www.rmbsa.net INCENTIVES TO FOREIGN INVESTMENT The Omnibus Investment Code of 1987 is the gene !" "!# th!

t $ ovides the most %om$ ehensive "isting of in%entives !v!i"!b"e to &u!"ified business ente $ ises' (nde the Omnibus Investment Code the )o! d of Investments *)OI+ $ub"ishes !n !nnu!" Investment , io ities ,"!n *I,,+ #hi%h %ont!ins ! "ist of e%onomi% !%tivities th!t ! e deemed -$ io it. investment ! e!s- !nd ! "ist of "ess deve"o$ed ! e!s th!t ! e $ omoted !s -/e. deve"o$ment ! e!s-' The 1998 I,, h!s fo its theme0 -Sust!ining G"ob!" Com$etitiveness to#! ds !%hieving So%i!" E&uit.0 ! Centenni!" 1eg!%.-' it #!s fo mu"!ted to se ve !s ! % onduit in the %ontinu!tion of the e%onomi% efo m $ og !ms #hi%h ! e % u%i!" in sust!ining the e%onomi% g!ins th!t the %ount . h!s !%hieved so f! ' Fo this .e! 2 the 1998 I,, is2 in $! t2 m!de $! !""e" to the ne#". m!nd!ted Indust i!" 3eve"o$ment ,"!n fo the ,hi"i$$ines *I3,,+ !nd "!.s the g ound#o / th!t ensu es the %onsisten%. of futu e I,,s #ith the ,hi"i$$ine N!tion!" 3eve"o$ment ,"!n fo the 4 1 st Centu . *,"!n 41+' The 1998 I,, "i/e#ise m!int!ins the five m!5o indust . %"!ssifi%!tions th!t ! e en%ou !ged #ith both fis%!" !nd non6fis%!" in%entives !s "!id do#n in the $!st I,,s2 to #it0 !' -E7$o t6O iented Indust ies-2 o ente $ ises th!t h!ve the %!$!bi"it. to e7$o t !t "e!st fift. $e %ent *89:+ out$ut2 in%"uding e7$o t $ odu%e s2 se vi%es fo e7$o t2 e7$o t t !ding2 tou ism2 !g o6e7$o t $ o%essing est!tes !nd !%tivities su$$o ting e7$o te s; b ' -C!t!".ti% Indust ies-2 o those th!t #i"" t igge $ odu%tion of goods #ith high v!"ue !dded su%h !s m!nuf!%tu ing of %om$osite bo! ds2 shi$bui"ding2 shi$ e$!i !nd shi$b e!/ing; %' -Indust ies (nde going Indust i!" <d5ustments- due to the o$ening u$ of the ,hi"i$$ine m! /et unde its ob"ig!tions to the =TO su%h !s enginee ed $ odu%ts2 o g!ni% !nd ino g!ni% %hemi%!"; d' -Su$$o t Indust ies-2 in%"uding inf !st u%tu e !nd se vi%es2 envi onment!" su$$o t f!%i"ities2 ese! %h !nd deve"o$ment $ o5e%ts !nd $ o5e%ts #hi%h the gove nment h!s de%"! ed to be $ io it. $ og !mmes be%!use of thei im$o t!n%e of the so%i!" !nd e%onomi% deve"o$ment of the ,hi"i$$ines; !nd e' -M!nd!to . In%"usions-2 #hi%h ! e in%"usions due to $ ovisions of "!# g !nting e"igibi"it. of $! ti%u"! indust . se%to s to the in%entives unde E'O' 44>' To &u!"if. fo the in%entives2 !n ente $ ise intending to eng!ge in ! $ efe ed ! e! of investment "isted in the %u ent I,, must be egiste ed #ith the )OI' The ente $ ises !$$".ing must eithe be o#ned b. ! %iti?en of the ,hi"i$$ines o be ! 5u idi%!" entit. si7t. $e %ent *>9:+ of #hose %!$it!" is o#ned o %ont o""ed b. %iti?ens of the ,hi"i$$ines' If the !$$"i%!nt is ! %o $o !tion2 si7t. $e %ent *>9:+ of the %!$it!" sto%/ outst!nding !nd

entit"ed to vote must be o#ned b. ,hi"i$$ine n!tion!"s2 !s defined in the "!#2 !nd !t "e!st si7t. $e %ent *>9:+ of the bo! d of di e%to s must be Fi"i$ino %iti?ens' The o#ne shi$ $e %ent!ge is #!ived unde the fo""o#ing %onditions0 !' the ente $ ise $ o$oses to eng!ge in ! $ionee $ o5e%t #hi%h is not !mong the ! e!s ese ved b. the Constitution !nd the "!#s of the ,hi"i$$ines fo ,hi"i$$ine %iti?ens o %o $o !tions #ho"". o#ned !nd %ont o""ed b. su%h %iti?ens; o b' the ente $ ise intends to e7$o t !t "e!st sevent. $e %ent *79:+ of its $ odu%tion; o %' investments ! e m!de in non6$ionee $ efe ed ! e!s #hi%h ! e not n!tion!"i?ed in the Constitution2 "!#s !nd the Neg!tive 1ists < !nd ) of the Fo eign Investments <%t2 b. <SE<N n!tion!"s !nd@o <SE<N 5oint ventu e $ o5e%ts o investments b. mu"ti"!te !" fin!n%i!" institutions' In the fi st t#o inst!n%es the ente $ ise is e&ui ed to !tt!in !t "e!st si7t. $e %ent *>9:+ Fi"i$ino o#ne shi$ #ithin thi t. *A9+ .e! s f om its egist !tion2 un"ess it e7$o ts one hund ed $e %ent *199:+ of its $ odu%tion' The ente $ ise must2 of %ou se2 be eng!ged in !n ! e! "isted in the I,,' If the ! e! of !%tivit. is not so "isted in the I,, the ente $ ise m!. sti"" &u!"if. fo in%entives if it #i"" e7$o t !t "e!st fift. $e %ent *89:+ of its tot!" $ odu%tion2 ende te%hni%!"2 $ ofession!" o othe se vi%es o e7$o t te"evision o motion $i%tu es o musi%!" e%o dings m!de o $ odu%ed in the ,hi"i$$ines' m!in $!ge FISC<1 INCENTIVES In the "ight of e%ent "egis"!tion2 mo e not!b". the en!%tment of the E7$!nded V!"ue <dded T!7 <%t !nd the !mendment to the Omnibus Investments Code b. Re$ub"i% <%t No' 79182 the fis%!" in%entives !v!i"!b"e to egiste ed ente $ ises h!ve been s"ight". !"te ed f om the o igin!" "isting in the Omnibus Investments Code' The $ esent t!7 in%entives th!t m!. be g !nted to egiste ed ente $ ises in%"ude0 1' In%ome T!7 Bo"id!. *ITB+

