metes and bounds are fixed or delimited by presidential proclamations for the purpose of 
applying incentives as provided in this Act. 
(4) “Free Trade/Freeport Zone” is an isolated and policed area adjacent to a port of entry as 
defined by Section 3519 of the Tariff and Customs Code, 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 import duties. 
(r) “IT Park” is an area which has been developed into a complex capable of providing 
infrastructure and other support facilities required by IT enterprises, as well as amenities required 
by professionals and workers involved in IT enterprises, or easy access to such amenities. 
(s) “IT Building” is a building, the whole or part of which has been developed by public or 
private corporate entities to provide infrastructure and other support facilities required by IT 
enterprises, as well as amenities required by professionals and workers involved in IT enterprises, 
or easy access to such amenities. 
TITLE I11 
INVESTMENTS WITH INCENTIVES 
CHAPTER I 
QUALIFIED ACTIVITIES 
SEC. 11. Investment Priorities Plan (IPP). - Not later than the end of June of every third year, the 
Board of Investments, after consultation with the Department of Finance (DOF), National 
Economic and Development Authority (NEDA), investment promotion agencies and other 
appropriate government agencies and the private sector and concurred in writing by the NEDA and 
DOF shall submit to the President the IPP for his approval: Provided, however, That the deadline 
for submission, may be extended by the President within a reasonable period. 
Upon approval of this Code, the IPP shall be prepared within one hundred twenty (120) days 
by the BOI, in consultation with the DOF, NEDA, the Office of the President, the PAS, other 
10 


alipropriate government agencies and the private sector and certified in writing by NEDA and DOF 
and in accordance with the criteria for determining the list of industries eligible for incentives under 
Sections 15 and 16 ofthis Code. 
The IPP shall be prepared once every three years by the BOT, in consultation with and 
certified in writing by the agencies enumerated in the preceding paragraph, to be submitted to the 
President for his approval not later than the end of June of the year immediately preceding the 
three-year period to be covered by the IPP. 
The LPP shall contain the industries, services or activities with high comparative advantage or 
significant competitive edge. It shall also include those that will engage in the (i) production or 
manufacture' of new productkervice or (ii) export productkervice or (iii) stimulation of both 
forward and backward linkages or creation of value added activities or (iv) socially relevant, 
environment-friendly and economically viable undertaking. 
SEC. 12. Amendments. - Subject to publication requirements and the criteria for investment priority 
determination, the Board of Investments, in a recorded consultation with and certified in writing by 
the aforementioned government agencies may, at any time, recommend to the President to add 
additional areas in the IPP, alter any of the terms of the declaration of an investment area or 
terminate the status of preference. In the case of activities under Section 16, such amendment shall 
be upon the recommendation of the Board with the concurrence of the Secretaries of Finance and 
Trade and Industry. In no case, however, shall any amendment of the IPP impair the incentives 
conferred on a registered enterprise. The Board shall not accept applications in an area of 
investment prior to the approval of the same as a preferred area nor after approval of its deletion as 
a preferred area of investment. 
SEC. 13. Publication. - Upon approval of the IPP, in whole or in part, or upon approval of an 
amendment thereof, the IPP or the amendment, specif~ng and declaring the areas of investment 
shall be published in at least one newspaper of genera1 circulation and all such areas shall be open 
for application until publication of an amendment or deletion thereof, or until the Board approves 
registration of enterprises. 
CHAPTER I1 
INCENTIVES TO REGISTERED ENTERPRISES 
SEC. 14. Governing Incentive Provision for Investment Promotion Agencies. - All existing and 
fiiture Investment Promotion Agencies (IPAs) vested with the power to confer and administer 
11 


incentives, including but not limited to the Philippine Economic Zone Authority (PEZA), Subic 
B;iy Metropolitan Authority (SBMA), Clark Development Corporation (CDC), John Hay 
Management Corporation (JHMC), Poro Point Management Corporation (PPMC), Bataan 
: 
Technology Park, Inc. (BTPI), Cagayan Economic Zone Authority (CEZA) and Zamboanga City 
i 
Special Economic Zone Authority (ZCSEZA), PHIVIDEC Industrial Authority (PIA), shall offer 
only incentives provided in this Act. For this purpose, PAS that were previously declared as special 
economic zones by virtue of presidential issuances shall be vested with the authority to confer and 
administer incentives provided herein. 
SEC. 15. Incentives to Registered Enterprises. - All investment promotion agencies may administer 
the following incentives to their respective registered enterprises to the extent of the 
ac:tivity/project: 
(a) Income Tax Holiday 
Income Tax Holiday (ITH) - Registered enterprises shall be entitled to an income tax holiday 
&om the start of their commercial operations to the extent of their activity under the following 
categories: 
Category A - A registered domestic enterprise located in highly developed areas, as 
determined by the Board, shall be entitled to four years income tax holiday. 
Category B - A registered domestic enterprise on the following shall be entitled to six years 
income tax holiday: 
(i) located in less developed areas as defined by the Board; or 
(ii) producing/rendering new products/services or having strong backward or forward 
linkages. 
Category C - A registered export enterprise shall be entitled to six years income tax holiday: 
Provided, however, That if the export enterprise complies with the following: (1) large capital 
investments or sizeable employment generation, or (2) use high level of technology or (3) located 
outside Metro Manila, it shall be entitled to eight years income tax holiday. 
0 
Registered enterprises embarking on new investments that are listed in the current IPP shall be 
entitled to incentives provided herein pertaining to the new investments and subject to such terms 
and conditions as the Board may determine. 
Additional investments in the project shall be entitled to income tax holiday equivalent to 
such investinents and may be entitled to additional income tax holiday for as long as investment is 


