13TH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
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First Regular Session 
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SENATE 
I328 
S. BILL NO. 
Introduced by Senator RALPH G. RECTO 
EXPLANATORY NOTE 
Under existing laws, the administration, implementation and 
issuance of investment promotion programs, the issuance of policies 
relative thereto, as well as the grant of fiscal and non-fiscal incentives to 
both foreign and domestic investors are being handled by various 
government agencies, such as the Board of Investments (BOI), the 
Philippine Economic Zone Authority (PEZA), the Subic Bay Metropolitan 
Authority (SBMA), the Clark Development Corporation (CDC), and several 
other agencies mandated under various laws to establish, maintain and 
manage special economic/freeport zones throughout the Philippines, 
The system of having different agencies administer and implement 
various incentive laws creates a perception among foreign investors that 
the Philippines does not have a unified and responsive investments 
promotion programs and p,olicies. Hence, to establish a harmonized, 
simplified, uniform and consistent investment policies and programs to 
make the Philippines more competitive if not globally, at least in the 
ASEAN Region, it is imperative that only one governing statute regulate 
the incentives granted by the government. 
This piece of legislation, THE INVESTMENTS AND INCENTIVES CODE OF 
THE PHILIPPINES is designed to harmonize and simplify the government's 
administration of programs and policies on the grant of fiscal and non- 
fiscal incentives to promote foreign and domestic investments in the 
Philippines. It seeks to introduce fiscal and administrative amendments to 
the current Omnibus Investments Code of the Philippines. 
The fiscal amendments will rationalize the grant of incentives that 
will be clear, simple, time-bound, performance based and at par with the 
regional countries. The Investment Priorities Plan (IPP) will include industries 
with high comparative advantage, new product/service and export 
oriented products and valid for a period of three (3) years. The incentives 
include the following: 
Income Tax Holiday Or Net Operating Loss Carry-Over 


- 
Four years for all activities in the IPP and domestic-oriented activities 
located within NCR 
- 
Six 
years 
for export activities or 
domestic activities that 
produce/render new or distinct product/service and an additional 
two years for locators outside NCR 
- 
Eight years for domestic activities with backward and forward 
linkages or strong potential for export development and listed in the 
IPP. 
Enterprises with existing operations that qualify for registration shall 
be limited to their incremental capacities and/or incremental sales 
value fdr ITH availment. 
- An ddditional four years for Strategic Projects. Strategic projects 
shalli be determined and approved as "STRATEGIC" by a 
unadimous decision of an inter-agency committee composed of 
DTI, hEDA and DOF. 
. NET OP~RATING 
LOSS CARRY OVER 
- 
Loss incbrred within the first five (5) years from start of commercial 
operatidn may be carried over for the next five (5) years following 
such losb 
- 
Enterprises availing of ITH/NOLCO/additional deductions must first 
secure 6rior certification of entitlement from the concerned IPA 
Filing ofi the ITR for the concerned registered enterprises shall be 
automaiically extended for a period of sixty (60) days from the 
statutory filing without penalties, interests and surcharges 
0 
5% on dross income earned, in lieu of local and national taxes for 
enterprises located in the ecozones. 
Acceleratejd depreciation of plant, machinery, and equipment using a 
depreciatidn rate twice as fast as the normal rate. 
- 
Capital Eq-ipment Incentives 
- 
Tax a i d  duty free importation of capital equipment for export- 
oriented enterprises 
Domestic-oriented enterprises shall be entitled to importation of 
capital eqbipment subject to 1% duty and the prevailing VAT 
- 


- Tax credit on domestic capital equipment 
Raw Material incentives 
- Tax Credit shall be based on actual taxes and duties paid not the 
present average or standard rate 
- 
Actual sales of BOI-registered domestic producers supplying to 
domestic companies enjoying tax and duty exemptions on their 
importations of capital equipment/machinery and raw materials shall be 
eligible for tax credit incentives 
- Application for tax credit must be acted upon within ninety (90) 
days from official acceptance, otherwise, it shall be deemed 
automatically approved 
Incentives on Breeding Stocks and Genetic Materials 
Deferred Imposition of the Minimum Corporate Income Tax (MCIT) - 
the 2% MCIT shall be imposed to registered enterprises after full 
availment of all income tax-based incentives. 
ADDITIONAL INCENTIVES FOR ECOZONES 
Exemption from real property tax on machinery and equipment 
Exemption from customs and internal laws and regulations or to local 
tax ordinances on merchandise brought into the zone. 
Exemption from local taxes and licenses to the extent of their 
construction, operation or production inside the zone. 
INCENTIVES TO FOREIGN NATIONALS 
Foreign stockholders of BOI-registered enterprises with investments of 
US$150,000 are entitled to an indefinite Special Investor's Resident Visa 
and Foreign nationals granted with Special Non-immigrant's Visa are 
entitled to the following incentives: 
(A) Exemption from obtaining alien certificate of registration and 
emigration clearance certificate; and 
(B) Exemption from securing alien employment permits and all types 
of clearances, permits, licenses required by any government 
department or agency. 
All Investment Promotion Agencies (IPA] will draw their incentives in 
the proposed bill. Likewise, the incentive administration policy of BO1 will 
be applied uniformly by all IPAs. A cap on the total amount of incentives 


of a registered enterprise will be imposed. In addition, incentives without a 
specific period shall be enjoyed for a period of twenty (20) years from 
date of registration or start of commercial operations, whichever is 
applicable except tax and duty free importation of capital equipment, 
machinery, spare parts, raw materials and supplies of enterprises 
registered with the ecozones: 
Application for registration may now be filed with any other 
government office authorized by the Board to accept applications. The 
time frame for processing of registration has been shortened to fifteen (15) 
days and BO1 registration shall be valid for a period of twenty (201 years 
from commercial operation unless extended by the Board. Also, ASEAN 
nationals or firms effectively controlled by ASEAN shall be considered as 
Philippine nationals except when the proposed activity is reserved by the 
Constitution to the Filipinos. Moreover, all registered projects are 
considered as preferred pioneer for purposes of tax treaties. 
Immediate approval of this bill is thus earnestly sought. 


13TH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
lST Regwlar Session 
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S E N A T E  
1328 
S. BILL NO. 
Introduced bv Senator RALPH G. RECTO 
AN ACT 
HARMONIZING AND RATIONALIZING THE ADMINISTRATION AND 
PURPOSE CERTAIN PROVISIONS OF EXECUTIVE ORDER NO. 226, 
OTHERWISE KNOWN AS THE OMNIBUS INVESTMENTS CODE OF 1987 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
GRANT OF FISCAL AND NON-FISCAL INCENTIVES, REPEALING FOR THE 
assembled: 
PRELIMINARY TITLE 
TITLE AND DECLARATION OF POLICY 
SECTION. 
1. Title of the Code. - This Act shall be known as “The Investments 
and Incentives Code of the Philippines”. The incentives provided for in this Code shall 
govern all investment promotion agencies and sectors granting incentives under special 
laws. 
SEC. 2. Declaration of Investment Policies. - The development of the national 
economy shall be promoted in consonance with the principles and objectives of achieving 
global competitiveness, fostering economic efficiency, encouraging and supporting 
investments that promote countrywide development, and creating productive and quality 
employment. Accordingly, the following are the declared policies of the State: 
1. The State shall create and maintain a stable and market responsive investment 
regime that will encourage and support private sector investments; 
2. The State shall extend fiscal and non-fiscal incentives to promote investments 
in activities that will significantly contribute to the achievement of the 
country’s development objectives consistent with the medium-term 
development plan of the Philippines. 
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3. The State shall grant incentives based on a system that is clear and simple to 
administer, time-bound, and performance-based taking into consideration the 
need to be competitive in attracting foreign investments vis-&-vis other 
countries in the region. 