!+ )OI egiste ed ente $ ises sh!"" be e7em$t f om the $!.ment of in%ome t!7es e%/oned f om the s%hedu"ed st! t of %omme %i!" o$e !tions !s fo""o#s0 i+ ii+ Ne# $ o5e%ts #ith ! $ionee st!tus fo si7 *>+ .e! s; Ne# $ o5e%ts #ith ! non6$ionee st!tus fo fou *C+ .e! s;

iii+ E7$!nsion $ o5e%ts fo th ee *A+ .e! s' <s ! gene !" u"e2 e7em$tion is "imited to in% ement!" s!"es evenue@ vo"ume; iv+ Ne# o e7$!nsion $ o5e%ts in "ess deve"o$ed ! e!s fo si7 *>+ .e! s2 eg! d"ess of st!tus; !nd

v+ Mode ni?!tion $ o5e%ts fo th ee *A+ .e! s' <s ! gene !" u"e2 e7em$tion is "imited to in% ement!" s!"es evenue@ vo"ume' b+ The in%ome t!7 ho"id!. is "imited in the fo""o#ing %!ses0

i+ E7$o t t !de s m!. be entit"ed to the ITB on". on thei in%ome de ived f om the fo""o#ing0 !+ E7$o t of ne# $ odu%ts2 i'e'2 those #hi%h h!ve not been e7$o ted in e7%ess of (SD1992999 in !n. of the t#o *4+ .e! s $ e%eding the fi"ing of !$$"i%!tion fo egist !tion2 o b+ E7$o t to ne# m! /ets2 i'e'2 to ! %ount . #he e the e h!s been no e%o ded im$o t of ! s$e%ifi% e7$o t $ odu%t in !n. of the t#o *4+ .e! s $ e%eding the fi"ing of the !$$"i%!tion fo egist !tion' ii+ Mining <%tivities !+ ITB; b+ ITB; !nd %+ Mining !nd $ o%essing of !gg eg!tes is not entit"ed to ITB' Mining !nd@o &u! .ing #ithout mine !" $ o%essing is not entit"ed to The e7$"o !tion !nd deve"o$ment of mine !" esou %es ! e not entit"ed to

%+ Ne# egiste ed $ionee !nd non6$ionee ente $ ises !nd those "o%!ted in the 1ess 3eve"o$ed < e!s *13<s+ m!. !v!i" themse"ves of ! bonus .e! in e!%h of the fo""o#ing %!ses0 i+ The indigenous !# m!te i!"s used in the m!nuf!%tu e of the egiste ed $ odu%t must !t "e!st be fift. $e %ent *89:+ of the tot!" %ost of !# m!te i!"s fo the $ e%eding .e! s $ io to the e7tension un"ess the )o! d $ es% ibes ! highe $e %ent!ge; o ii+ The !tio of tot!" im$o ted !nd domesti% %!$it!" e&ui$ment to the numbe of #o /e s fo the $ o5e%t does not e7%eed (SD192999 to one *1+ #o /e 2 o iii+ The net fo eign e7%h!nge s!vings o e! nings !mount to !t "e!st (SD8992999

!nnu!"". du ing the fi st th ee *A+ .e! s of o$e !tion' In no %!se sh!"" the egiste ed $ionee fi m !v!i" of this in%entive fo ! $e iod e7%eeding eight *8+ .e! s' 4+ E7em$tion f om t!7es !nd duties on im$o ted s$! e $! ts

< egiste ed ente $ ise #ith ! bonded m!nuf!%tu ing #! ehouse sh!"" be e7em$t f om %ustoms duties !nd n!tion!" inte n!" evenue t!7es on its im$o t!tion of e&ui ed su$$"ies@s$! e $! ts fo %onsigned e&ui$ment o those im$o ted #ith in%entives' A+ E7em$tion f om #h! f!ge dues !nd e7$o t t!72 dut.2 im$ost !nd fees'

<"" ente $ ises egiste ed unde the 1998 I,, #i"" be given ! ten6.e! $e iod f om d!te of egist !tion to !v!i" of the e7em$tion f om #h! f!ge dues !nd !n. e7$o t t!72 im$ost !nd fees on its non6t !dition!" e7$o t $ odu%ts' C+ T!7 e7em$tion on b eeding sto%/s !nd geneti% m!te i!"s #ithin ten *19+ .e! s f om the d!te of egist !tion o %omme %i!" o$e !tion' 8+ T!7 % edit on t!7 !nd dut. $o tion of domesti% b eeding sto%/s !nd geneti% m!te i!"s' < t!7 % edit e&uiv!"ent to one hund ed $e %ent *199:+ of the v!"ue of n!tion!" inte n!" evenue t!7es !nd %ustoms duties on "o%!" b eeding sto%/s #ithin ten *19+ .e! s f om d!te of egist !tion o %omme %i!" o$e !tion fo !g i%u"tu !" $ odu%e s' >+ T!7 % edit on !# m!te i!"s !nd su$$"ies'

< t!7 % edit e&uiv!"ent to the n!tion!" inte n!" evenue t!7es !nd duties on !# m!te i!"s2 su$$"ies !nd semi6m!nuf!%tu ed $ odu%ts used in the m!nuf!%tu e of e7$o t $ odu%ts !nd fo ming $! t the eof sh!"" be g !nted to ! egiste ed ente $ ise' 7+ <ddition!" dedu%tion fo "!bo e7$ense'

Fo the fi st five *8+ .e! s f om egist !tion2 ! egiste ed ente $ ise sh!"" be !""o#ed !n !ddition!" dedu%tion f om t!7!b"e in%ome e&uiv!"ent to fift. $e %ent *89:+ of the #!ges of !ddition!" s/i""ed !nd uns/i""ed #o /e s in the di e%t "!bo fo %e' This in%entive sh!"" be g !nted on". if the ente $ ise meets ! $ es% ibed %!$it!" to "!bo !tio !nd sh!"" not be !v!i"ed simu"t!neous". #ith ITB' This !ddition!" dedu%tion sh!"" be doub"ed if the !%tivit. is "o%!ted !n 13<' 8+ <ddition!" dedu%tion fo ne%ess! . !nd m!5o inf !st u%tu e #o /s'

Registe ed ente $ ises "o%!ting in 13<s o in ! e!s defi%ient in inf !st u%tu e2 $ub"i% uti"ities !nd othe f!%i"ities m!. dedu%t f om t!7!b"e in%ome !n !mount e&uiv!"ent to the e7$enses in%u ed in the deve"o$ment of ne%ess! . !nd m!5o inf !st u%tu e #o /s' This $ ivi"ege2 ho#eve 2 is not g !nted to mining !nd fo est .6 e "!te d $ o5e%ts !s the. #ou"d n!tu !"". be "o%!ted in %e t!in ! e!s to be ne! thei sou %es of !# m!te i!"s' m!in $!ge @ ne7t NON6FISC<1 INCENTIVES !' $ ote%tion f om e7$ o$ i!tion of $ o$e t. e$ esented b. investments2 e7%e$t fo $ub"i% use o in the inte est of n!tion!" #e"f! e !nd defen%e !nd on". u$on $!.ment of 5ust %om$ens!tion2 #hi%h m!. be emitted in the %u en%. in #hi%h the investment #!s o igin!"". m!de !nd !t the e7%h!nge !te $ ev!i"ing !t the time of emitt!n%e; b' $ ote%tion f om e&uisition of $ o$e t. e$ esented b. the investment2 e7%e$t in the event of #! o n!tion!" eme gen%. !nd on". u$on $!.ment of 5ust %om$ens!tion2 #hi%h m!. be emitted in the %u en%. in #hi%h the investment #!s o igin!"". m!de !nd !t the e7%h!nge !te $ ev!i"ing !t the time of emitt!n%e; %' Em$"o.ment of fo eign n!tion!"s in su$e viso .2 te%hni%!" o !dviso . $ositions fo five *8+ .e! s f om d!te of egist !tion2 The $osition of $ esident2 gene !" m!n!ge !nd t e!su e of fo eign6o#ned egiste ed ente $ ises o thei e&uiv!"ent sh!"" ho#eve not be sub5e%t to the fo egoing "imit!tions' d' Sim$"ifi%!tion of %ustoms $ o%edu es fo the im$o t!tion of e&ui$ment2 s$! e $! ts2 !# m!te i!"s2 !nd su$$"ies !nd e7$o ts of $ o%essed $ odu%ts' e' Im$o t!tion of %onsigned e&ui$ment fo ! $e iod of 19 .e! s f om d!te of egist !tion2 sub5e%t to $osting of ! e6e7$o t bond' f' The $ ivi"ege to o$e !te ! bonded m!nuf!%tu ing@t !ding #! ehouse sub5e%t to Customs u"es !nd egu"!tions' m!in $!ge @ b!%/ @ ne7t INCENTIVES FOR REGION<1 BE<3E(<RTERS The gove nment h!s been !%tive". $ omoting the ,hi"i$$ines !s !n ide!" "o%!tion fo mu"tin!tion!" o t !nsn!tion!" %o $o !tions to est!b"ish thei egion!" he!d&u! te s #hi%h ! e entit"ed to the fo""o#ing in%entives0 !' b' e7em$tion f om in%ome t!7; e7em$tion f om v!"ue6!dded t!7;