made in the same project, as the Board may decide: Provided, That the project is listed in the IPP at 
thLe time the additional investment in the project is made: Provided, further, That the entitlement 
period for additional investments shall not exceed three times the period provided under Subsection 
(a) of Section 15: Provided, however, That the total ITH period for an export enterprise availing of 
an eight year ITH shall not exceed twenty (20) years. Any unused incentives shall be deemed 
forfeited if not used during the incentive period. 
, 
The Bureau of Internal Revenue (BIR) shall require a registered enterprise availing of ITH or 
NOLCO to secure a certificate of eligibility from the appropriate IPA before filing an official copy 
o f  its Income Tax Return (ITR) with BO1 or appropriate IPA for validation. 
Failure to secure certification and/or to file the ITH or NOLCO availment for validation by 
the BO1 or appropriate investment promotion agency within forty-five (45) days from the last day 
of statutory filing date for ITR shall cause the forfeiture of the availment for the taxable period. 
(b) Net Operating Loss Carryover (NOLCO) - The net operating loss of the business or 
eiiterprise during the first three years from start of commercial operation which had not been 
previously offset as deduction from gross income shall be carried over as a deduction from gross 
income for the next five consecutive taxable years immediately following the year of such loss: 
Frovided, however, That operating loss resulting from availment of incentives provided in this 
Code shall not be entitled to NOLCO. 
Registered enterprises availing of the ITH as herein provided shall not be entitled to avail o f  
the Net Operating Loss Carry Over (NOLCO). 
(c) Imposition of a Tax Rate of Five Percent (5%) On Gross Income Earned (GIE) - Except 
for real property tax on land, no local and national taxes as prescribed under Republic Act No. 
8.424, also known as “The National Internal Revenue Code of 1997 as amended”, such as income 
tax, excise tax, franchise taxes, shall be imposed on business establishments operating within a 
special economic zone, PIA or freeport. In lieu thereof, five percent (5%) of the gross income 
e:med shall be paid. The allocation of the five percent (5%) GIE pertaining to the local government 
unit foregoing taxes hereunder shall be governed by the charter or governing law of the IPA. 
i 
The incentive o f  five percent (5%) tax rate on gross income earned shall not be available to 
B,OI registered enterprises. 
13 


(d) Accelerated Depreciation. - Accelerated depreciation of plant, machinery, and equipment 
that are reasonably needed and actually used for the production and transport of goods and services 
may be depreciated using a rate not exceeding twice the rate which would have been used had the 
aimual 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 (NIRC) of 1997, as 
ainended. 
(e) Capital Equipment Incentives. - (1) Importations of capital equipment, spare parts, tools 
and die, or those required for pollution abatement and control, cleaner production and waste 
reduction including consignment thereof by registered export-oriented enterprises upon the 
effectivity of this law, shall be exempted to the extent of one hundred percent (100%) of the taxes 
and customs duties: Provided, That the importation thereof shall be used exclusively by the 
registered enterprise in its registered activity: Provided, fiwther, That the importation of machinery 
and equipment and accompanying parts shall comply with the following conditions: 
, i 
(i) They are not manufactured domestically in sufficient quantity, of comparable quality and 
a't reasonable prices; 
(ii) They are reasonably needed and will be used exclusively by the registered enterprise in the 
manufacture of its products, unless prior approval of the Board or the concerned P A  is secured for 
the part time utilization of said equipment in a non-registered activity to maximize usage thereof or 
the proportionate taxes and duties are paid on a specific equipment and machinery being 
permanently used for non-registered activities; and 
(iii) 
The approval of the Board or the concerned IPA was obtained by the registered 
enterprise for the importation of such machinery, equipment and spare parts. 
Approval of the Board or the concerned IPA must be secured before any sale, transfer or 
disposition of the imported capital equipment, machinery or spare parts is made: Provided, That if 
such sale, transfer or disposition is made within the first five years from date of importation, any of 
the following conditions must be present: 
(1) If made to another enterprise enjoying tax and duty exemption on imported capital 
equipment; 
(2) If made to another enterprise, upon payment of any taxes and duties due on the net book 
: 
1 
value of the capital equipment to be sold; 
i 
14 


(3) Exportation of the capital equipment, machinery, spare parts or source documents or those 
required for pollution abatement and control; and 
(4) For reasons of proven technical obsolescence. 
When the aforementioned sale, transfer or disposition is made under any of the conditions 
provided for in the foregoing paragraphs other than paragraph (2), the registered finn shall not pay 
the taxes and duties waived on such items: Provided, further, That if the registered enterprise sells, 
transfers or disposes the aforementioned imported items without prior approval within five years 
from date of importation, the registered enterprise and the vendee, transferee, or assignee shall be 
solidarily liable to pay twice the amount of the tax and duty exemption given it: Provided, jinally, 
That even if the sale, transfer or disposition of the capital equipment, machinery or spare parts is 
a-pproved after five years from date of importation, the registered enterprise is still liable to pay the 
taxes and duties based on the net book value of the capital equipment, machinery or spare parts if it 
has violated any of its registration terms and conditions. Otherwise, it shall no longer be subject to 
the payment of the taxes and duties waived thereon. 
: 
i 
(2) The purchase of machinery and capital equipment and raw materials, supplies, parts and 
semi-finished products, used in the fabrication of machinery and capital equipment by a registered 
export-oriented enterprise, from a domestic manufacturer shall be subject to zero percent (0%) 
value-added tax. 
The registered export-oriented enterprise shall be granted a tax credit equivalent to the amount 
of duties that would have been waived on the machinery; capital equipment; and raw materials, 
supplies, parts and semi-finished products used in the fabrication of machinery and capital 
equipment, had these items been imported, upon its submission to the DOF of the bill of materials 
evidencing the transaction value of such and other pertiiient documents, for verification and proper 
endorsement. 
The registered export enterprise availing of the incentives provided under the immediately 
preceding two paragraphs shall be subject to the following: (a) that said capital equipment, 
machinery and spare parts will be used exclusively by the registered enterprise in its registered 
activity; (b) that the capital equipment or machinery where the raw materials, supplies, parts and 
semi-finished products were used would have qualified for tax and duty-free importation; and (c) 
that the approval of the Board or the concerned IPA is obtained by the registered enterprise. If the 
registered enterprise sells, transfers or disposes of these machineries, capital equipment and spare 
parts, the provision in the preceding paragraphs for such disposition shall apply. 
15 