4. The State shall adopt an integrated, cohesive and comprehensive investment 
incentives law including a single administering agency, whenever applicable, 
that shall be recognized as the governing statute on the grant of investment 
incentives. To this end, all investment incentive schemes shall be rationalized 
thereby harmonizing the fiscal incentives granted by all investment incentive 
giving agencies of government. 
5. The State recognizes that industrial peace is an essential element of economic 
growth and it is the principal responsibility of the state to ensure that such 
condition prevails. 
6. The State shall undertake investment promotion initiatives deemed crucial to 
the attainment of each investment goal and objective. 
TITLE I 
DEFINITIONS OF TERMS 
SEC. 3. Definition of Terms. - As used herein, the term: 
(a) 
“BO1 or Board” shall mean the Board of Investments (BOI) created under 
this Code. 
“Investment Promotion Agencies (IPAs)” shall include BOI, Philippine 
Economic Zone Authority (PEZA), Subic Bay Metropolitan Authority 
(SBMA), Clark Development Corporation (CDC), Cagayan Economic 
Zone Authority (CEZA), Zambomga City Special Economic Zone 
Authority (ZCSEZA), Philippine Veterans Investment Development 
Corporation (Phivedec) Industrial Authority, and all other government 
agencies granting incentives to specific sectors under special laws. 
(c) 
“Registered Enterprises“ shall mean any individual, partnership, 
cooperative, corporation or other entity incorporated and/or organized and 
existing under Philippine laws; and registered with the Board in 
accordance with this Book Provided, however, That the term “registered 
(b) 
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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 of fiduciary functions. 
“Technological assistance contracts“ shall mean contracts for: (1) the 
transfer, by license otherwise, of patents, processes, formulas or other 
technological rights of foreign origin; and/or (2) foreign assistance 
concerning technical and factory management, design, planning, 
construction, operation and similar matters. 
”Foreign loans” shall mean any credit facility or financial assistance other 
than equity investment denominated and payable in foreign currency or 
where the creditor has the option to demand payment in foreign exchange 
and registered with the Bangko Sentral ng Pilipinas (BSP) and the Board. 
“Investment Priorities Plan (ZPP)” shall mean the list of industries and 
activities prepared by the BOI, which will be eligible for registration with 
the Board, whjch includes industries with high comparative advantage, 
activities that will produce new product/service and export-oriented 
industries. 
“New product/sewice” shall refer to any productlservice not locally 
manufactured/rendered or not sufficiently manufacturedhendered to meet 
the demands for the said producthervice. 
(d) 
(e) 
(9 
(g) 
The BOI, in consultation with the National Economic Development 
Authority (NEDA) shall prepare an annual list of products/services that 
are not sufficiently manufacturedrendered. 
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“Industries with High Comparative Advantage” shall refer to industries 
which have export potential or those which have economically viable 
DRCs and/or High RCA indices. 
“Domestic Resource Cost (DRC)” shall refer to the economic value in 
pesos of domestic resources needed to save or earn foreign exchange. 
“Revealed Comparative Advantage Index (RCA index)” is the ratio of a 
given commodity’s share in the country’s total exports to that 
commodity’s share in the total exports of the world. 
“Gross Income Earned or GIE” shall mean all income derived ffom 
whatever source, including, but not limited to the following items: 
(1) Compensation for services in whatever form paid, including but not 
limited to fees, salaries, wages, commission, and similar items; 
(2) Gross income derived from the conduct of trade or business or the 
exercise of profession; 
(3) Gains derived from dealings in property; 
(4) Interests; 
(5) Rents; 
(6) Royalties; 
(7) Dividends; 
(8) Annuities; 
(9) Prizes And Winnings; 
(10) Pensions; and 
(11) Partner’s distributive share from the net income of the general 
professional partnership. 
“Tax Credit” shall mean any credits against taxes andor duties equal to 
those actually paid or would have bee0 paid to evidence which a tax credit 
certificate shall be issued by the Secretary of Finance or his representative, 
or the Board, if so delegated by the Secretary of Finance. The tax credit 
certificates issued by the Board pursuant to this Code shall not be 
transferable. The tax credit certificate shall be used to pay taxes, duties, 
charges and fees due to the national government: Provided, That the tax 
credit issued under this Code shall form part of the gross income of the 
grantee for income tax purposes under Section 32 of the National Internal 
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Revenue Code (NIRC) and therefore taxable: Provided further, That such 
tax credits shall be valid only for a period of ten (10) years from date of 
issuance. 
(m) “Export Products” shall mean manufactured or processed products the total 
freight on board (FOB) Philippine port value of @e exports of which did not 
exceed five million dollars in the United States Currency in the calendar 
year 1968. The above definition notwithstanding, the National Plan for 
Investments Promotions (NPIP) may include other products for export 
subjects to such conditions and limited incentives as may be determined by 
the Board. Further, it may include other products for exports subject to such 
conditions and limited incentives as may be determined by the Board. 
“Export Sales” shall mean the sales values and/or revenues, determined 
from invoices, bills of lading, inward letters of credit, landing certificates, 
and other commercial documents, of products/services (1) shipped out of the 
country and sold in the territory of another country by registered enterprises 
(direct exportation); or, (2) sold to other export producers whether registered 
enterprises or not, for further processing to be shipped out of the country 
and sold in the territory of another country by such export producers 
(indirect exportation); or, (3) sales of export products/services by registered 
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 knowledge, information, technology and 
systems and/or application or installation thereof in the project sites 
including but not limited to the fields of engineering and construction 
design, logistics, repair and maintenance, and services provided to 
international airlinedshipping lines/military aircraft or seacraft even if 
rendered locally provided revenues are paid for in foreign currency, 
excluding mere deployment of people or individual practice of profession 
abroad (constructive exportation). 
(n) 
Sales of locally manufactured or assembled goods for household and 
personal use to Filipinos abroad and other non-residents of the Philippines 
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as well as returning oyerseas Filipinos under the Internal Export Program of 
the government shall also be considered export sales. 
(0) “Sewice enterprise” shall refer to an enterprise engaged or proposing to 
engage in rendering technical, professional or other services. The Board 
shall formulate an annual list of services not covered herein. 
An “Export enterprise” shall mean a manufacturer, processor or service 
provider that earns fifty percent (50%) of its annual sales from exports. 
@) 
The Information Technology (IT) industry shall automatically be considered 
as export enterprise but subject to the preparation of a negative list by the 
Board. 
(4) 
A “Domestic enterprise” shall mean an enterprise which produces goods for 
sale, or renders services to the domestic market entirely or if exporting a 
portion of its output fails to consistently export at least fifty percent (50%). 
(r) 
“Production Cost’ shall mean shall mean the total of the cost of direct labor, 
raw materials, and manufacturing overhead, determined in accordance with 
generally accepted accounting principles, which are incurred in 
manufacturing or processing the products of a registered enterprise. 
(s) 
“Processing” shall mean converting of raw materials into marketable from 
through physical, mechanical, chemical, electrical, biochemical, biological 
or other means or by a special treatment or a series of actions, such as 
slaughtering, milling, pasteurizing, drying or desiccating, quick freezing, 
that results in a change in the nature or state of the products. Merely packing 
or packaging shall not constitute processing. 
TITLE 11 
ORGANIZATION AND FUNCTIONS OF THE BO1 
SEC. 4. The Board of Investments (BOO. - The BO1 shall implement the 
provisiOns of this Code except as otherwise provided herein. 