%' e7em$tion f om !"" /inds of "o%!" "i%enses2 fees2 dues2 im$o ts o !n. othe "o%!" t!7es o bu dens; d' t!7 !nd dut.6f ee im$o t!tion of t !ining m!te i!"s #hi%h ! e not "o%!"". !v!i"!b"e2 sub5e%t to $ io )OI !$$ ov!"; e' im$o t!tion of moto vehi%"es2 sub5e%t to $ io )OI !$$ ov!" !nd the $!.ment of %o es$onding t!7es !nd duties2 $ ovided th!t the. ! e fo the e7%"usive use of the %om$!n.Fs e7$!t i!te e7e%utives !nd do not e7%eed the numbe of the %om$!n.Fs e7$!t i!te e7e%utives; su%h vehi%"es m!. be e$"!%ed eve . th ee .e! s f om thei im$o t!tion; f' mu"ti$"e ent . vis!s fo fo eign e7e%utives of the egion!" he!d&u! te s !nd thei s$ouses !nd unm! ied %hi"d en unde 41 .e! s of !ge !nd e7em$tion f om immig !tion fees2 !"ien %e tifi%!tes of egist !tion !nd immig !tion %"e! !n%e %e tifi%!te e&ui ements; g' in%ome t!7 !t ! edu%ed !te of 18 $e %ent of thei g oss %om$ens!tion fo !"ien em$"o.ees of egion!" he!d&u! te s; h' t!7 !nd dut.6f ee im$o t!tion of $e son!" !nd househo"d effe%ts of !"ien e7e%utives of egion!" he!d&u! te s; !nd e' e7em$tion f om t !ve" t!7 fo $e sonne" of egion!" he!d&u! te s !nd thei de$endents2 $ ovided su%h $e sonne" $e fo m te%hni%!" !nd su$e viso . fun%tions' m!in $!ge @ b!%/ @ ne7t OTBER INCENTIVES V! ious othe "!#s $ ovide fo the g !nt of !ddition!" in%entives to mo e s$e%ifi% !nd s$e%i!"i?ed ! e!s of investment' <mong these ! e the fo""o#ing0 BUILD-OPERATE-TRANSFER LAW , o5e%ts unde t!/en unde the )ui"d6O$e !te6T !nsfe 1!# #hi%h %ost mo e th!n One )i""ion ,esos sh!"" be entit"ed to the in%entives unde the Omnibus Investments Code eg! d"ess of its in%"usion o non6in%"usion in the .e! ". Investment , io ities ,"!n' In !ddition2 these $ o5e%ts m!. be g !nted gove nment su$$o t o %ont ibutions2 eithe in the fo m of $! ti!" fin!n%ing f om di e%t gove nment !$$ o$ i!tions !nd@o f om Offi%i!" 3eve"o$ment <ssist!n%e funds u$ to fift. $e %ent *89:+ of the $ o5e%t %ost2 %ost sh! ing #ith the !gen%. o "o%!" gove nment unit invo"ved in the $ o5e%t2 o % edit enh!n%ements' EXPORT DEVELOPMENT ACT OF 1994 Ente $ ises #hi%h e! n !t "e!st fift. $e %ent *89:+ of thei no m!" o$e !ting evenues

f om the s!"e of $ odu%ts o se vi%es outside the ,hi"i$$ines fo fo eign %u en%. sh!"" be entit"ed to in%entives !side f om those g !nted unde the Omnibus Investments Code !nd those g !nted to ente $ ises in the e%o?ones o in the Subi% F ee6,o t2 !s fo""o#s0 !' e7em$tion f om the e&ui ement of !dv!n%e $!.ment of %ustoms duties u$on the o$ening of ! "ette of % edit; b' t!7 % edits fo im$o t!tion of in$uts !nd !# m!te i!"s fo the $ odu%tion !nd $!%/!ging of e7$o ted goods unti" A1 3e%embe 1999; %' t!7 % edits fo in% e!ses in %u ent .e! Fs e7$o t evenues2 sub5e%t to !$$"i%!b"e u"es !nd guide"ines; !nd d' su$$o t in e7$o t fin!n%ing2 gu! !ntee !nd insu !n%e f om the E7$o t Fin!n%ing Institution@E7$o t Fin!n%ing , og !mme' FOREIGN INVESTOR'S LEASE ACT <n. fo eign investo is !""o#ed to "e!se $ iv!te "!nds fo ! $e iod of fift. *89+ .e! s2 ene#!b"e fo t#ent.6five *48+ .e! s2 !s "ong !s the "e!sed "!nd is used so"e". fo the $u $oses of o in %onne%tion #ith the investment2 su%h !s the est!b"ishment of indust i!" est!tes2 f!%to ies2 !ssemb". o $ o%essing $"!nts2 !nd othe s' PHILIPPINE OVERSEAS SHIPPING DEVELOPMENT ACT Fo eign investment in ! ,hi"i$$ine shi$$ing ente $ ise is !""o#ed u$ to C9 $e %ent of the %!$it!" of su%h ente $ ise' < ,hi"i$$ine shi$$ing ente $ ise is e7em$t f om the $!.ment of in%ome t!7 on its in%ome f om ,hi"i$$ine ove se!s shi$$ing unti" the .e! 49942 sub5e%t to the %onditions "!id out in the "!#' It is !"so e7em$t f om im$o t duties !nd t!7es on the im$o t!tion of o%e!n going vesse"s to be egiste ed unde the ,hi"i$$ine f"!g'

m!in $!ge @ b!%/ S,ECI<1 ECONOMIC GONES In 19982 the R!mos !dminist !tion en!%ted the S$e%i!" E%onomi% Gone <%t2 #hi%h est!b"ished s$e%i!" e%onomi% ?ones2 o -e%o?ones-2 th!t no# tot!" A9 %ities !nd to#ns in v! ious $ ovin%es !nd egions th oughout the ,hi"i$$ines' These e%o?ones ! e in !ddition to the e7isting e7$o t $ o%essing ?ones "o%!ted in )!guio2 Cebu2 )!t!!n !nd C!vite !nd ! e %onside ed !s se$! !te %ustoms te ito ies f om the est of the ,hi"i$$ines' Ente $ ises egiste ed #ith the ,hi"i$$ine E%onomi% Gone <utho it. *,EG<+ !nd est!b"ished in these e%o?ones ! e g !nted in%entives in !ddition to those g !nted unde the Omnibus Investments Code o those g !nted b. , esidenti!" 3e% ee No' >> th!t % e!ted the E7$o t