This incentive shall be deemed waived if application for tax credit under this subsection was 
not filed within one year from date of delivery. 
(f) The importation of source documents by information technology registered enterprises 
shall be eligible for tax and duty free importation. 
(8) Raw Material Incentives. - Every registered export-oriented enterprise shall enjoy a tax 
credit equivalent to the internal revenue taxes and customs duties paid on the supplies, raw 
materials and semi- manufactured products provided the same are not sufficient in quantity, quality 
or are not competitively priced which are used in the manufacture, processing or production of its 
export products forming part thereof, exported directly and indirectly by the registered export- 
oriented enterprise, based on the actual taxes and duties paid for such materials/supplies/semi- 
manufactured products by the registered enterprise. 
This incentive shall be deemed waived if application for tax credit under this subsection was 
not filed within one year from date of exportation of the final product. 
(h) Incentives on Breeding Stocks and Genetic Materials. - Importation of breeding stocks 
and genetic materials within ten (10) years from the date of registration of commercial operation of 
the enterprise shall be exempt from all taxes and duties: Puovided, That such breeding stocks and 
genetic materials are (a) reasonably needed in the registered activity; and (b) approved by the Board 
o r  the concerned PA. 
' 
The registered enterprise availing of the incentives shall be subject to the following: (a) that 
said breeding stocks and genetic materials would have been qualified for tax and duty-free 
importation under the preceding paragraph; (b) that the breeding stocks and genetic materials are 
reasonably needed in the registered activity; (c) that approval of the Board or the concerned IPA has 
b'een obtained by the registered enterprise; and (d) that the purchase is made within ten (10) years 
from the date of registration of coinmercial operation of the registered enterprise. 
This incentive shall be deemed waived if application for tax credit under this subsection was 
not filed within one year from date of delivery. 
(i) Exemption from wharfage dues. - The provisions of law to the contrary notwithstanding, 
exports by a registered enterprise shall be exempted from wharfage dues. 
(i) Deferred Imposition of the Minimum Corporate Income Tax (MCIT). - The Minimum 
Corporate Income Tax (MCIT) of two percent (2%) of the gross income as of the end of the taxable 
16 


year shall be imposed when the minimum corporate income tax is greater than the income tax 
computed under the NIRC of 1997, as amended, for the taxable year: Provided, however, That said 
MCIT shall be imposed only after the enterprise’ entitlement period to the income tax-based 
incentives. 
(k) (1)Tax Treatment of Merchandise in the Export Processing Zones. - (a) Except as 
otherwise provided in this Code, foreign and domestic merchandise, raw materials, supplies, 
articles, equipment, machineries, spare parts and wares of every description, except those prohibited 
by law, brought into the zone to he sold, stored, broken up, repacked, assembled, installed, sorted, 
cleaned, graded, or otherwise processed, manufactured, mixed with foreign or domestic 
merchandise whether directly or indirectly related in such activity, shall not be subject to customs 
and internal revenue laws and regulations nor to local tax ordinances, the provisions of law to the 
contrary notwithstanding. 
(b) Merchandise purchased by a registered export processing zone enterprise, from the 
customs territory and subsequently brought into the export processing zone, shall be considered as 
export sales and exportation thereof shall be entitled to the benefits allowed by law for such 
transaction. 
(c) Domestic merchandise sent from the export processing zone to the customs territory shall, 
whether or not combined with or made part of other articles likewise of local origin or 
manufactured in the Philippines while in the export processing zone, be subject to internal revenue 
laws of the Philippines as domestic goods sold, transferred or disposed of for local consumption. 
i 
(d) Merchandise sent from the export processing zone to the customs territory shall, whether 
or not combined with or made part of other articles while in the zone, be subject to rules and 
regulations governing imported merchandise. The duties and taxes shall be based on the value of 
said imported materials (except when the final product is exempt). 
(e) Domestic merchandise on which all internal revenue taxes have been paid, if subject 
thereto, and foreign merchandise previously imported on which duty or tax has been paid, or which 
have been admitted free of duty and tax, may be taken into the export processing zone from the 
customs territory of the Philippines and be brought back thereto free of quotas, duty or tax. 
(f) Subject to such regulations respecting identity and safeguarding of the revenue as the 
concerned P A  may deem necessary when the identity of an article entered into the export 
processing zone under the immediately preceding paragraph has been lost, such article when 
17 


i 
removed from the zone and taken to the customs territory shall be treated as foreign merchandise 
entering the country for the first time, under the provisions of the Tariff and Customs Code of the 
Philippines, as amended. 
(8) Articles produced or manufactured in the export processing zone and exported therefrom 
shall, on subsequent importation into the customs territory, be subject to the import laws applicable 
to like articles manufactured in a foreign country. 
(h) Unless the contrary is shown, merchandise talcen out of the export processing zone shall 
be considered for tax puiposes to have been sent to customs territory. 
Special Econoinic Zones declared by Presidential Proclamations or created by law may avail 
the incentives provided herein as conferred by the appropriate IPA subject to such terms and 
conditions as may be provided by law. 
(2) Tax Treatment of Merchandise in Free TradeiFreeport Zones. - The free trade/freeport 
zlme shall be operated and managed as a separate customs territory ensuring free flow or movement 
of goods within, into and exported out of the free tradeifreeport zone. Importations of raw 
materials, and capital equipment are tax and duty free. However, exportation or removal of goods 
from the free tradeifreepoi? zones to the other parts of the Philippine territory shall be subject to 
ciustoms and internal revenue laws and regulations. 
(3) Tax Treatment of Services in the Special Economic Zones. 
~ 
(a) Sale of service by an 
entity from the customs territory to a registered ecozone or free trade enterprise, or by a registered 
ecozone or freeport enterprise, or by a registered ecozone or freeport enterprise to another ecozone 
or freeport enterprise shall be treated as indirect export, and hence, entitled to the benefits allowed 
by law for such transaction. 
I 
1 i 
@) Sale or service by a registered ecozone or freeport enterprise to the customs territory shall 
be subject to applicable internal revenue laws and regulations. 
(1) Registered export oriented enterprises shall have access to the utilization of the bonded 
warehousing system in accordance with the rules and regulations of the Bureau of Customs. 
(m)Etnployment of Foreign Nationals. - Subject to the provisions of Section 29 of 
Commonwealth Act No. 613, as amended, a registered enterprise may employ foreign nationals in 
supervisory or technical positions for a period not exceeding ten (10) years from its registration: 
18 