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SEC .5. The Board Of Governors; Management Committee - 
A. The Board of Governors. - The BO1 shall be composed of nine (9) governors: 
the Secretary of Trade and Industry; the Director General of the NEDA; the Secretary of 
Finance; three (3) Undersecretaries of Trade and Industry; and three (3) representatives 
from the private sector to be chosen by the President. The Secretary of Trade and 
Industry shall concurrently be the Chairman of the Board and the Undersecretary of the 
DTI for Industry and Investments shall concurrently be the Vice Chairman of the Board 
and its Managing Governor. The other two (2) undersecretaries of Trade and Industry 
may designate their permanent representatives in cases of absence or unavailability. The 
three (3) representatives from the private sector shall be appointed by the President for a 
term of four (4) years, which may be extended by the President for another four (4) years: 
Provided, That one of the governors from the private sector shall serve the Board on a 
full-time basis; Provided, however, That upon the expiration of his term, a governor shall 
serve as such until his successor shall have been appointed and qualified: Provided 
further, That no vacancy shall be filled except for the unexpired portion of any term, and 
that no one may be designated to be a govemor of the Board in an acting capacity but all 
appointments shall be ad interim or permanent: ProvidedJinally, That no governor from 
the private sector shall serve for more than eight (8) years. 
B. The BOI Management Committee. -- The BO1 Management Committee is 
hereby created and the Board of Governors may delegate some of its fhctions thereto, in 
appropriate cases, in which case, the performance of such delegated functions shall no 
longer require Board approval and confirmation. 
SEC. 6. Qualifications of Governors of the Board. - 
The governors of the Board 
shall be citizens of the Philippines, at least thirty (30) years old, of good moral character, 
and of recognized competence in the fields of law, economics, finance, banking, 
commerce, industry, agriculture, engineering, management or labor. 
SEC. I. Appointment of Board Personnel. -- The Board shall appoint its technical 
staff and other personnel subject to Civil Service law, rules and regulations. 
SEC. 8. Powers and Duties of the Board. -- The Board shall be responsible for the 
regulation and promotion of investments in the Philippines. It shall meet as often as may 
be necessary, generally once a week on such day as it may fix. Notice of regular and 
special meetings shall be given to all members of the Board. The presence of five (5) 
members of the Board shall constitute a quorum and the affirmative vote of five (5) 


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members of the Board in a meeting validly held shall be necessmy to exercise its powers 
and perform its duties, which shall be as follows: 
(1) Promulgate such rules and regulations as may be necessary to implement the 
intent and provisions of this Code; 
(2) Process and approve, deny, suspend, revoke applications for registration with 
the Board, imposing terms and conditions as it may deem necessary to 
promote the objectives of this Code, including the refund and forfeiture of 
incentives when appropriate, restricting availment of certain incentives not 
needed by the project upon the determination of the Board, requiring 
performance bonds from BOI-accredited bonding companies, and payment of 
application, registration, publication and other necessary fees when warranted, 
may limit the availment of the tax holiday incentive to the extent that the 
investor's country law or treaties with the Philippines allows a credit for taxes 
paid in the Philippines; 
(3) Delegate, in appropriate cases, some of its functions to the BO1 management 
committee, or to any official of the Board with the rank equivalent to a 
Department Director; 
(4) After due hearing, decide controversies concerning the implementation of the 
relevant provisions of this Code that may arise between registered enterprises 
or investors therein and government agencies, within thirty (30) days after the 
controversy has been submitted for decision; Provided, That the investor or 
the registered enterprise may appeal the decision of the Board within thirty 
(30) days from receipt thereof to the President for decision. To effectively 
exercise this power, the Board shall have the power to subpoena witnesses, 
administer oaths, and compel the production of books, papers, and other 
evidences, and to cite for contempt any persodorganization that fails to 
comply with the aforestated processes; Provided, That to arrive at the truth, 
the investigator(s) may grant immunity from prosecution to any person whose 
testimony or whose possessions of documents or other evidence is necessary 
or relevant to determine such truth in any investigation; 
(5) Recommend to the Commissioner of Immigration and Deportation the entry 
into the Philippines for employment of foreign nationals under this Code; 
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(6) Periodically check and verify, either by inspection of the books or by 
requiring regular reports, the proportion of the participation of Philippine 
nationals in a registered enterprise to ascertain compliance with its 
qualification to retain registration under this Code; 
(7) Periodically check and verify the compliance by registered enterprises with 
the relevant provisions of this Code, the rules and regulations promulgated 
under this Code and the terms and conditions of registration; 
(8) After due notice, cancel the registration or suspend the enjoyment of 
incentives benefits of any registered enterprise andor require refund of 
incentives enjoyed by such enterprise including interests and monetary 
penalties, and levy properties of the registered enterprise, if appropriate, for 
(a) failure to maintain the qualifications required by this Code for registration 
with the Board or (b) for violation of any provisions of this Code, the rules 
and regulations issued under this Code, the terms and conditions of 
registration, laws for the protection of labor or the consuming public; 
provided, That the registration of an enterprise whose project timetable, as set 
by the Board is delayed by one year, shall be considered automatically 
cancelled unless otherwise reinstated as a registered enterprise by the Board; 
(9) Determine the organizational structure taking into account Sec. 6 of this Code; 
appoint, discipline and remove its personnel consistent with the provisions of 
the Civil Service and Rules; 
(10) 
Prepare or contract for preparation of feasibility and other pre-investment 
studies, either upon its own initiative; or upon the request of Philippine 
nationals who commit themselves to invest therein and show the capability of 
doing so; Provided, That if the venture is implemented, then the amount 
advanced by the Board shall be repaid within five (5) years from the date the 
commercial operation of said enterprise starts; 
(1 1) 
When feasible and considered desirable by the Board, require registered 
enterprises to list their shares of stock in any accredited stock exchange or 
directly offer a portion of their capital stock to the public and/or their 
employees; 
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(12) 
Formulate and implement industrial programs that would hasten economic 
growth and development including those relating to the implementation of 
international trade, investments and environmental agreements and protocols; 
(13) 
Recommend to the President of the Philippines, in appropriate cases, and 
subject to the conditions, which the Board deems necessary, the suspension of 
the nationality requirement provided for in this Code or any other 
nationalization statute; 
(14) 
(15) 
Prepare or contract for the preparation of industry and sectoral 
development programs, the NPIP and gather and compile statistical, technical, 
marketing, financial and other data required for the effective implementation 
of this Code; 
Establish offices in the Philippines and abroad; 
(16) 
Within four (4) months after the close of the fiscal year, submit annual 
reports to the President that shall cover its activities in the administration of 
this Code, including recommendations on investment policies; 
(17) 
Provide, directly or through Philippine Diplomatic Missions, such 
information as may be of interest to prospective foreign investors; 
(1 8) 
Collate, analyze and compile pertinent information and studies 
concerning activities/industries/ sector that have been or may be in the PP; 
(19) 
Enter into agreements with other agencies of government for the 
simplification and facilitation of systems and procedures involved in the 
promotion of investments, operation of economic zones and registered 
enterprises, and other activities necessary for the effective implementation of 
this Code; and 
(20) 
Generally, exercise all the powers necessary or incidental to attain the 
purposes of this Code and other laws vesting additional functions on the 
Board. 
SEC. 9. Powers and Duties of the Chairman. - 
The Chairman shall have the 
following powers and duties: 
(1) 
(2) 
To preside over the meetings of the Board of Governors; 
To render annual reports to the President and such special reports as may 
be requested, 
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(3) 
To act as liaison between investors seeking joint venture arrangements in 
particular areas of investments; 
Recommend to the Board of Governors sucb policies and measures he 
may deem necessary to carry out the objectives of this Code; and 
Generally, to exercise such other powers and perform such other duties as 
may be directed by the Board of Governors from time to time. 