, o%essing Gones2 #hi%heve set of in%entives the e%o?one ente $ ise o$ts to m!/e use of' These !ddition!" in%entives ! e !s fo""o#s0 !' e7em$tion f om n!tion!" inte n!" evenue t!7es !nd f om "o%!" t!7es2 "i%enses2 im$o ts o fees; b' "o#e fin!" t!7 of 8 $e %ent on g oss in%ome in "ieu of othe n!tion!" !nd "o%!" t!7es2 e7%e$t e!" est!te t!7es; %' !ddition!" dedu%tion f om the five *8+ $e %ent fin!" t!7 on g oss in%ome e&uiv!"ent to h!"f of the v!"ue of t !ining e7$enses; d' dut.6 !nd t!76f ee im$o t!tion into the e%o?one of %!$it!" e&ui$ment !nd s$! e $! ts of su%h e&ui$ment2 %onst u%tion m!te i!"s fo its f!%to .2 #! ehouse !nd othe su%h st u%tu es2 s$e%i!"i?ed offi%e e&ui$ment !nd s$e%i!"i?ed vehi%"es !nd othe t !ns$o t e&ui$ment2 sub5e%t to %onditions im$osed b. the ,EG<; e' t!7 !nd dut.6f ee im$o t!tion of $ ofession!" inst uments !nd too"s of t !de !nd of $e son!" !nd househo"d effe%ts of fo eign n!tion!"s %onne%ted #ith the egiste ed ente $ ise in the e%o?one; f' t!7 % edits fo im$o t substitution of !# m!te i!"s2 %!$it!" e&ui$ment !nd@o s$! e $! ts; g' net o$e !ting "oss %! .ove fo "osses in%u ed du ing the fi st five .e! s of o$e !tion inside the e%o?one; h' !%%e"e !ted de$ e%i!tion of fi7ed !ssets; i' $e m!nent esident st!tus fo the investo 2 his@he s$ouse !nd de$endent %hi"d en be"o# 41 .e! s of !ge2 #he e the investo Fs initi!" $e son!" investment is not "ess th!n (SD1892999'99; 5' emitt!n%e of !fte 6t!7 $ ofits !nd othe e! nings in !n.fo eign %u en%. of fo eign investment #ithout need of $ io !$$ ov!" b. the )!ng/o Sent !" ng ,i"i$in!s *)S,+2 if su%h investment h!s been $ evious". egiste ed #ith the )S,' m!in $!ge S()IC <N3 C1<RH Ente $ ises est!b"ishing thei o$e !tions in the Subi% S$e%i!" E%onomi% !nd F ee$o t Gone !nd the C"! / S$e%i!" E%onomi% Gone ! e entit"ed to in%entives outside the Omnibus Investments Code' Regist !tion of ente $ ises #ith the Subi% F ee$o t Gone e7%"udes them f om &u!"if.ing fo in%entives unde the Omnibus Investments <%t' )ut2 the in%entives !v!i"!b"e to ente $ ises #ithin this Gone ! e simi"! to those unde the

Omnibus Investments Code' Bo#eve 2 ente $ ises in the C"! / S$e%i!" E%onomi% Gone ! e entit"ed to the in%entives unde the Omnibus Investments <%t2 those g !nted to the E7$o t , o%essing Gone2 !nd those g !nted to ente $ ises in the Subi% F ee$o t Gone' The in%entives fo ente $ ises "o%!ted in the Subi% F ee$o t Gone !nd #hi%h m!. !"so be !v!i"ed of b. those in the C"! / S$e%i!" E%onomi% Gone ! e the fo""o#ing0 !' f ee". eng!ging in !n. business2 t !de2 m!nuf!%tu ing2 fin!n%i!" o se vi%e !%tivit. !nd im$o ting !nd e7$o ting f ee". !"" t.$es of goods2 sub5e%t to egu"!tions of the Subi% )!. Met o$o"it!n <utho it. o the C"! / 3eve"o$ment Co $o !tion; b' e7em$tion f om n!tion!" inte n!" t!7es !nd "o%!" t!7es2 in%"uding in%ome t!7 on !"" in%ome f om sou %es #ithin ! e!s %onside ed !s se$! !te %ustoms te ito . f om the ,hi"i$$ine %ustoms te ito .; %' m!7imum of five *8+ $e %ent fin!" t!7 on g oss in%ome in "ieu of !"" n!tion!" !nd "o%!" t!7es; d' in%ome t!7 % edits fo !"" t!7es $!id b. fo eign %o $o !tions;

e' !""o#!b"e in%ome f om sou %es #ithin the ,hi"i$$ine %ustoms te ito . of ! m!7imum of A9 $e %ent of tot!" in%ome; f' e7em$tion f om f !n%hise2 %ommon %! ie o v!"ue6!dded t!7es !nd othe $e %ent!ge t!7es on $ub"i% !nd se vi%e uti"ities o$e !ting #ithin the Gone; g' $ efe enti!" in%ome t!7 t e!tment on in%ome e! ned@de ived f om business o$e !tions #ithin the se%u ed ! e! of the Gone o f om fo eign sou %es; h' ?e o6 !ted v!"ue6!dded t!7 on $u %h!ses of !# m!te i!"s2 %!$it!" goods o e&ui$ment !nd se vi%es f om entities #ithin the ,hi"i$$ine %ustoms te ito .; i' e7em$tion f om %ustoms !nd im$o t duties !nd n!tion!" inte n!" evenue t!7es on im$o t!tions of !# m!te i!"s !nd %!$it!" goods !nd e&ui$ment; 5' em$"o.ment of fo eign n!tion!"s2 sub5e%t to the %e tifi%!tion e&ui ements of the 3e$! tment of 1!bo !nd Em$"o.ment; /' $e m!nent esiden%. vis!s fo fo eign investo s investing !t "e!st (SD4892999'99 in the Gones; 1' tem$o ! . esiden%. vis!s fo fo eign em$"o.ees2 thei s$ouses !nd de$endent %hi"d en unde 41 .e! s of !ge; m' ! f ee m! /et fo fo eign e7%h!nge2 go"d2 se%u ities !nd futu es th!t #i"" !""o# f eedom to eng!ge in business t !ns!%tions invo"ving !n. fo eign %u en%.; !nd

n' !v!i"!bi"it. of !n Ins$e%tion !nd 3is$utes Offi%e fo the !mi%!b"e sett"ement of "!bo dis$utes' *Sou %e0 The Regu"!to . Envi onment b. Romu"o2 M!b!nt!2 )uen!ventu !2 S!.o% I de "os <nge"es $ub"ished in the -,hi"i$$ines2 The Ne7t <si!n Tige - b. Jose G!"!

htt$0@@###'gt!"!#$hi"'%om@3oingK)usiness'htm
Incentives to Foreign Investors

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Board of Investments (BOI) Incentives Omnibus Investment Code of 1987 (EO 226) a amended is the a! that grants incentives to foreign investors" #he incentives avai ab e to $OI registered com%anies or enter%rise are as fo o!s& Fiscal Incentives ' Income ta( ho ida)" From the start of commercia o%erations* ne! ) registered %ioneer %ro+ects are e(em%t from income ta(es for si( )ears* non,%ioneer firms for four )ears* and e(%ansion %ro+ects for three )ears (for incrementa sa es revenue-vo ume)" .e! registered %ioneer and non,%ioneer enter%rises ma) avai of a bonus )ear in each of the fo o!ing cases if& ' Indigenous ra! materia s used are at east /01 of the tota cost of ra! materia s for the %receding )ears ' #he ratio of tota im%orted and domestic ca%ita e2ui%ment to number of !or3ers does not e(ceed 45610*000 to one !or3er* or ' #he net foreign e(change savings or earnings amount to at east 456/00*000 annua ) during the first three )ears of o%eration ' 7dditiona deduction of abor e(%enses from ta(ab e income ' #a( credit for ta(es and duties on ra! materia s used in the manufacture* %rocessing* or %roduction of e(%ort %roducts ' 7dditiona deduction of necessar) and ma+or infrastructure e(%enses from ta(ab e income ' 7ccess to bonded manufacturing and !arehouse s)stem ' E(em%tion from ta(es and duties on im%orted su%% ies and s%are %arts for consigned e2ui%ment ' E(em%tion from !harfage dues and an) e(%ort ta(* dut) fee* and im%ost Non-fiscal Incentives ' 5im% ification of customs %rocedures" Customs %rocedures are sim% ified for the im%ortation of e2ui%ment* s%are %arts* ra! materia s* and su%% ies and the e(%ort of %roducts of $OI,registered firms" ' 4nrestricted use of consigned e2ui%ment" $OI,registered enter%rises8 use of consigned e2ui%ment is unrestricted %rovided a re,e(%ort bond is %osted" ' Em% o)ment of foreign nationa s" Foreign nationa s ma) be em% o)ed in su%ervisor)* technica * or advisor) %ositions !ithin five )ears from a registered %ro+ect9s registration* e(tendib e for imited %eriods to be determined b) the $OI" #he %ositions of %resident* genera manager* and