Provided, That when the majority of the capital stock of a registered enterprise is owned by foreign 
investors, the positions of the president, treasurer and general manager or their equivalents may be 
retained by foreign nationals beyond the period set forth herein and such officer is the owner or a 
StocWlolder owning at least ten percent (10%) of the outstanding capital stock of the registered 
enterprise and he remains the owner or maintains his stoclcholdings therein. 
I 
I i 
Foreign nationals under employment contract within the purview of this incentive, their 
spouses and unmarried children under twenty-one (21) years of age, who are not excluded by 
Section 29 of Commonwealth Act No. 613, as amended, shall be permitted to enter and reside in the 
Philippines during the period of employment of such foreign nationals. They shall be issued a 
multiple entry visa, valid for a period of three years, to enter and leave the Philippines without 
ftrther documentary requirements other than valid passports or other travel documents in the nature 
of passports. The validity of the multiple entry visa shall be extendible yearly. 
The foreign national admitted herein, as well as their respective spouses and dependents shall 
be exempt from: (a) obtaining alien certificate of registration and emigration clearance certificates; 
and (b) securing the Alien Employment Permit (AEP) and all types of clearances, permits, licenses 
or their equivalents required by any government department or agency. 
SEC. 16. Other Incentives. - Upon recommendation of the Board, the Secretaries of Trade and 
Industry and Finance may jointly grant other incentives subject to approval by the President to 
activities listed in the P P  that exhibit high social economic returns on the part of capital or labor 
intensive activities. In the exercise o f  this authority, the following criteria shall be taken into 
account: (1) large capital investments or sizeable employment generation or (2) use of high level 
technology. 
The incentives may include, as delennined by the Board to be appropriate in a particular 
industry or enterprise, any or all of the following: 
(1) Investment Tax Allowance 
An investment allowance to the extent of its actual investment, paid in cash or property, shall 
be allowed as a deduction from its taxable income but not to exceed thirty percent (30%) spread 
within three years to be availed after the income tax holiday: Provided, (1) That the investment is 
made in a subscription of shares in the original and/or increased capital stock of an enterprise; (2) 
That the shares are held for a period of not less than three years; and (3) That the investment is 
approved with the Board. If the shares are disposed within the three-year period, the enterprise 
shall lose the benefit of this deduction, its income tax liability will be recomputed and he shall pay 
19 


whatever additional sum be due plus interest thereon, within thirty (30) days from the date of 
disposition. 
(2) Double Deduction for Training Expenses 
Expenses incurred for local training given to employees for the development of skills 
identified as necessary by the appropriate government agencies, upon approval by the Board, shall 
entitle the registered enterprise to a special deduction from the taxable income equivalent to one 
hundred percent (100%) of the total expenses over and above the allowable ordinary and necessary 
business deductions for said expenses under the National Internal Revenue Code, as amended, for a 
period of five years after entitlement of other income tax based incentives. 
(3 j Double Deduction for Research and Development 
Expenses incurred for research and development conducted in the Philippines relating to the 
business shall entitle the registered enterprise to a special deduction from taxable income equivalent 
to one hundred percent (100%) of the total expenses over and above the allowable ordinary and 
business deductions for said expenses under the National Internal Revenue Code, as amended, for a 
period of five years after entitlement of other income tax based incentives. 
To raise the quality of basic education, a domestic enterprise that produces quality educational 
materials for the public school system shall be entitled to the incentive herein provided. 
' . 
SEC. 17. Non-Fiscal Incentive for Eco-Tourism Sites. - Airline companies that will be accredited to 
slme eco-tourism sites duly designated by the President may enjoy landing privileges directly in 
those sites: Provided, That the airline company shall bring in a large number of tourists and subject 
to such rules and regulations as the Board, in consultation with the Civil Aeronautics Board (CAB), 
the Department of Tourism (DOT) and other appropriate government agencies may determine. 
SEC. 18,Incentive to Investors. - A  foreign national covered under Subsection (m) of Section 15 of 
this Act, who invests an amount of at least US$150,000.00, either in cash and/or equipment, in a 
registered enterprise shall be entitled to an Investor's Visa: Provided, That, 
(a) He is at least eighteen (18) years of age; 
(b) He has not been convicted of a crime involving moral turpitude; 
i 
(c) He is not afflicted with any loathsome, dangerous or contagious disease; 
(d) He has not been institutionalized for any mental disorder or disability; 
20 


P,povided, further, That in securing the investor’s visa, the alien-applicant shall be entitled to the 
same privileges provided for under Section 16 (M), last paragraph. 
As a holder of the Investor’s Visa, an alien shall be entitled to reside in the Philippines while 
his investment subsists. For this purpose, he should submit an annual report, in the form duly 
prescribed for the purpose, to prove that he has maintained his investment in the country. Should 
said alien withdraw his investments from the Philippines, then the Investor’s Visa issued to him 
shall automatically expire. 
The minimum amount for investment provided for under this Code shall be made applicable 
to visas granted to investors by the PEZA, SBMA, CDC, JHMC, PPMC, BTPI, CEZA, ZCSEZA, 
PIA and other investment promotion agencies. 
i 
CHAPTER 111 
REGISTRATION OF ENTERPRISES 
SEC. 19. Qunlzjcntions of a Registered Enterprise. - To be entitled to register to avail of 
incentives, an applicant must satisfy the following conditions: 
(a) He is a citizen of the Philippines, in case the applicant is a natural person, or in case of a 
corporation or partnership or any other association, regardless of nationality, it must be organized 
and/or registered and existing under Philippine laws and that it must comply with all the 
qualifications provided under this Act: Provided> however, That for purposes of this Act and any 
law to the contrary notwithstanding, a natural-born ASEAN citizen or a corporation effectively 
ctontrolled by ASEAN citizens shall be considered as a Philippine investor: Provided, further, That 
the investment is made in an activity where the Constitution does not specifically require Filipino 
participation; 
(b) That it will engage in an activity included in the Investment Priorities Plan (PP) or in an 
industry servicing eco-tourism sites duly designated by the President as provided under Section 17 
of this Act; 
(c) That the activity it will engage in is not within the activities reserved by the Constitution 
to Philippine citizens or corporations owned and controlled by Philippine citizens; and 
(d) That if the applicant is engaged or proposes to engage in undertakings or activities other 
than the registered projects, it shall install an accounting system adequate to identify the 
investments, revenues, costs, and profits or losses of each registered project undertalcen by the 
I 
21 