(4) 
( 5 )  
SEC. 10. Powers and Duties of the Vice-Chairnzaiz. - 
The Vice-chairman shall 
have the following powers and duties: 
To act as Managing Governor of the Board, thereby executing all acts of 
administration; 
To preside over the meetings of the Board of Governors in the absence of 
the Chairman; 
Prepare the Agenda for the meetings of the Board of Governors and 
submit for its coilsideration and approval the policies and measures which 
the Chairman deems necessary and proper to cany out the provisions of 
this Code; 
Assist registered enterprises and prospective investors to have their papers 
processed with 
dispatch by all government offices, agencies, 
instrumentalities and financial institutions; and 
Perform the other duties of the Chairman in the absence of the latter, and 
such other duties as may be assigned to him by the Board of Governors. 
TITLE I11 
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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 BOI, after consultation with the appropriate government agencies 
and the private sector, shall submit the IPP to the President; Provided, however, That the 
deadline for submission, may be extended by the President. 
Upon approval of this Code, the IPP shall be prepared within 120 days by the 
BOI, in consultation with the NEDA, and the private sector and in accordance with the 
criteria for determining the list of industries entitled to incentives. 
The IPP shall be prepared once every three (3) years by the BO1 to be submitted 
to the President for hisher approval not later than the end of June of the year immediately 
preceding the three-year period to be covered by the IPP. 
The P P  shall contain the industries or activities with high comparative advantage 
as evidenced by indicators such as DRC and RCA. It shall also include those that will 
engage in the production or manufacture of new product/service and export 
producffservice. 
SEC. 12. Criteria in the ZPP. - 
No economic activity shall be included in the 
IPP unless it is shown to be economically, technically and financially sound after 
thorough investigation and analysis by the Board. 
The determination of preferred areas of investment to be listed in the IPP shall be 
based on long-run comparative advantage, taking into account the value of social 
objectives and employing economic criteria along with market, technical, and financial 
analyses. 
The Board shall take into account the following: 
(a) 
Primarily, the economic soundness of the specific activity as shown by its 
economic internal rate of return; 
The extent of contribution of an activity to a specific developmental goal; 
Other indicators of comparative advantage (e.g., DRC, RCA). 
The market and technical aspects and considerations of the activity 
proposed to be included. 
(b) 
(c) 
(d) 
SEC. 13. Amendments. - 
Subject to publication requirements and the criteria for 
investment priority determination, the BO1 may, at any time, add additional areas in the 
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PP, alter any of the terms of the declaration of an investment area or terminate the status 
of preference. In no case, however, shall any amendment of the P P  impair whatever 
rights that may have already been legally vested in qualified enterprises which shall 
continue to enjoy such rights to the full extent allowed under this Code. The Board shall 
not accept applications in an area of investment prior to the approval of the same as a 
preferred area nor after approval of its deletion as a preferred area of investment. 
SEC. 14. Publication -- Upon approval of the PP, in whole or in part, or upon 
approval of an amendment thereof, the IPP or the amendment, specifying and declaring 
the areas of investment shall be published 'in at least one (1) newspaper of general 
circulation and all such areas shall be open for application until publication of an 
amendment or deletion thereof, or until the Board approves registration of enterprises. 
CHAPTER I1 - INCENTIVES TO REGISTERED ENTERPRISES 
SEC. 15. Governing Incentive Provision for IPAs. -- All existing and future IPAs 
vested with the power to grant incentives, including but not limited to the PEZA, SBMA, 
CDC, CEZA, ZCSEZA, and Phivedec Industrial Authority, as well as all industries 
granted investment incentives under special laws shall draw their incentives under this 
Code. 
For this purpose, the incentives provisions of the governing laws of the IPAs and 
industries are hereby repealed accordingly. 
SEC. 16. Incentives to Registered Enterprises. - All PAS may grant the following 
incentives to their respective registered enterprises to the extent of the activity/proj ect: 
(A) 
INCOME TAX HOLlDAY (ITH) OR NET OPERATING LOSS 
CARRYOVER (NOLCO) 
(1) ITH - Registered enterprises shall be entitled to an income tax holiday from 
the start of their commercial operation to the extent of their activity under the following 
categories: 
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Category A - All activities listed in the IPP, which includes inter alia, domestic- 
oriented activities located within the National Capital Region 
(NCR) shall be entitled to four (4) years ITH. 
CategoryB - Export-oriented activities located within NCR or domestic oriented 
activities ptoducingkendering distinct or new products/services 
shall be entitled to six (6) years ITH. 
Category C - Export-oriented activities located outside NCR or domestic- 
oriented activities located within or outside NCR with (a) 
backward and forward linkages or strong potential for export 
development; and @) listed in the P P  shall be entitled to eight (8) 
years ITH. 
Enterprises with existing operations that qualify for registrations 
shall be limited to their incremental capacities and/or incremental 
sales value for ITH availment. 
Category D - The foregoing categories notwithstanding, an additional four (4) 
years shall be granted for “strategic projects”. Strategic Projects 
refer to activities which exhibit high social economic returns and 
comply with any of the following conditions: 
(a) 
(b) 
(c) 
(d) 
Project would create high value-added; 
Project would generate sizable employment; 
Project would require large investments; or 
Project would use new and internationally-accepted high 
level of technology. 
A project shall be determined and approved as “strategic” by a 
unanimous decision of an inter-agency committee composed DTI- 
BOI, NEDA and Department of Finance @OF). 
(2) NOLCO - The net operating loss of the business or enterprise during the first 
five (5) years from start of commercial operation which had not been previously offset as 
deduction from gross income shall be carried over for the next five (5) consecutive 
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taxable years from gross income immediately following the year of such loss; Provided 
howevev, That operating loss resulting from availment of incentives provided in this Code 
shall not be entitled to NOLCO. 
A registered enterprise availing of ITH, NOLCO or additional deductions must 
secure a prior certification of entitlement from the concerned P A  before filing their 
income tax returns (ITR) with the Bureau of Internal Revenue (SIR). 
For this purpose, the statutory time for filing of the ITR of the concerned 
registered enterprise with the BIR shall automatically be extended for a period of sixty 
(60) days therehom, without penalties, interests and surcharges. 
Registered enterprises availing of the ITH as herein provided shall not be entitled 
to avail of the NOLCO and vice-versa. Registered enterprises shall have the option to 
avail of the ITH or NOLCO at the time of registration, but once the option is made, no 
amendment shall be allowed. 
(B) IMPOSITION OF A TAX RATE OF FIVE PERCENT (5%) ON GIE 
Except for real property taxes, no taxes, local and national, shall be imposed on 
business establishments operating within an economic zone or freeport. In lieu thereof, 
five percent (5%) of the gross income shall be paid and remitted as follows: 
I. 
FOR ECONOMIC ZONES 
(a) 
(b) 
three percent (3%) shall be remitted to the national government; and 
two percent (2%) shall be remitted directly to the local government units 
concerned 
11. 
FOR SUBIC BAY FREEPOR'I 
(a) 
(b) 
three percent (3%) shall be remitted to the national government; 
one percent (1%) shall be remitted directly to the local government units 
concerned; and 
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IV. 
(c) 
one percent (1%) to be included in a development fund to be utilized for the 
development of municipalities outside the City of Olongapo and the 
Municipality of Subic, and other municipalities contiguous to the base areas. 