treasurer* or their e2uiva ents* of foreign,o!ned registered firms ma) be retained b) foreign nationa s for a onger %eriod" Qualifications for BOI-Registered Enterprises 1" If a natura %erson* he or she must be a :hi i%%ine citi;en" 2" If a %artnershi% or an) other association* it must be organi;ed under :hi i%%ine a!s and at east 601 of its ca%ita is o!ned and contro ed b) :hi i%%ine citi;ens" <" If a cor%oration* it must be organi;ed under :hi i%%ine a!s and at east 601 of the ca%ita stoc3 outstanding and entit ed to vote is o!ned and he d b) :hi i%%ine nationa s* and at east 601 of the members of the $oard of =irectors are :hi i%%ine citi;ens" If the cor%oration does not %ossess the re2uired degree of o!nershi% b) :hi i%%ine nationa s* the fo o!ing circumstances must be satisfactori ) estab ished& , It %ro%oses to engage in a %ioneer %ro+ect !hich cannot be readi ) and ade2uate ) fi ed b) :hi i%%ine nationa s* or the a%% icant !i e(%ort at east 701 of its tota %roduction" , It ob igates itse f to attain the status of a :hi i%%ine nationa !ithin <0 )ears from date of registration* but a registered enter%rise !hich e(%orts 1001 of its tota %roduction need not com% ) !ith this re2uirement" , #he %ioneer area that it !i engage in is not !ithin the activities reserved b) the Constitution to :hi i%%ine citi;ens or cor%orations o!ned and contro ed b) citi;ens" , #he business activit) that the a%% icant !i engage in is isted under the Investment :riorities : an (I::) of the :hi i%%ines" Incentives for Philippine Economic one !uthorit" (PE !) and Information #echnolog" (I#) Par$s %ocators #he governing a! is >e%ub ic 7ct 7916 other!ise 3no!n as the 5%ecia Eco;one 7ct of 199/" 4%on registration !ith :E?7* the incentives avai ab e to investors are a combination of those granted b) $OI and $C=7& && #a(, and dut),free im%ortation of ca%ita e2ui%ment* ra! materia s* s%are %arts* su%% ies* breeding stoc3s* and genetic materia s && Income ta( ho ida) of four )ears for non,%ioneer or si( )ears for %ioneer %ro+ects && 7 s%ecia ta( rate of /1 of gross income in ieu of a nationa and oca ta(es after the income ta( ho ida) && #a( credit for im%ort substitution && E(em%tion from !harfage dues* e(%ort ta(* and im%ort fees && #a( credit on domestic ca%ita e2ui%ment* breeding stoc3s* and genetic materia s && 7dditiona deduction for incrementa abor e(%enses and training e(%enses && 4nrestricted use of consigned e2ui%ment && :ermanent resident status for foreign investors and immediate fami ) && Em% o)ment of foreign nationa s && >emittance of earnings !ithout %rior a%%rova from the $5: Enterprises Qualified to %ocate in the Eco&one '' E(port Enterprise , manufactures* assemb es* or %rocesses %roducts !hich are 1001 e(%orted* un ess a o!er %ercentage is a%%roved b) :E?7" '' Free #rade one Enterprise , im%orts and mar3ets ta(, and dut),free goods !ithin the free trade area in the Eco;one" @oods brought outside the free trade area !i be sub+ect to customs and tariff duties" '' )ervice Enterprise , is engaged in an) one or a combination of the fo o!ing activities& customs bro3erage* truc3ing-for!arding* +anitoria * securit)* insurance and-or ban3ing* consu ting* or an) such service a%%roved b) :E?7" '' *omestic +ar$et Enterprise , manufacturer* assemb er* or %rocessor

of goods that cannot e(%ort at east /01 of their tota out%ut for a %eriod of three )ears if ma+orit),o!ned b) Fi i%inos and at east 701 if ma+orit),o!ned b) foreign nationa s" '' Pioneer Enterprise , fa s under an) of the fo o!ing conditions& , Aanufactures* %rocesses* or %roduces goods not %roduced in a commercia sca e in the countr) , 4ses a design* formu a* scheme* method* or %rocess !hich is ne! and untried in the :hi i%%ines , :roduces non,conventiona fue s or manufactures e2ui%ment that uti i;es non,conventiona sources of energ) , =eve o%s areas for agri,e(%ort %rocessing deve o%ment* or , @iven such a status under the annua I:: a%%roved b) the :resident '' ,tilities Enterprise , contracted to %rovide ight and %o!er* !ater su%% ) and distribution* communications* and trans%ortation s)stems in the Eco;one" '' Facilities Enterprise , contracted to bui d and maintain necessar) infrastructure such as !arehouses* bui dings* road net!or3s* %orts* se!erage and drainage s)stems* and other faci ities considered as necessar) b) :E?7 in the deve o%ment and o%erations of the Eco;one" '' #ourism Enterprise , o%erates tourist accommodation faci ities* restaurants* s%orts and recreationa faci ities in the Eco;one" '' Eco&one *eveloper-Operator , deve o%s* o%erates* and maintains the Eco;one* a com%onent sectors (i"e"* IEs* E:?s* Free #rade ?ones* and #ourist->ecreationa Centers) and a re ated infrastructure (roads* ight and %o!er s)stems* drainage faci ities* etc")" '' I.# and I#-ena/led enterprise - Information and Communications #echno og) enter%rise such as $usiness :rocess Outsourcing* Ca Centers* 5oft!are Aanufacturing and =eve o%ment" '' Business enterprise under the IPP - $usiness Enter%rise or activit) isted under the Investment :riorities : an (I::)" Incentives to Foreign Investors

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Incentives to %ocators at )u/ic Ba" +etropolitan !uthorit" ()B+!) and .lar$ *evelopment .orporation (.*.) #!o of the more attractive investment sites in 5outheast 7sia toda) are the 5ubic $a) Free%ort and 5%ecia Economic ?one (5$F) and the C ar3 5%ecia Economic ?one (C5E?)" #hese sites are former 45 mi itar) faci ities converted into civi ian use" #he vision for the 67*000,hectare 5$F is to create a se f,sustaining industria * commercia * financia * and investment center in addition to its internationa sea%ort* !hich can anchor 600 shi%s" #he C5E?* !hich s%ans some <<*6/< hectares* is being converted into a s%ecia economic ;one and its 1*620,hectare civi aviation com% e( into a !or d,c ass internationa air%ort" >egistered enter%rises in both 5$F and C5E? en+o) various investment incentives inc uding access to first,c ass commercia * residentia * and tourist faci ities"#he 5$A7 and C=C grant incentives to registered enter%rises ocated at the sites" 7 registered 5$F enter%rise is a business enter%rise organi;ed and e(isting under :hi i%%ine or foreign a!s* registered !ith the 5$A7* and ocated !ithin the 5$F" 7 C5E? enter%rise is a du ) constituted business organi;ation !hich is organi;ed or domici ed in the :hi i%%ines or an) foreign countr) that is registered !ith C=C and $oth the 5$A7 and C=C grant essentia ) the same set of incentives to registered 5$F and C5E? enter%rises" #hese incentives inc ude& Fiscal Incentives && #a(, and dut),free im%ortation of machineries* e2ui%ment* ra! materia s* su%% ies* and a other artic es inc uding finished goods"