enterprise separately from the aggregate investment, revenues, costs and profits or losses of the 
whole enterprise, or to establish a separate corporation for each registered project if the Board or 
other P A S  should so require to facilitate proper implementation of this Act. 
CHAPTER IV 
BASIC RIGHTS AND GUARANTEES OF REGISTERED ENTERPRISES 
SEC. 20. Protection of Investments. - All investors and registered enterprises are entitled to the 
b:asic rights and guarantees provided in the Constitution. Among other rights recognized by the 
Grovemment of the Philippines are the following: 
(a) Repatriation of Investments. - In the case of foreign investments, the right to repatriate the 
entire proceeds of the liquidation o f  the investment in the currency in which the investment was 
originally made and at the exchange rate prevailing at the time of repatriation, subject to the 
provisions of Section 74 of Republic Act No. 265, as amended; 
For investments made pursuant to Executive Order No. 32 and its implementing rules and 
regulations, remittability shall be as provided therein. 
(b) Remittance of Earnings. - In the case of foreign investments, the right to remit earnings 
fiom the investment in the currency in which the investment was originally made and at the 
exchange rate prevailing at the time of remittance, subject to the provisions of Section 74 of 
Republic Act No. 265, as amended; 
(c) Foreign Loans and Contracts. - The right to remit at the exchange rate prevailing at the 
time of remittance such sums as may be necessary to meet the payments of interest and principal on 
foreign loans and foreign obligations arising from technological assistance contracts, subject to the 
provisions of Section 74 of Republic Act No. 265, as amended; 
(d) Freedom fiom Expropriation. - There shall be no expropriation by the government of the 
property represented by investments or of the property of the enterprise except for public use or in 
the interest of national welfare or defense and upon payment of just compensation. In such cases, 
foreign investors or enterprises shall have the right to remit sums received as compensation for the 
expropriated property in the currency in which the investment was originally made and at the 
exchange rate at the time of remittance, subject to the provisions of Section 74 of Republic Act No. 
2.65, as amended; and 
(e) Requisition of Investment. - There shall be no requisition of the property represented by 
Che investment or of the property of enterprises, except in the event of war or national emergency 
i 
22 
i 


arid only for the duration thereof. Just compensation shall be determined and paid either at the time 
of requisition or immediately after cessation of the state of war or national emergency. Payments 
re:ceived as compensation for the requisitioned property may be remitted in the currency in which 
the investment was originally made and at the exchange rate prevailing at the time of remittance, 
subject to the provisions of Section 74 of Republic Act No. 265, as amended. 
CHAPTER V 
ADMINISTRATION OF INCENTIVES 
SEC. 21.Duties and Responsibilities of other IPAs. - The following are the duties and 
responsibilities of other IPAs under this Act: 
(a) to adopt consistent procedures of administering incentives in accordance with the 
guidelines established by the Board; 
(b) to adopt and implement systems and procedures affecting trade and customs policies in 
accordance with the requirements established by the DOF and the Board; 
(c) to submit data and information to the DOF and the Board as required by any of these 
I 
a:yncies to ascertain consistency of investments policies and incentives, including their 
L 
implementation as provided in (a), and to ensure the proper implementation of systems and 
procedures affecting trade and customs policies as provided in (b); and 
(d) to perform all other duties and responsibilities, as may be required by the President. 
SEC. 22. Administration, Implementation and Monitoring of Incentives. - The investment 
promotion agencies shall be responsible for the administration and implementation of the incentives 
granted to their respective registered enterprises: Provided, That any incentive administration policy 
adopted by the Board for incentives common to all registered enterprises shall be uniformly applied 
by all incentive administering agencies. 
For proper monitoring, the BO1 shall create a single database of all incentives provided by all 
incentives granting agencies and all information thereto. Double entry accounting shall be done by 
the Board in recording all incentives granted by the government for transparency purposes. 
The Board, NEDA and DOF shall meet regularly to monitor and review the investments and 
incentives granted and a report shall be annually submitted to the Congressional Oversight 
Committee referred to under Section 37. 
23 


SEC. 23. Application. - Applications shall be filed with the IPAs or any other government office 
authorized by the Board to accept applications, recorded in a registration book and the date 
appearing therein and stamped on the application shall be considered the date of official acceptance. 
In no case shall double registration be allowed. In the event that an enterprise shall transfer to 
another investment promotion agency or government assets enjoying incentives will be privatized, 
only the remaining unutilized incentives shall be enjoyed by the enterprise or the transferee, vendee 
or assignee of the government corporation. 
All applications and their supporting documents filed under this Code shall be confidential 
and shall not be disclosed to any person except with the consent of the applicant or upon an order of 
a court of competent jurisdiction. 
SEC. 24. Criteria Evaluation of Application. - The following criteria will be considered in the 
evaluation of applications for registration under a preferred area: 
(a) Impact of the project on the overall economy; 
@) Overall viability of the project; 
(c) The extent of employment generation; 
(d) The extent to which technological advances are applied and adopted to local conditions; 
and 
(e) Such other criteria as the Board may determine. 
SEC. 25. Approval and Registration Procedures. - The Board is authorized to adopt rules and 
regulations to facilitate action on applications filed with it; prescribe criteria for the evaluation of 
several applications; devise standard forms for the use of applicants and delegate to the regional 
offices of the Department of Trade and Industry the authority to receive and process applications for 
enterprises to be located in their respective regions. 
i 
Applications filed shall be considered automatically approved if not acted upon by the Board 
within fifteen (15) working days from official acceptance thereof. Deferment by the Board shall be 
considered as an official action: Provided, however, That the Board may defer action to a specific 
application not more than twice and Provided, $finally, That the Board shall act upon the 
application within ten (10) working days from compliance with the cause of the last deferment. 
SEC. 26. Certificate of Registration. - A BOI-registered enterprise under this Code shall be issued a 
Ckrtificate of Registration under the seal of the Board of Investments and the signature of its 
Chairman and/or such other officer or employee of the Board as it may empower and designate for 
24 