FOR THE ZAMBOANGA CITY ECONOMIC ZONE AND FREEPORT 
(a) 
(b) 
two percent (2%) shall be remitted to the national government; and 
three percent (3%) which shall be allocated as follows: 
(i) 
two percent (2%) to the City of Zamboanga 
(ii) one percent (1%) to Barangay Special Development Fund 
FOR THE CAGAYAN ECONOMIC ZONE AND FUEPORT 
(a) 
(b) 
(c) 
two percent (2%) shall be remitted to the national government; 
one percent (1%) shall be remitted directly to the Province of Cagayan; 
one percent ( 1%) to be shared by the municipalities affected by the 
declaration of the zone in proportion to their income from business activities 
within the zone; and 
one percent (1%) shall be remitted directly to the CEZA; 
(d) 
(C) ACCELERATED DEPRECIATION 
Accelerated depreciation, in accordance with the rules and regulations prescribed 
by the DOF, of plant, machinery, and equipment that are reasonably needed and actually 
used for the production and transport of goods and services may be depreciated using a 
depreciation rate twice as fast as the normal rate in accordance with the provisions of the 
NIRC; Provided, That the taxpayer notifies in writing the Commissioner of Internal 
Revenue at the beginning of the depreciation period as to what depreciation rate allowed 
thereunder shall be used by it. 
@) CAPITAL EQUIPMENT INCENTIVES 
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(1) Importations of capital equipment, spare parts, production consumables, or 
those required for pollution abatement and control including consignment thereof, by 
registered export-oriented enterprises upon the effectivity of this law shall he exempt to 
the extent of one hundred percent (100%) of the taxes and custom duties; Provided, That 
the importation thereof shall be used exclusively by the registered enterprise in its 
registered activity; Provided further, That importation of source documents by 
enterprises engaged in information technology shall likewise be fully exempt for the 
period stated herein. 
(2) The aforementioned importations of registered domestic-oriented enterprises 
shall be subject to payment of 1% custom duties and the prevailing value-added tax. 
Board approval must be secured before any sale, transfer or disposition of the 
said items is made; Provided, That if such sale, transfer or disposition is made within the 
first five (5) years from date of importation, any of the following conditions must be 
present: 
(a) 
If made to another enterprise enjoying tax and duty exemption on imported 
capital equipment; 
, 
If made to another enterprise, upon payment of any taxes and duties due on 
the undepreciated portion of the item to be sold based on a normal rate of 
depreciation; 
Exportation of the equipment, machinery, spare parts or source documents 
or those required for pollution abatement and control; 
For reasons of proven technical obsolescence; 
For purposes of replacement to improve and/or expand the operations of the 
registered enterprise; or 
Repair of the imported item. 
(b) 
(c) 
(d) 
(e) 
(0 
When the aforementioned sale, transfer or disposition is made under any of the 
conditions provided for in the foregoing paragraphs other than paragraph (b), the 
registered firm shall not pay the taxes and duties waived on such items. 
Providedfirther, That if the registered enterprise sells, transfers or disposes the 
aforementioned imported items without prior Board approval within five (5) years fkom 
date of importation, the registered enterprise and the vendee, transferee, or assignee shall 
be solely liable to pay twice the amount of the tax exemption given it; 
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Providedfinally, That even if the Board approved the sale, transfer or disposition 
of the equipment after five (5) years from date of importation, the registered enterprise is 
still liable to pay the taxes and duties on the undepreciated portion of the equipment, 
machinery or spare parts based on a normal rate of depreciation if it has violated any of 
its registration terms and conditions, otherwise, it shall no longer be subject to the 
payment of the taxes and duties waived thereon. 
(3) A tax credit equivalent to the taxes and/or duties paid on raw materials, 
supplies, parts and semi-finished products used in the fabrication of the machinery and 
equipment shall be given to export-oriented firms which purchase machinery and 
equipment from a domestic manufacturer; Provided, That: 
said equipment, machinery and spare parts will be used exclusively by the 
registered enterprise in its registered activity; 
the equipment would have qualified for tax and duty-free importation; 
the value-added tax that has been paid and refunded to or for which tax 
credit has already been issued to the manufacturer of the equipment or 
machinery for such raw materials, supplies, spare parts or semi-finished 
products, shall no longer be available for the issuance of tax credit to the 
registered enterprise who purchased the equipment; and 
that the approval of the Board is obtained by the registered enterprise. If the 
registered enterprise sells, transfers or disposes of these machinery, 
equipment and spare parts, the provision in the preceding paragraphs for 
such disposition shall apply. 
The tax credit certificate issued shall be valid for a period of ten (10) years from 
date of issuance: Provided however, That it shall form part of the gross income of the 
grantee for income tax purposes and therefore taxable; Providedfinally, That applications 
for tax credit under this subsection must be filed within one (1) year from date of 
delivery, otherwise, this incentive shall be considered as waived. 
(E) 
RAW MATERIALS INCENTIVES 
Every registered export enterprise shall enjoy a tax credit equivalent to the 
national internal revenue taxes and customs duties paid on the supplies, raw materials and 
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semi- manufactured products used in the manufacture, processing or production of its 
export products forming part thereof, exported directly and indirectly by the registered 
export enterprise, based on the actual taxes and duties paid 
for such 
materials/supplies/semi-manufactured products by the registered enterprise. 
Provided, That actual sales of BO1 registered domestic producers supplying raw 
materials, semi-manufacturedmafactured products and machineries/equipment to 
domestic companies enjoying tax and dvty exemption on their importation of capital 
equipment, machinery, spare parts or raw materialdsupplies by law, or by their charters 
or franchise shall be eligible for the tax credit incentives provided for in this Code. 
The tax credit certificate issued shall be valid for a period of ten (10) years from 
date of issuance: Provided however, That it shall form part of the gross income of the 
grantee for income tax purposes and therefore taxable: Providedfinally, That applications 
for tax credit under this subsection must be filed within two (2) years from exportation of 
the final product for indirect exports or one (1) year for direct exports, otherwise, this 
incentive shall be considered as waived. 
All applications for tax credit must be acted upon within a period of ninety (90) 
days from official acceptance, otherwise, they shall be deemed automatically approved. 
Registered export oriented enterprises shall have access to the utilization of the 
bonded warehousing system. 
(F) 
INCENTIVES ON BREEDING STOCKS AND GENETIC MATERIALS 
(1) Importation of breeding stocks and genetic materials within ten (IO) years from 
the date of registration of commercial operation of the enterprise shall be exempt from all 
taxes and duties: Provided, That such breeding stocks and genetic materials are: (a) 
reasonably needed in the registered activity; and (b) approved by the Board. 
(2) A tax credit equivalent to one hundred percent (100%) of the value of customs 
duties that would have been waived on the breeding stocks and genetic materials had 
these items been imported shall be given to the registered enterprise which purchases 
breeding stocks and genetic materials from a domestic producer; Provided, That: 
(a) 
said breeding stocks and genetic materials would have been qualified for 
tax and duty-free importation under the preceding paragraph; 
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(b) 
the breeding stocks and genetic materials are reasonably needed in the 
registered activity; 
approval of the Board has been obtained by the registered enterprise; and 
the purchase is made within ten (10) years from the date of registration of 
commercial operation of the registered enterprise. 
(c) 
(d) 
The tax credit certificate issued shall be valid for a period of ten (10) years from 
date of issuance; Provided hawever, That the tax credit shall form part of the gross 
income of the grantee for income tax purposes and therefore taxable. 
(G) DEFERRED IMPOSITION OF THE MINIMUM CORPORATE INCOME 
TAX (MCIT) 
The MCIT of two percent (2%) of the gross income as of the end of the taxable 
year shall be imposed when the minimnm corporate income tax is greater than the tax 
computed under the NIRC as amended for the taxable year; Provided however, That said 
MCIT shall be imposed only after the enterprise’ entitlement period to the income tax 
based incentives. 
(H) EXEMPTION FROM REAL PROPERTY TAX ON MACHINERY AND 
EQUIPMENT 
Ecozone registered enterprises shall be fully exempt from the payment of the real 
property tax on equipment and machineries imposed under the Local Government Code. 