&& .o oca and nationa ta(es" In ieu thereof* 5$F and C5E? enter%rises %a) a ta( of /1 of @ross Income Earned* !hich refers to gross sa es or revenue derived from an) business activit) !ithin the ;ones* ess cost of %roduction or direct cost of services as !e as other costs s%ecifica ) determined in regu ations to be materia in the o%erations of the business" Non-Fiscal Incentives && :ermanent residenc) status for investors* their s%ouses* de%endent chi dren under 21 )ears of age %rovided that the) have continuing investments of not ess that 4562/0*000"00" && Em% o)ment of foreign nationa s"

http://www.wowphilippines.com.ph/dot/how_to_invest.asp How to Invest In The Philippines

(by Joaquin Cunanan & Co.)

1. What requirements must be complied with before a forei n corporation can en a e in business in the Philippines! Before a foreign corporation can engage in business in the Philippines, it must first secure the necessary licenses or registration certificates from the appropriate government agencies. enerally, the registration process starts with the !ecurities an" #$change Commission (!#C). %f the propose" pro&ect or activity qualifies for incentives, the foreign investor may file its application with the appropriate government agency "epen"ing on the pro&ect's location, as follows( ) Boar" of %nvestments (B*%) + for pro&ects outsi"e any of the special economic ,ones (!#-) ) Philippine #conomic -one .uthority (P#-.) + for pro&ects to be locate" in any of the !#-'s un"er the P#-. ) !ubic Bay /etropolitan .uthority + for pro&ects to be locate" in the !ubic Bay 0reeport ) Clar1 2evelopment Corporation + for pro&ects to be locate" in the Clar1 !pecial #conomic -one ) Cagayan #conomic -one .uthority + for pro&ects to be locate" in the Cagayan !pecial #conomic -one ) -amboanga #conomic -one .uthority + for pro&ects to be locate" in the -amboanga City !pecial #conomic -one ". Is a forei n investor allowed to own 1##$ of a business entit%! 3ith the liberali,ation of the foreign investments law, 4556 foreign equity may be allowe" in all areas of investment e$cept financial institutions an" those inclu"e" in the 0oreign %nvestment 7egative 8ist (0%78). #$ecutive *r"er (#*) 7o. 44 has been issue" approving the 9hir" 0%78 which ta1es effect on *ctober :;, 4<<=. 9his list inclu"es( &ist ' + areas reserve" to 0ilipinos by man"ate of the Constitution an" special laws such as but not limite" to( a. /ass me"ia e$cept recor"ing, practice of license" profession, retail tra"e, cooperative, small scale mining, etc., where foreign ownership is prohibite". b. ."vertising, ownership of lan", operation an" management of public utilities, etc., where only minority foreign ownership is allowe". &ist ( + areas that are "efense relate", those with a"verse effects on public health an" morals an" "omestic mar1et enterprise with pai">in capital of less than ?!@:555,555, unless they involve a"vance"

technology or "irectly employ at least A5 employees, in which case, the pai">up capital can be ?!@455,555 only. ). What is the eneral polic% of the overnment on forei n investments! Is this polic% li*el% to chan e in the near future! 9he government encourages foreign investments which will provi"e significant employment opportunities relative to the amount of capital being investe"B an" provi"e a foun"ation for the future "evelopment of the economy. %nvestment>relate" rules have been liberali,e" to facilitate entry of foreign investments. 9his thrust is e$pecte" to continue. +. What are the ma,or incentives available to a re istered enterprise! .n enterprise registere" with the Boar" of %nvestments pursuant to the 4<=C *mnibus %nvestments Co"e (#* ::D) is entitle" to the followe" incentives, among others, sub&ect to certain terms an" con"itions( a. %ncome ta$ liability holi"ay (%9E) for si$ years for pioneer firms an" generally four years for non>pioneer firms. %f a non>pioneer firm is locate" in a less "evelope" area, it shall generally be entitle" to D years %9E. 0irms locating within /etro /anila shall not be grante" %9E unless they are( i. 3ithin a government in"ustrial estate ii. !ervice>type pro&ects with no manufacturing facilities iii. Power generating plants iv. #$porters with e$pansion pro&ects b. 9a$ cre"it on raw materials, supplies, an" semi>manufacture" pro"ucts c. .""itional "e"uction from ta$able income for labor e$pense (cannot be simultaneously en&oye" with the %9E incentive) ". .""itional "e"uction from ta$able income for necessary an" ma&or infrastructure wor1s (cannot be simultaneously en&oye" with the %9E incentive) Certain non>fiscal incentives are also available to registere" enterprises, among which are( employment of foreign nations, guarantee" repatriation of foreign investments an" earnings thereon, an" importation of consigne" equipment for an unlimite" perio" sub&ect to posting of a re>e$port bon". 9he !pecial #conomic -one .ct of 4<<A man"ates the P#-. to operate, a"minister, manage an" "evelop !pecial #conomic -ones or #co,ones. Business enterprises operating within #co,ones shall be entitle" to the incentives grante" to registere" enterprises un"er Presi"ential 2ecree 7o. DD or Boo1 F% of #* ::D. %n a""ition to the incentives mentione" above for B*%>registere" enterprises, P#-.>registere" e$porters en&oy ta$ an" "uty e$emptions on importations of capital equipment, raw materials an" other merchan"ise "irectly nee"e" in its registere" operations. 0urthermore, e$porters using local materials as inputs shall en&oy the same benefits provi"e" for in the #$port 2evelopment .ct of 4<<;. /oreover, in lieu of paying all local an" national ta$es, business enterprises within the #co,one, whose P2 DD or #* :DD incentives have lapse", shall remit to the national government a preferential rate of A6 of their gross income as final ta$. 9wo other special economic ,ones were create" un"er two separate special laws. 9hese are the Cagayan !pecial #conomic -one an" the -amboanga City !pecial #conomic -one. 9he incentives grante" to those that will locate in these eco,ones are similar to the incentives grante" to P#-. eco,one enterprises. #nterprises allowe" to operate within the !ubic Bay 0reeport (!B0) shall, in lieu of paying all other ta$es, pay a final ta$ of A6 of gross income provi"e" their income from local (non>e$port) sales shall not e$cee" G56 of their income from all sources.