b 
the purpose. The certificate shall be in such form and style as the Board may determine and shall 
state, among other matters: 
(a) The name of the registered enterprise; 
(b) The area of investment in which the registered enterprise is proposing to engage; 
(c) The type of the activity it is undertaking or proposing to undertake; and 
(d) The other terms and conditions to be observed by the registered enterprise by virtue of the 
registration. 
SEC. 27. Validity of BOI Registration. - An enterprise' registered activity with the Board shall be 
valid for a period of twenty (20) years from the start of commercial operation except on certain 
industries as may be determined by the Board. 
SEC. 28. Extension of Period of Avnilment. - The availment period of the incentives provided 
herein may be extended by the concerned iiivestment promotion agency, in the event that the 
rcgistered enterprise has suffered operational fovce majeure that has impaired its viability, 
equivalent thereto. 
SEC. 29. Duration of Incentives. - Enterprises registered with PEZA, SBMA, CDC, JHMC, PPMC, 
BiTPI, CEZA and ZCSEZA, and PIA may enjoy the ITH or NOLCO granted by the concerned IPA, 
prior to availment of the five percent (5%) GIE. 
Fiscal incentives under this Code shall be terminated after a cumulative period of twenty (20) 
years from date of registration or start of commercial operation, whichever is applicable, except that 
it could be extended with regard to industries deemed indispensable to national development: 
f'yovided, further, That the duration of incentives shall not be applicable to tax and duty free 
importation of capital equipment, raw materials, supplies and spare parts of enterprises registered 
with PEZA, SBMA, CDC, JHMC, PPMC, BTPI, CEZA, ZCSEZA, PIA and freeport zones. 
, 
i 
The industries exempted from this provision shall be recommended by the Board, with the 
concurrence of the Secretaries of the Department of Finance and Trade and Industry. 
SEC. 30. Payment in the Form of Foreign Cuvrencies. - All IPAs may be allowed to receive only 
freely convertible foreign currencies as payment of application fees, fines and penalties, including 
refund of incentives. 
S8EC. 31. The Fiscal Incentives Review Board. - 
The Fiscal Incentives Review Board (FIRB) 
created under Presidential Decree NO. 776, is hereby mandated to oversee the administration of 
2s 


fi;scal iricentives in government-owned and -controlled corporations and other government agencies 
whose fiscal incentives under non-investment-related special laws are being repealed under this 
Act, The FIRB shall recommend to the President for his approval the incentives to be granted 
based on the annual importation requirement of the concerned agency: Provided, however, That 
applications for incentives shall be acted upon by the FIRB within sixty (60) days upon submission 
o.Fthe complete requirements by the applicant. Failure of the FIRB to act within the aforementioned 
date shall mean that the application for incentives by the concerned GOCC or government agency is 
considered recommended. 
, i 
TITLE IV 
FINAL PROVISIONS 
SEC. 32. Authovity to Retain Funds. - Subject to accounting and auditing procedures, enterprises 
registered with the Board and other investment promotion agencies are required to share in the 
special development fund of the Board for projects relevant to the objectives of this Act equivalent 
to one percent (1%) of the ITH granted for every application. 
SEC. 33. 
Univevsal Covevage. - Five years from the date this Act goes into effect, all existing 
registered enterprises enjoying the incentives under Books One, Five and Six of Executive Order 
No. 226, otherwise known as the Omnibus Investments Code of 1987, as amended, and all, other 
enterprises registered under other laws shall be governed exclusively by this Act: Provided, That 
incentives arising from contracts or agreements entered into ,by an enterprise with the government, 
its instrumentalities and agencies shall continue in force and effect according to the terms thereof: 
Provided, jiwther, That existing enterprises may opt to register and be governed by the provisions 
of this Act. 
SEC. 34. Protection of the Environment. - The BOI, in coordination with the appropriate agencies, 
s:hall take concrete and appropriate steps to enact the proper measures for the protection of the 
environment, and shall coordinate with the Environmental Management Bureau of the Department 
of Environment and Natural Resources to 
avoid undue delay in the issuance of the required 
E:nvironmentaI Compliance Certificate (ECC): 
Provided, however, That applications for 
environmental clearances, permits, and/or licenses of registered enterprises shall be acted upon by 
the appropriate government agency within one hundred twenty (120) days from date of official 
acceptance. In the event that the appropriate government agency failed to act within the 
aforementioned date, the application for the said environmental requirement shall be deemed 
complied with for purposes of operation of the registered activity: Provided, finally, That the Board 
: 
i 
26 


may withdraw the certificate of registration issued to the enterprise should the appropriate 
government agency eventually deny the application. 
SEC. 35. Suspension and Forfeiturc of Incentives of BOI-registered Enterprises; Refund and 
Penalties. - When there is probable cause to believe that the registered enterprise has violated its 
registration terms and conditions, the Board may suspend its availment of incentives, until proven 
o1;hemise. 
1 
The Board may impose fines and penalties and/or forfeit the incentives granted to its 
registered enterprises whenever there are violations of the registration terms and conditions by the 
laiter, without prejudice to the caiicellation of the registration of said enterprise: Provided, 
however, That the Board may cancel or abate only the imposition of fines, in meritorious cases. 
In case of cancellation of the Certificate granted under this Code, the Board may, in 
appropriate cases, require the refund of incentives availed of and impose corresponding fines and 
penalties. 
Any enterprise which violates any provision of this Code, its implementing rules and 
regulations, the terms and conditions of its registration or any lawful directive of the Board, or in 
the availment of incentives, including all official reports required to be submitted to the Board, shall 
be subject to a fine not to exceed One million pesos (Pl,OOO,OOO.OO) but, without prejudice to the 
disapproval of its application for registration or cancellation of its registration: Provided, That any 
willful commission of fraudulent misrepresentation in its application for registration or submission 
of reports or gross violation of this Code and its Implementing Rules and Regulations, a fine of at 
least One million pesos (Pl,OOO,OOO.OO) but not to exceed Ten million pesos (PlO,OOO,OOO.OO) shall 
be imposed, in addition to other penalties that may be imposed by the Board. 
The Board shall prepare a schedule of fines and penalties to be imposed on emng registered 
enterprises depending on the violation incurred, which may be reduced in exceptional cases. 
Responsible officers of such enterprises, including duly appointed external consultants-agents 
who knowingly commit, aid or abet the commission of any of the acts mentioned above, shall be 
subject to a fine of not less than One hundred thousand pesos (PlO0,OOO.OO) but not more than 
Three hundred thousand pesos (P300,OOO.OO). 
1 
Government officers and employees who participate directly or indirectly in the commission 
of the foregoing acts shall likewise be liable to a fine of not less than One hundred thousand pesos 
27 