(0 TAX TREATMENT OF MERCHANDISE IN THE ZONE. - 
(1) Except as 
otherwise provided in this Code, foreign and domestic merchandise, raw materials, 
supplies, articles, equipment, machineries, spare parts and wares of every description, 
except those prohibited by law, brought into the zone to be sold, stored, broken up, 
repacked, assembled, installed, sorted, cleaned, graded, or otherwise processed, 
manipulated, manufactured, mixed with foreign or domestic merchandise whether 
directly or indirectly related in such activity, shall not be subject to customs and internal 
revenue laws and regulations nor to local tax ordinances, the provisions of law to the 
contrary notwithstanding. 
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(2) 
Merchandise purchased by a registered zone enterprise from the customs 
territory and subsequently brought into the zone, shall be considered as export sales and 
the exported thereof shall be entitled to the benefits allowed by law for such transaction. 
(3) 
Domestic merchandise sent from the zone to the customs territory shall, 
whether or not combined with or made part of other articles likewise of local origin or 
manufactured in the Philippines while in the export processing zone, be subject to 
internal revenue laws of the Philippines as domestic goods sold, transferred or disposed 
of for local consumption. 
(4) 
Merchandise sent from the export processing zone to the customs territory 
shall, whether or not combined with or made part of other articles while in the zone, be 
subject to rules and regulations governing imported merchandise. The duties and taxes 
shall be assessed on the value of imported materials (except when the final product is 
exempt) and the internal revenue taxes on the values added. 
(5) 
Domestic merchandise on which all internal revenue taxes have been paid, 
if subject thereto, and foreign merchandise previously imported on which duty or tax has 
been paid, or which have been admitted free of duty and tax, may be taken into the zone 
from the customs territory of the Philippines and be brought back thereto free of quotas, 
duty or tax. 
(6) 
Subject to such regulations respecting identity and safeguarding of the 
revenue as the authority may deem necessary when the identity of an article entered into 
the export processing zone under the immediately preceding paragraph has been lost, 
such article. When removed from the zone and taken to the customs territory shall be 
treated as foreign merchandise entering the country for the first time, under the provisions 
of the Tariff and Customs Code. 
(7) 
Articles produced or manufactured in the zone and exported therefrom 
shall, on subsequent importation into the customs temtory, be subject to the import laws 
applicable to similar articles manufactured in a foreign country; 
(8) 
Unless the contrary is shown, merchandise taken out of the zone shall be 
considered for tax purposes to have been sent to customs temtory. 
(J) 
EXEMPTION FROM LOCAL TAXES AND LICENSES. - (1) 
Notwithstanding the provisions of law to the contrary, zone registered enterprise shall, to 
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the extent of their construction, operation or production inside the zone be exempt from 
the payment of any and all local government imposts, fees, licenses or taxes. 
(2) 
Production equipment or machineries, not attached to real estate, used 
directly or indirectly, in the production, assembly or manufacture of the registered 
product of the zone registered enterprise shall be exempt from real property taxes. 
(K) EMPLOYMENT 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, technical 
or advisory positions for a period not exceeding ten (10) years from its registration; 
Provided however, That the total number of foreign nationals employed shall not exceed 
five percent (5%) of the enterprise’ total work force; Provided firther, 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 of their equivalents may be 
retained by foreign nationals beyond the period set forth herein and such officer is the 
owner or a stockholder owning at least ten percent (10%) of the outstanding capital stock 
of the registered enterprise and he remains the owner or maintains his stockholdings 
therein. 
Foreign nationals under employment contract within the purview of this incentive, 
their spouses and unmarried children under eighteen (18) years of age, who are not 
excluded by Section 29 of Commonwealth Act numbered 613, as amended, shall be 
permitted to enter and reside in the Philippines during the period of employment of such 
foreign nationals. 
The foreign national admitted herein, as well as their respective spouses and 
dependents shall be exempt from: (a) obtaining alien certificate of registration and 
emigration clearance certificates; and @) securing the Alien Employment Permit (AEP) 
and all types of clearances, permits, licenses or their equivalents required by any 
government department or agency. 
SEC. 17. Incentive to investors. -- When a foreign national covered under Sec. 16, 
paragraph (K) of this Code, invests an amount of at least US$l50,000.00, either in cash 
andor equipment, in an enterprise engaged in an activity registered with the BOI, he shall 
be entitled to a Special Investor’s Resident Visa; Provided that, 
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1. He is at least (1 8) years of age; 
2. He has not been convicted of a crime involving moral turpitude; 
3. He is not afflicted with any loathsome, dangerous or contagious disease; 
4. He has not been institutionalized for any mental disorder or disability; 
Providedhrther, That for purposes o f  compliance with this particular condition, 
the alien-applicant should prove that he has remitted such amount in acceptable foreign 
currency to BOI-accredited Philippine government banks or has brought into the 
Philippines the said equipment; Provided finally, That in securing the special investor’s 
resident visa, the alien-applicant shall be entitled to the same privileges provided for 
under Sec. 16 (K), last paragraph. 
As a holder of the Special Investors Resident Visa, an alien shall be entitled to 
reside in the Philippines while his investment subsists. For this purpose, he should submit 
an annual report, in the form duly prescribed for the purpose, to prove that he has 
maintained his investment in the country. Should said alien withdraw his investments 
from the Philippines, then the Special Investors Resident Visa issued to him shall 
automatically expire. 
The minimum amount for investment provided for under this Code shall be made 
applicable to visas granted to investors by the PEZA, SBMA, CDC, CSEZ, and ZCSEZ. 
CHAPTER 111 - REGISTRATION OF ENTERPRISES 
SEC. 18. QualiJcations of a Registered Enterprise. - To be entitled to register to 
avail of incentives, an applicant must satisfy the following conditions: 
(1) He is a citizen of the Philippines, in case the applicant is a natural person, or in 
case of a corporation or partnership or any other association, it must be organized and 
existing under Philippine laws and that it must comply with all the qualifications 
provided under this Code; Provided however, that for purposes of this Code and any law 
to the contrary notwithstanding, a natural-born Association of Southeast Asian Nations 
(ASEAN) citizen or a corporation effectively controlled by ASEAN citizens shall be 
considered as a Philippine investor; Provided, That the investment is made in an activity 
where the Constitution does not specifically require Filipino participation; 
(2) That it will engage in an activity included in the IPP; 
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(3) That the activity it will engage in is not within the activities, reserved by the 
Constitution to Philippine citizens or corporations owned and controlled by Philippine 
citizens, such as the operation of public utilities. 
For this purpose and any law to the contrary notwithstanding, the business of 
constructing and repairing vessels or parts thereof shall not be considered a public utility 
and no certificate of public convenience shall be required therefor; 
(4) If the applicant is engaged or proposes to engage in undertaking or activities 
other than registered projects, it has installed or undertakes to install an accounting 
system adequate to identify the investments, revenues, costs, and profits or losses of each 
registered project undertaken by the enterprise separately from the aggregate investment, 
revenues, costs and profits or losses of the whole enterprise or to establish a separate 
corporation for each registered project if the Board should so require to facilitate proper 
implementation of this Code. 
CHAPTER IV - 
BASIC RIGHTS AND GUARANTEES 
OF REGISTERED ENTERPRISES 
SEC. 19. 
Protection of Investments. - All investors and registered 
enterprises are entitled to the basic rights and guarantees provided in the Constitution. 
Among other rights recognized by the Government of the Philippines are the following: 
(a) 
Repatriation of Investments. - 
In the case of foreign investments, the 
right to repatriate the entire proceeds of the liquidation of the investment in the currency 
in which the investment was originally made and at the exchange rate prevailing at the 
time of repatriation, subject to the provisions of Section 74 of Republic Act No. 265 as 
amended; 
For investments made pursuant to Executive Order No. 32 and its implementing 
rules and regulations, remittability shall be as provided therein. 