#nterprises locating within the Clar1 !pecial #conomic -one (former .merican .irbase at Clar1 0iel") an" Poro Point !pecial #conomic an" 0reeport -one (former 3allace .ir !tation an" its a"&oining areas) are grante" incentives similar to those given to !B0 enterprises. -. 're investment incentives transferable! %n general, investment incentives are not transferable. 9a$ cre"it certificates may, however, be transferre" sub&ect to certain con"itions. %n the case of ta$ cre"it certificates issue" pursuant to the #$port 2evelopment .ct of 4<<;, sai" "ocuments are consi"ere" negotiable instruments an" may be transferre" to any person, natural or &uri"ical, e$cept to local government units. .oint /entures 1. If we enter into a ,oint venture with Philippine investors0 will the 123 allow us to -1$ or more of its equit%! 9he !#C will allow foreign equity in e$cess of A56 provi"e" the area of activity involve" is not covere" by the thir" regular foreign investments negative list un"er #* 7o. 44. ". If we are restricted to a +#$ equit% holdin 0 how can we assure ourselves of control of the operations! %n general, control of an enterprise goes to the group which has the power to "etermine its policies an" the manner in which the enterprise is to be run, an" such assurance of control is obtaine" through ma&ority ownership of the voting capital stoc1 of the corporation. 9here are, however, certain arrangements that coul" provi"e a minority group with wor1ing control. 9hese arrangements inclu"e( (a) "iffusion of ma&ority ownership, (b) licensing agreements, an" (c) voting trust arrangements among stoc1hol"ers. %t is also a"visable that the !#C be consulte" in any arrangement involving voting rights to ascertain that no con"ition of the permit to invest in the enterprise will be violate". ). 're there an% requirements that directors and other officers must be 4ilipino citi5ens and/or residents! 9he ma&ority of the "irectors must be resi"ents of the Philippines an" the secretary must be a resi"ent 0ilipino citi,en. Eowever, for ban1s an" ban1ing institutions an" "omestic air carriers, at least two>thir"s of the members of the boar" must be citi,ens of the Philippines. 0or a firm engage" in a nationali,e" or partially nationali,e" activity, the ma$imum number of foreign "irectors must not e$cee" the proportion of actual foreign equity in the firm, an" all of its e$ecutive an" managing officers must be 0ilipino citi,ens. +. How are ,oint ventures ta6ed! .n unincorporate" &oint venture is ta$e" li1e a corporation. 9he share of the &oint venture partners will no longer be ta$able to them because they parta1e of "ivi"en"s if pai" to a "omestic or resi"ent corporation. Eowever, an unincorporate" &oint venture forme" for the purpose of un"erta1ing a construction pro&ect or engaging in petroleum operations is not sub&ect to the corporate income ta$. *nly the &oint venture partners will be ta$e" on their respective shares.

htt$0@@###'dti'gov'$h@%ontentment@9@>9@>8@49>'5s$ P27' Incentives

For Eco;one =eve o%ers and O%erators For Eco;one and Information #echno og) (I#) Bocators

For Eco&one *evelopers - Operators

Income ta( ho ida) Incentives under the $ui d,O%erate,#ransfer Ba! ($O# Ba!) inc uding government su%%ort for accessing Officia =eve o%ment 7ssistance and other sources of financing :rovision of vita off,site infrastructure faci itiesC O%tion to %a) a s%ecia /1 gross income ta(* in ieu of a nationa and oca ta(es :ermanent resident status for foreign investors and immediate fami ) members Em% o)ment of foreign nationa s 7ssistance in the %romotion of economic ;ones to oca and foreign ocator enter%rises

$ac3 to #o%

For Eco&one and Information #echnolog" (I#) %ocators

Income ta( ho ida) (I#D) or e(em%tion from cor%orate income ta( for four )ears* e(tendab e to a ma(imum of eight )earsC after the I#D %eriod* there is an o%tion to %a) a s%ecia /1 ta( on gross income* in ieu of a nationa and oca ta(es E(em%tion from duties and ta(es on im%orted ca%ita e2ui%ment* s%are %arts* su%% ies* ra! materia s" 7 so breeding stoc3s and-or genetic materia s or the e2uiva ent ta( credit on these items* !hen sourced oca ) =omestic sa es a o!ance e2uiva ent to <01 of tota sa es E(em%tion from !harfage dues and e(%ort ta(es* im%osts and fees :ermanent resident status for foreign investors and immediate fami ) members Em% o)ment of foreign nationa s 5im% ified im%ort and e(%ort %rocedures Other incentives under E(ecutive Order 226 (Omnibus Investment Code of 1987)* as ma) be determined b) the :E?7 $oard

Investment Incentives $OI Incentives $ac3 to #o%

(8I Incentives

Fisca Incentives .on,Fisca Incentives Incentives for >egiona Dead2uarters and >egiona O%erating Dead2uarters

Fiscal Incentives Fisca incentives inc ude the fo o!ing& 7" Income #a( Do ida) $" E(em%tion from #a(es and =uties On Im%orted 5%are :arts C" E(em%tion from Eharfage =ues and E(%ort #a(* =ut)* Im%ost and Fees =" #a( E(em%tion on $reeding5toc3s and @enetic Aateria s #. #a( Credits

0.

7dditiona =eductions from #a(ab e Income

7" Income #a( 0olida" (I#0) 1" $OI,registered enter%rise sha be e(em%t from the %a)ment of income ta(es rec3oned from the schedu ed start of commercia o%erations* as fo o!s& a" .e! %ro+ects !ith a %ioneer status for si( (6) )earsC b" .e! %ro+ects !ith a non,%ioneer status for four (F) )earsC c" E(%ansion %ro+ects for three (<) )ears" 7s a genera ru e* e(em%tion is imited to incrementa sa es revenue-vo umeC d" .e! or e(%ansion %ro+ects in ess deve o%ed areas (B=7s) for si( (6) )ears* regard ess of statusC e" Aoderni;ation %ro+ects for three (<) )ears" 7s a genera ru e* e(em%tion is imited to incrementa sa es revenue-vo ume" 2" #he I#D is imited in the fo o!ing cases& a" E(%ort traders ma) be entit ed to the I#D on ) on income derived from the fo o!ing& o E(%ort of ne! %roducts* i"e" those !hich have not been e(%orted in e(cess of 456100*000 in an) of the t!o (2) )ears %receding the fi ing of a%% ication for registration* or o E(%ort to ne! mar3ets* i"e"* to a countr) !here there has been no recorded im%ort of a s%ecific e(%ort %roduct in an) of the t!o (2) )ears %receding the fi ing of the a%% ication for registration" b" Aining 7ctivities o #he e(% oration and deve o%ment of minera resources are not entit ed to an I#DC o Aining and-or 2uarr)ing !ithout minera

<"

%rocessing is not entit ed to an I#DC Aining and %rocessing of aggregates is not entit ed to I#D" .e! registered %ioneer and non,%ioneer enter%rises and those ocated in B=7s ma) avai themse ves of a bonus )ear in each of the fo o!ing cases& a" #he indigenous ra! materia s used in the manufacture of the registered %roduct must at east be fift) %ercent (/01) of the tota cost of ra! materia s for the %receding )ears %rior to the e(tension un ess the $oard %rescribes a higher %ercentageC or b" #he ratio of tota im%orted and domestic ca%ita e2ui%ment to the number of !or3ers for the %ro+ect does not e(ceed 4561*000 to one (1) !or3erC or c" #he net foreign e(change savings or earnings amount to at east 456/00*000 annua ) during the first three (<) )ears of o%eration" In no case sha the registered %ioneer firm avai of the I#D for a %eriod e(ceeding eight (8) )ears"

$ac3 to Fisca Incentives

$" E(emption from #a(es and *uties on Imported )pare Parts 7 registered enter%rise !ith a bonded manufacturing !arehouse sha be e(em%t from customs duties and nationa interna revenue ta(es on its im%ortation of re2uired su%% ies-s%are %arts for consigned e2ui%ment or those im%orted !ith incentives"
$ac3 to Fisca Incentives

C" E(emption from 1harfage *ues and E(port #a(2 *ut"2 Impost and Fees 7 enter%rises registered under the I:: !i be given a ten (10) )ear %eriod from the date of registration to avai of the e(em%tion from !harfage dues and an) e(%ort ta(* im%ost and fees on its non,traditiona e(%ort %roducts"

$ac3 to Fisca Incentives

=" #a( E(emption on Breeding )toc$s and 3enetic +aterials 7gricu tura %roducers !i be e(em%ted from the %a)ment of a ta(es and duties on their im%ortation of breeding stoc3s and genetic materia s !ithin ten (10) )ears from the date of registration or commercia o%eration"

$ac3 to Fisca Incentives

E"