(€~lOO,OOO.OO) but not more than Three hundred thousand pesos (P300,000.00), in addition to any 
criminal and administrative penalties imposable under the Civil Service Law, Revised Penal Code, 
Republic Act No. 3019 (Anti-Gra8 And Corrupt Practices Act), Republic Act No. 6713 (Code Of 
Conduct And Ethical Standards For Public OfJicials) and other applicable laws. 
If the offender is a foreign national, in addition to the imposable fines and penalties above, the 
foregoing acts shall be grounds for his summary deportation. 
SEC. 36. Appeals from Board’s Decision. - All orders or decisions of the Board in cases involving 
the provisions of this Code shall immediately be executory. No appeal from the order or decision 
of the Board by the party adversely affected shall stay such order or decision, unless a supersedeas 
bond equivalent to the amount stated in the order or decision is posted by the appellant. 
I 
All appeals involving cases decided by the Board, except as provided in the next 
siicceeding paragraph, shall be filed with the Court of Appeals within fifteen (15) days from notice 
of the order or decision or of the denial of the appellant’s motion for new trial or reconsideration. 
Within the same period, the aggrieved party may file a motion for reinvestigation or 
reconsideration. Only one motion for reconsideration shall be allowed, subject to the posting of the 
aforementioned supersedeas bond which shall be limited to cash and/or surety bond from a BOI- 
aNxredited bonding company. 
In cases involving the denial of an application for registration, the party adversely affected by 
such denial may appeal the same to the Office of the President within thirty (30) days from notice 
of the order denying the application for registration. Where an appeal has been filed, said order or 
decision shall be final and executory ninety (90) days after the perfection of the appeal, unless 
reversed. 
SEC. 37. Congressional Oversight Committee. - A Congressional Oversight Committee, herein 
referred to as the Committee, is hereby constituted in accordance with the provisions of this Code. 
The Committee shall be composed of the Chairmen of the Committee on Ways and Means and 
Committee on Trade and Industry of the Seiiate and House of Representatives and four additional 
members from each house, to be designated by the Speaker of the House of Representatives and the 
Senate President, respectively. 
The Committee shall, among others, in aid of legislation, monitor and eiisure the proper 
implementation, especially Section 16 of this Act. The Committee is also empowered to require all 
IPAs submission of all pertinent information, including but not limited to, availment of fiscal 
, 
6 
28 