(b) 
Remittance of Earnings. - 
In the case of foreign investments, the right to 
remit earnings from the investment in the currency in which the investment was 
originally made and at the exchange rate prevailing at the time of remittance, subject to 
the provisions of Section 74 of Republic Act No. 265 as amended; 
(c) 
Foreign Loans and Contracts. - 
The right to remit at the exchange rate 
prevailing at the time of remittance such sums as may be necessary to meet the payments 
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of interest and principal on foreign loans and foreign obligations arising from 
technological assistance contracts, subject to the provisions of Section 74 of Republic Act 
No. 265 as amended; 
(d) 
Freedom from Expropriation. - 
There shall be no expropriation by the 
government of the property represented by investments or of the property of the 
enterprise except for public use or in the interest of national welfare or defense and upon 
payment of just compensation. In such cases, foreign investors or enterprises shall have 
the right to remit sums received as compensation for the expropriated property in the 
currency in which the investment was originally made and at the exchange rate at the 
time of remittance, subject to the provisions of Section 74 of Republic Act No. 265 as 
amended; 
(e) 
Requisition of Investment. - 
There shall be no requisition of the property 
represented by the investment or of the property of enterprises, except in the event of war 
or national emergency and only for the duration thereof. Just compensation shall be 
determined and paid either at the time of requisition or immediately after cessation of the 
state of war or national emergency. Payments received as compensation for the 
requisitioned property may be remitted in the currency in which the investment was 
originally made and at the exchange rate prevailing at the time of remittance, subject to 
the provisions of Section 74 of Republic Act No. 265 as amended. 
CHAPTER V - ADMINISTRATION OF INCENTIVES 
SEC. 20. Administration and Implementation of Incentives. The IPAs shall be 
responsible for the implementation and administration of the incentives granted to their 
respective registered enterprises; Provided, that any incentive administration policy 
adopted by the Board of Governors shall be uniformly applied by all incentive 
administering agencies. 
SEC. 21. Application. - Applications shall be filed with the Board or any other 
government office authorized by the Board to accept applications, recorded in a 
registration book and the date appearing therein and stamped on the application shall be 
considered the date of official acceptance. 
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All applications and their supporting documents filed under this Code shall be 
confidential and shall not be disclosed to any person except with the consent of the 
applicant or upon an order of a court of competent jurisdiction. 
SEC. 22. Criteria Evaluation of Application. - The following criteria will be 
considered in the evaluation of applications for registration under a preferred area: 
(a) 
(b) 
(c) 
(d) 
Impact of the project on the overall economy; 
Overall viability of the project; 
The extent of employment generation; 
The extent to which technological advances are applied and adopted to 
local conditions; and 
Such other criteria as the Board may determine. 
(e) 
SEC. 23. Approval and Registration Procedures. - The Board is authorized to 
adopt rules and regulations to facilitate action on applications filed with it; prescribe 
criteria for the evaluation of several applications; devise standard forms for the use of 
applicants and delegate to the regional offices of the DTI the authority to receive and 
process applications for enterprises to be located in their respective regions. 
Applications filed shall be considered automatically approved if not acted upon 
by the Board within fifteen (15) working days from official acceptance thereof. 
Deferment by the Board shall be considered as an official action; Provided however, That 
the Board may defer action to a specific application not more than twice; Provided 
Jinally, That the Board shall act upon the application within ten (10) working days from 
compliance with the cause of the last deferment. 
SEC. 24. Certificate of Registration. - 
A registered enterprise under this Code 
shall be issued a Certificate of Registration under the seal of the BO1 and the signature of 
its Chairman and/or such other officer or employee of the Board as it may empower and 
designate for the purpose. The certificate shall be in such form and style as the Board 
may determine and shall state, among other matters: 
The name of the registered enterprise; 
The area of investment in which the registered enterprise is proposing to 
engage; 
The type of the activity it is undertaking or proposing to undertake; and 
The other terms and conditions to be observed by the registered enterprise 
by virtue of the registration. 
(a) 
(b) 
(c) 
(d) 
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SEC. 25. Validity of BOI registration. -- A firm’s registration with the Board shall 
be valid for a period of twenty (20) years from start of commercial operation unless 
extended by the Board. 
SEC. 26. Treaties on double taxation. -- All projects registered with the Board 
shall be considered as preferred pioneer areas of activities for purposes of the treaties on 
double taxation with other countries. 
All enterprises registered with an P A  shall be automatically registered with the 
BO1 for purposes of tax treaty privileges. 
SEC. 27. Capping of incentives. -- As it may deem necessary, the BO1 may 
impose a cap on the total amount of incentives that may be availed of by a registered 
enterprise within a given year. But in no case shall the Board withdraw or commute the 
incentives granted after the firm’s registration except for violations of its registration 
terms and conditions. 
SEC. 28. Extension of period of availment. - The availment period of the 
incentives provided herein may be extended by the concerned investment promotion 
agency in the event that the registered enterprise has suffered operational force majeure 
that has impaired its viability. 
SEC. 29. Duration of incentives. - Export-oriented enterprises registered with 
PEZA, SBMA, CDC, CEZ, ZCEZ may enjoy the ITH or NOLCO granted by the 
concerned PA, prior to availment of the 5% GIE, but, in no case shall the cumulative 
availment of the ITH/NOLCO and the 5% GIE incentives exceed twenty (20) years. 
Incentives provided under this Code where there is no specific period of 
availment shall terminate after a period of twenty (20) years from date of registration or 
start-up of commercial operations of the registered enterprise, whichever is applicable; 
Provided however, that this shall not be applicable to the incentive of tax and duty free 
importation of capital equipment, raw materials, supplies and spare parts of enterprises . 
registered with PEZA, SBMA, CDC, CEZ, ZCEZ. 
SEC. 30. Payment in the form of foreign currencies. -- All PAS may be allowed to 
receive foreign currencies as payment of application fees, fines and penalties, including 
refund of incentives. 
TITLE IV 
FINAL PROVISIONS 
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SEC. 31. Personnel. - All positions in the Board shall be governed by a 
compensation, position classification systems, and qualification standards approved by 
the Managing Governor with the concurrence of the Board of Governors based on a 
comprehensive job analysis and audit of actual duties and responsibilities. The 
compensation plan shall be comparable with the prevailing compensation plans of a 
government financial institution and shall be subject to periodic review by the Board no 
more than every two years without prejudice to yearly merit reviews or increases based 
on productivity. The Board shall therefore be exempt from existing laws, rules and 
regulations on compensation, position classification and qualification standards. 
SEC. 32. Authority to retain funds. -- The Board shall have the authority to retain 
one-half of funds arising from the collection of fees from applications/certifications of 
registration and/or incentives availment, fines, .penalties and refund of incentives and 
other sources of income subject to the usual accounting process. 
SEC. 33. Vested Rights. - 
Existing registered enterprises which are enjoying the 
incentives under Executive Order No. 226 shall continue to enjoy such incentives for the 
period therein stated: Provided, however, That firms which made investments on projects 
approved or registered by BO1 and PEZA six (6) months before the effectivity of this 
Code may opt to be governed by the provisions of this Code; Provided further, That 
PEZA enterprises enjoying the 5% GIE, regardless of date of registration, may opt to be 
governed by the provisions of this Code. 
SEC. 34. After Tax Profits. - 
Without prior BSP approval, after tax profits and 
other earnings of foreign investments of registered enterprises may be remitted outward 
in the equivalent foreign exchange through any of the banks licensed by the BSP; 
Provided, however, That such foreign investments in said enterprises have been 
previously registered with the BSP. 
SEC. 35. Protection of the environment. - 
The BOI, in coordination with the 
appropriate agencies, shall take concrete and appropriate steps and enact the proper 
measures for the protection of the environment. 