incentives, total investments, and cost-benefit analysis of incentives against investments, in a 
regular manner. 
SEC. 38. Effectivity of Implementing Rules and Regulations. - The IPAs, NEDA, DOF, Department 
of Trade and Industry and other appropriate government agencies, shall promulgate rules and 
regulations to implement the intent and provisions of this Code. Such niles and regulations shall 
take effect fifteen (15) days following its publication in a newspaper of general circulation in the 
Philippines. 
SEC. 39. Transitory Provision. - Until the Implementing Rules and Regulations of this Code take 
effect, the present rules and regulations to implement the provisions of this Code shall apply. 
For activities or entities, whether government or private, whose tax and/or duty exemptions or 
preferential treatment under special laws are withdrawn or repealed by this Act, pertinent provisions 
of the National Revenue Code (NIRC) of 1997, as amended; the Tariff and Customs Code, as 
%mended; and the Local Government Code, shall apply. 
SEC. 40. Separability Clause. - The provisions of this Code are hereby declared to be separable 
and, in the event any of such provisions is declared unconstitutional, the other provisions which are 
not affected thereby shall remain in force and effect. 
SEC. 41. Repealing Clauses. - The following laws or provisions of laws are hereby repealed: 
(1) Batas Pambansa Big. 44 - “An Act To Promote Investments in Less Developed Areas” 
(2) Batas Pambansa Blg. 391 - “An Act Declaring the 1983 Investment Incentives Policy by 
Modifying the System on the Grant of Investment Incentives, Amending for the Purpose 
Presidential Decree No. 1689 and other Pertinent Laws” 
(3) Presidential Decree No. 1623 - “Authorizing the Issuance of Special Investors Resident 
Visas to Aliens and for other Purposes (Repealed by Executive Order No. 226)” 
Presidential Decree No. 1893 - “Further Amending Presidential Decree No. 1623 entitled 
“Authorizing the Issuance of Special Investors Resident Visas to Aliens and for other Purposes”, as 
amended. 
(4) Presidential Decree No. 1789 - “A Decree to Revise, Amend and Codify the Investment, 
Agricultural and Export Incentives Acts to be Known as the Omnibus Investments Code (Repealed 
by Batas Pambansa Blg. 391)” 
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(5) Presidential Decree No. 2032 - “A Decree Declaring National Policies on Agricultural 
Development and Promulgating the Agricultural Incentives Act of 1986 (Repealed by Batas 
Pambansa Blg. 391)” 
(6) Executive Order No. 815 - “To Safeguard and Promote the Development of the Philippine 
Semiconductor Electronics Industry” 
(7) Executive Order No. 1045 - “Modifying Fiscal Incentives to BOI-Registered Enterprises” 
(8) Presidential Decree No. 66 - “Creating the Export Processing Zone Authority and 
Revising Republic Act No. 5490” 
(9) Republic Act No. 7888 - “An Act to Amend Article 7(13) of Executive Order No. 226, 
Otherwise Known as the Omnibus Investment Code of 1987)” 
(10) Book I, V, VI of Executive Order No. 226 are hereby absolutely repealed; 
(1 1) The incentive provisions under the following investment - related laws are hereby 
repealed as follows: 
(a) Sections 36(Q of Presidential Decree No. 705, otherwise known as the “Revised Forestry 
Code”; 
(b) Sections 6 and 7 of Republic Act No. 7103, otherwise lmown as the “Iron and Steel 
Industry Act”; 
(c) Sections 6 and 7 of Republic Act No. 7471, otherwise lmown as the “Philippine Overseas 
Shipping Development Act” and Section 2 of Republic Act No. 9301 (An Act Amending Certain 
Provisions of Republic Act No. 7471 otherwise known as the “Philippine Overseas Shipping 
Development Act and For Other Purposes”; 
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3 i 
(d) Section 19 of Republic Act No. 7279, otherwise known as the “Urban Development and 
Housing Act of 1992”; 
(e) Sections 16 (a), (b), (c), (d), (e) and 17 of Republic Act No. 7844, otherwise known as the 
“Export Development Act of 1994”; 
(0 Sections 83, 90, 91, 92 and 93 of Republic Act No. 7942, otherwise lcnown as the 
“Philippine Mining Act of 1995”; 
(g) Section 35 (b), (c) and (d) of Republic Act No. 8550, otherwise known as the “Philippine 
Fisheries Code of 1998”; 
(h) Section 9 of Republic Act No. 8479, otherwise lmown as the “Downstream Oil 
Deregulation Act of 1998”; 
(i) Section 1 of Republic Act No. 9281, entitled “An Act to Strengthen Agriculture and 
Fisheries Modernization in the Philippines by Extending the Effectivity of Tax Incentives and its 
Mandated Funding Support, Amending for this Purpose Sections 109 and 112 of Republic Act No. 
8435”; 
0’) Section 45 of Republic Act No. 9003 also lcnown as “Ecological Solid Waste 
Management Act of 2000”; 
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(k) Section 26 (A.1, A.l.l, A.1.2) of Republic Act No. 9275, entitled “The Philippine Clean 
Water Act of 2004”; 
(1) Sections 4 and 19 of Republic Act No. 9295 also known as “An Act Promoting the 
Development of Philippine Domestic Shipping, Shipbuilding, Ship Repair and Ship Breaking, 
Ordaining Refoms in Government Policies Towards Shipping in the Philippines and For Other 
Purposes”; 
(m)Section 13 of Republic Act No. 8479 also known as the “Clean Air Act of 1999”; 
(n) Section 16 of Republic Act No. 7844, entitled “An Act to Develop Exports as a ICey 
Towards the Achievement of the National Goals Towards the Year 2000”. 
(12) The provisions of: 
(a) Section 12 (c) and (g) of Republic Act No. 7227, otherwise known as the “Bases 
Conversion and Development Act of 1992;” 
(b) Section 6 of Proclamation 984 creating the Morong Special Economic Zone pursuant to 
R.epublic Act No. 7227; 
(c) Section 5 of Proclamation 216 Creating the Poro Point Special Economic Zone pursuant to 
R-epublic Act No. 7227; 
(d) Section 3 of Executive Order No. 32, Series of 1994 amending Executive Order No. 103, 
Series of 1993, establishing the John Hay Development Corporation; 
(e) Section 4, paragraphs (e), (9 and (g) of Republic Act No. 7903, otherwise known as 
“Zamboanga City Special Economic Zone Act of 1995”; 
(f) Section 4, paragraphs (b), (c) and (e) of Republic Act No. 7922, entitled “Cagayan Special 
Economic Zone Act of 1995”; and 
(g) Sections 8, 9 and 10 of Presidential Decree No. 538, entitled “Creating and Establishing 
tine PHIVIDEC Industrial Authority and Making its Subsidiary Agency of the Philippine Veterans 
Investment Development Corporation Defining Its Powers, Functions and Responsibilities and for 
Other Purposes” which are inconsistent with this Act, are hereby repealed or modified accordingly: 
Provided, however, That they shall draw their respective incentives from any of those provided for 
under this Code. 
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(13) The provisions of Republic Act No. 7916, otherwise known as “Special Economic Zone 
Act of 1995”, and Republic Act No. 8748, otherwise laown as “An Act Amending Republic Act 
No. 7916” which are inconsistent with this Code are hereby repealed or modified accordingly. 
(14) The provisions of Section 12 (b) of Republic Act No. 7227 and Section 5 of Republic Act 
No. 7103 are modified accordingly. 
(15) The following incentive provisions under the specific laws cited herein are hereby 
absolutely repealed: 
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(a) Last sentence of Section 17 of Republic Act No. 7820, “An Act Creating the Partido 
Development Administration, Defining its Powers and Functions, Providing Funds 
Therefor, and for Other Purposes”; 
(b) Section 8(d) of Republic Act No, 5487, “An Act to Regulate the Organization and 
Operation of Private Detective, Watchmen or Security Guard Agencies (The Private 
Security Agency Law)”; and 
(c) Section 8 of Republic Act No. 8436, “An Act Authorizing the Commission on Elections to 
Use an Automated Election system in the May 11, 1998 National or Local Elections and in 
Subsequent National or Local Electoral Exercises, Providing Funds Therefor and for Other 
Purposes” are hereby repealed. 
(d) Section 25 of Presidential Decree No. 857, “Providing for the Reorganization of Port 
Administration 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”; and 
(e) Sections 2 and 3 of Presidential Decree No. 1362, “Allowing Radio Broadcasting and 
Television Stations to Import Radio or Television Equipment, Spare Parts and Allied 
Technical and Program Materials to be Used Exclusively in their Broadcast Operations 
Subject to Certain Conditions”. 
(16) 
The tax and/or duty incentives granted to government-owned and -controlled 
corporations or government agencies under the following laws are hereby repealed: Provided, That 
the tax and/or duty exemptions withdrawn herein maybe recommended to be restored in whole or in 
part, after careful and objective evaluation, by the Fiscal Incentives Review Board (FIRB): 
(a) Section 14 of Republic Act No. 7354, “An Act Creating the Philippine Postal 
Corporation, Defining its Powers, Functions and Responsibilities, Providing for 
Regulation”; 
(b) Title 9, Section 21 of Republic Act No. 7306, “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”; 
i 
(c) Sections 18, 19,20 and 21 of Republic Act No. 6847, “An Act Creating and Establishing 
the Philippine Sports Commission, Defining its Powers, Functions and Responsibilities 
Appropriating Funds Therefor, and for Other Purposes”; 
(d) Section 18 of Republic Act No. 8044, ‘‘An Act Creating the National Youth 
Commission, Establishing a National Comprehensive and Youth Development, 
Appropriating Funds Therefor, and for Other Purposes”; 
(e) Subparagraph (a)(2) and last sentence of subparagraph (b) of Section 8 and Section 14 of 
Presidential Decree No. 269, “Creating the National Electrification Administration as a 
Coiporation, Prescribing its Powers and Activities, Appropriating the Necessary Funds 
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Therefor and Declaring 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; 
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4 
(f) Section 14(b) of Republic Act No. 7308, ”An Act to Promote And Develop the Seed 
Industry in the Philippines and Create a National Seed Industry Council and for Other 
Purposes”; 
(g) Section 9 Subsection (e), last sentence of the first paragraph of subsection (f), second 
paragraph of subsection (i), and subsection (j) of Republic Act No. 7900, “An Act to 
Promote the Production, Processing, Marketing, and Distribution of High Value Crops, 
Providing Funds Therefor, and for Other Purposes”. 
(h) Section 20 of Republic Act No. 7279, otherwise known as the “Urban Development and 
Housing Act of 1992”; and 
(i) Sections 1, 2, 3 and 4 of Republic Act No. 7109, entitled “An Act Granting Tax 
Exemption Privileges to Local Water Districts”. 
All other laws, acts, decrees, orders and issuances inconsistent with any provisions of this 
Code are hereby repealed or modified accordingly. 
S8EC. 42. 
newspaper of general circulation in the Philippines. 
Effectivity. - This Act shall take effect fifteen (15) days following its publication in a 
Approved 
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