SEC. 36. Suspension and forfeiture of incentives: 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 incentives availment, until proven 
otherwise. 
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The Board may impose fines and penalties and/or forfeit the incentives granted to 
its registered enterprises whenever there are violations of the registration terms and 
conditions by the latter, without prejudice to the cancellation of the registration of said 
enterprise. 
In case of cancellation of the Certificate granted under this Code, the Board may, 
in appropriate cases, require the refund of incentives availed of and impose 
corresponding fines and penalties. 
Any enterprise which violates any provision of this Code, its implementing rules 
and regulations, the terms and conditions of its registration of any lawful directive of the 
Board, or willfully commits any fraudulent misrepresentation in the course of filing an 
application for registration, or in the availment of incentives, including all official reports 
required to be submitted by the Board, shall be subject to a fine of not more than One 
Million Pesos (P1,000,000.00), without prejudice to the disapproval of its application for 
registration or cancellation of its registration. 
The Board shall prepare a schedule of fines and penalties to be imposed on erring 
registered enterprises depending on the violation incurred, which may be reduced in 
exceptional cases. 
Responsible officers of such enterprises, including duly appointed external 
consultants-agents who knowingly commit, aid or abet the commission of any of the acts 
mentioned above, shall be subject to a fine of not less than One Hundred Thousand Pesos 
(P100,OOO.OO) but not more than Three Hundred Thousand Pesos (P300,OOO.OO). 
j Government officers and employees who participate directly or indirectly in the 
commission of the foregoing acts shall likewise be liable to a fine of not less than One 
Hundred Thousand Pesos (P100,000.00) but not more than Three Hundred Thousand 
Pesos (P300,000.00), in addition to any criminal and administrative penalties imposable 
under the Civil Service Law, Revised Penal Code, Republic Act No. 3019 (Anti-Graft 
And Corrupt Practices Act), Republic Act No. 6713 (Code Of Conduct And Ethical 
Standards For Public Officials) and other applicable laws. 
If the offender is a foreign national, in addition to the imposable fines and 
penalties above, the foregoing acts shall be grounds for his summary deportation. 
SEC. 37. Appeals from Boardk 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 
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order or decision, unless a supersedeas bond equivalent to the amount stated in the order 
or decision is posted by the appellant. 
All appeals involving cases decided by the Board, except as provided in the next 
succeeding paragraph, shall be filed with the Court of Appeals within fifteen (15) days 
from notice of the order or decision or 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-accredited bonding company. 
In cases involving the denial of an application for registration, the party adversely 
affected by such denial may appeal the same to the office of the president within thirty 
days from notice of the order denying the application for registration. Where an appeal 
has been filed, said order or decision shall be final and executory ninety (90) days after 
the perfection of the appeal, unless reversed. 
SEC. 38. Implementing Rules and Regulations. -The BOI, in consultation with 
NEDA, DOF, DTI and other appropriate government agencies shall promulgate rules and 
regulations to implement the intent and provisions of this Code. 
SEC. 39. Separability Clause. - The provisions of this Code are hereby declared 
to be separable and, in the event any of such provisions is declared unconstitutional, the 
other provisions which are not affected thereby shall remain in force and effect. 
SEC. 40. Repealing Clauses. - (1) The following provisions or laws are hereby 
repealed: . 
A. 
Batas Pambansa 44 
B. 
Batas Pambansa 391 
C. 
Presidential Decree 218 
D. 
Presidential Decree 1419 
E. 
F. 
Presidential Decree No. 1789 
G. 
Presidential Decree 2032 
H. 
Presidential Decree No. 538 
I. 
Executive order 8 I5 
.I. Executive Order 1045 
K. 
Republic Act No. 7888 
Presidential Decree No 1623, as amended 
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(4) 
(7) 
(9) 
Book I of Executive Order No. 226 is hereby absolutely repealed. 
Books IU and IV o f  Executive Order No. 226 are hereby repealed by 
Republic Act No. 8756. 
Books V and VI o f  Executive Order No. 226 are hereby absolutely 
repealed. 
The provisions of Republic Act Nos. 7916 and 8748, which are 
inconsistent with this Code are hereby repealed or modified accordingly. 
The provisions of Commonwealth Act No. 146, as amended are hereby 
modified accordingly; 
The provisions of Section 12 of Republic Act No. 7227, otherwise known 
as the “Bases Conversion and Development Act of 1992, section 4, 
paragraphs (e), (f) and (g) of Republic Act no. 7903 otherwise known as 
“Zamboanga City Special Economic Zone Act of 1995” and section 4, 
paragraphs (b), (c) and (e) of Republic Act No. 7922 entitled, “Cagayan 
Special Economic Zone Act of 1995” which are inconsistent with this act, 
are hereby repealed or modified accordingly; Provided, however, That 
they shall draw their respective incentives from any of those provided for 
under this Code. 
The provisions of section 3(e) and (f) of Republic Act No. 7042, as 
amended by Republic Act no. 8179 otherwise known as “The Foreign 
Investments Act as amended” are hereby modified by Sections 10 (Q)(R) 
of this Code. The provision of Section 5 of RA 7103, is modified by 
Section 7 (20) o f  this Code. 
The incentives provisions under other investment incentives laws catering 
to specific industries are hereby repealed as follows: 
A. 
Section 36 o f  Presidential Decree No. 705, otherwise known as the 
“Revised Forestry Code”; 
Section 12 o f  Presidential Decree no. 87, otherwise known as the 
“Oil Exploration Development Act o f  1972”; 
B. 
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D. 
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Sections 8, 9 and 10 of Presidential Decree No. 538 otherwise 
known as the “Philippine Veterans Investment Development 
Corporation”; 
Sections 16 and 17 of Presidential Decree No. 972 otherwise known 
as the “Coal Development Act”; 
Sections 4(a) and (d) of Presidential Decree No. 1442, otherwise 
known as the “Geothermal Exploration and Development Act”; 
Sections 10 and 11 of Republic Act No. 7156 otherwise known as 
the “Mini-hydroelectric Incentive Act”; 
Sections 6, 7 and 8 of Republic Act No. 7103 otherwise known as 
the “Iron and Steel Industry Act”; 
Sections 6 and 7 of Republic Act No. 7471 otherwise known as the 
“Philippine Overseas Shipping Development Act”; 
Sections 19 and 20 of Republic Act No. 7279 otherwise known as 
the “Urban Development and Housing Act of 1992”; 
Sections 61 and 62 of Republic Act No. 6938 otherwise known as 
the “Cooperative Code of the Philippines”; 
Sections 16 and 17 of Republic Act No. 7844 otherwise known as 
the “Export Development Act of 1994”; 
Section 12 of Republic Act No. 8047 otherwise known as the “Book 
Publishing Industry Development Act”; 
Sections 83, 90, 91, 92 and 93 of Republic Act No. 7942 otherwise 
known as the “Philippine Mining Act of 1995”; 
Section 12 of Republic Act No. 7718 otherwise known as the 
“Build-Operate-transfer Law”; 
Section 3 (a), (c), (d) and (h) of Republic Act No. 8502 otherwise 
known as the “Jewelry Industry Development Act of 1998”; 
Section 35 of Republic Act No. 8550 Otherwise known as the 
“Philippine Fisheries Code of 1998; and 


Q. Section 9 of Republic Act No. 8479 otherwise known as the 
“Downstream Oil Deregulation Act of 1998”. 
(10) 
All other laws, acts, decrees, orders and issuances inconsistent with any 
provisions of this Code are hereby repealed or modified accordingly. 
SEC. 41. Effectivity Clause. - This Act and its implementing rules and regulations 
shall take effect fifteen (15) days after its publication in at least two (2) newspapers of 
general circulation. 
Approved, 
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