#a( .redits 1" #a( credit on ta( and dut) %ortion of domestic breeding stoc3s and genetic materia s" 7 ta( credit e2uiva ent to one hundred %ercent (1001) of the va ue of nationa interna revenue ta(es and customs duties on oca breeding stoc3s !ithin ten (10) )ears from date of registration or commercia o%eration for agricu tura %roducers" 2" #a( credit on ra! materia s and su%% ies" 7 ta( credit e2uiva ent to the nationa interna revenue ta(es and duties %aid on ra! materia s* su%% ies and semi, manufacture of e(%ort %roducts and forming %art thereof sha be granted to a registered enter%rise"
$ac3 to Fisca Incentives

F"

!dditional *eductions from #a(a/le Income 1" 7dditiona deduction for abor e(%ense (7=BE)" For the first five (/) )ears from registration* a registered enter%rise sha be a o!ed an additiona deduction from ta(ab e income e2uiva ent to fift) %ercent (/01) of the !ages of additiona s3i ed and uns3i ed !or3ers in the direct abor force" #he incentive sha be granted on ) if the enter%rise meets a %rescribed ca%ita to abor ratio and sha not be avai ed of simu taneous ) !ith I#D" #his additiona deduction sha be doub ed if the activit) is ocated in a Bess =eve o%ed 7reas (B=7)" 2" 7dditiona deduction for necessar) and ma+or infrastructure !or3s" >egistered enter%rises ocating in B=7s or in areas deficient in infrastructure* %ub ic uti ities and other faci ities ma) deduct from ta(ab e income an amount e2uiva ent to the e(%enses incurred in the deve o%ment of necessar) and ma+or infrastructure !or3s" #he %rivi ege* ho!ever* is not granted to mining and forestr),re ated %ro+ects as the) !ou d natura ) be ocated in certain areas to be near their sources of ra! materia s"

$ac3 to Fisca Incentives

Non-Fiscal Incentives .on,fisca incentives are as fo o!s& 7" Em% o)ment of Foreign .ationa s 7 registered enter%rise ma) be a o!ed to em% o) foreign nationa s in su%ervisor)* technica or advisor) %ositions for five (/) )ears from date of registration" #he %osition of :resident*

@enera Aanager and #reasurer of foreign,o!ned registered enter%rises or their e2uiva ent sha ho!ever not be sub+ect to the foregoing imitations" $" 5im% ification of customs %rocedures for the im%ortation of e2ui%ment* s%are %arts* ra! materia s and su%% ies and e(%orts of %rocessed %roducts" C" Im%ortation of consigned e2ui%ment for a %eriod of 10 )ears from date of registration* sub+ect to %osting of a re,e(%ort bond" =" #he %rivi ege to o%erate a bonded manufacturing-trading !arehouse sub+ect to Customs ru es and regu ations"
$ac3 to to%

Incentives for Regional 0ead4uarters (R0Q) and Regional Operating 0ead4uarters (RO0Q) in the Philippines >DGs are entit ed to the fo o!ing incentives& 7" E(emption on the Pa"ment of .orporate Income #a(5 7n annua information return of a ta(,e(em%t cor%oration sha be fi ed !ith the $ureau of Interna >evenue ($I>) to effect e(em%tion" $" E(emption on the Pa"ment of 6alue-!dded #a(5 #he e(em%tion inc udes the sa e or ease of goods and %ro%ert) inc uding the rendition of services to >DG" >ODGs can avai of the fo o!ing incentives& 7" .orporate Income #a(5 Income derived b) the >ODG from %erforming 2ua if)ing activities sha be sub+ect to a %referentia rate of 101 on ta(ab e income" $" Branch Profit Remittance #a(5 7n) income derived from the :hi i%%ines !hen remitted to the %arent com%an) sha be sub+ect to the ta( on branch %rofit remittances" C" 6alue-!dded #a(5 >ODG sha be sub+ect to the ten %ercent (101) va ue,added ta( un ess other!ise %rovided under the .ationa Interna >evenue Code" E(em%tions common for both >DG and >ODG& 7" E(emption from !ll 7inds of %ocal #a(es2 Fees2 or .harges5 :a)ment ho!ever* sha be made for rea %ro%ert) ta( on and im%rovements and e2ui%ment" $" #a( and *ut" Free Importation of #raining +aterials and E4uipment5 7%% icab e to materia s not oca ) avai ab e* sub+ect to %rior a%%rova from the $oard of Investments ($OI)" #he sa e or dis%osition of e2ui%ment !ithin t!o )ears after im%ortation* entered ta( and dut) free* sha re2uire %rior a%%rova from the $OI and %rior %a)ment of a%% icab e ta(es and duties" C" Entitlement to the Importation of Ne8 +otor 6ehicles5 #he

im%ortation sha be sub+ected to the %a)ment of the corres%onding ta(es and duties" 4nder >7 87/6* the fo o!ing incentives are given to the e(%atriates of a registered >DG->ODG in the :hi i%%ines& 7" +ultiple Entr" 6isa5 Issued to e(%atriates* their res%ective s%ouses and unmarried chi dren under 21 )ears o d" 7 non, immigrant visa sha be issued !ithin 72 hours u%on submission of a re2uired documents" #he mu ti% e entr) visa is va id for a %eriod of three (<) )ears and e(tendib e for another three )ears u%on submission to the $ureau of Immigration of a s!orn certification b) a res%onsib e officer of the >DG->ODG that its icense to o%erate remains va id and that it has com% ied !ith a re2uirements sti%u ated under re evant :hi i%%ine a!s" $" 1ithholding #a( of 9:; on .ompensation Income5 7%% ied to both a ien and Fi i%ino e(ecutives ho ding manageria or technica %ositions" C" #a( and *ut" Free Importation of Personal and 0ousehold Effects5 7%% icab e on im%orts made !ithin ninet) (90) da)s before or after conversion of the a ien e(ecutive9s admission categor) to mu ti% e entr) visa" =" #ravel #a( E(emption5 Issued b) the :hi i%%ine #ourism 7uthorit) (:#7) u%on recommendation b) the $OI during the %eriod of the e(%atriate9s assignment in the countr)"

Investment Incentives

#!o agencies under =#I* the $oard of Investments ($OI) and the :hi i%%ine Economic ?one 7uthorit) (:E?7) give se%arate incentives to investors as ong as the) meet a number of criteria" Board of Investments (BOI) #he $OI* the ead investment %romotion agenc) of the government issues the Investment :riorit) : an (I::) annua )" 4nder $oo3 I of the Omnibus Investments Code* an investor ma) en+o) certain benefits and incentives %rovided he invests in %referred areas of investments found in the current I::" Incentives inc ude ta( e(em%tions and concessions" 7n enter%rise ma) sti be entit ed to incentives even if its business activit) is not isted in the I:: as ong as

it has&

7t east /01 of its %roduction is for e(%orts* if Fi i%ino o!ned 7t east 701 of its %roduction is for e(%orts* if ma+orit) foreign,o!ned (or more than F01 e2uit))

Philippine Economic

one !uthorit" (PE !)

#he :E?7 !as estab ished under >e%ub ic 7ct 7916 or the 5%ecia Economic ?one 7ct of 199/" Its main mission is to s%ur the gro!th and diversification of e(%orts b) attracting foreign investors to ocate their manufacturing % ants* their regiona !arehouses or their I# com%anies in the countr)9s economic ;ones" Current )* there are 1/0 economic ;one ocations in different sites a over the countr)"
$OI Incentives :E?7 Incentives $ac3 to #o%
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.lar$ still has ta( incentives2 sa"s *ia&

$) Aar3 Bouie :" >o(as and Hoe) 7gui ar* Central Luzon Bureau CB7>I ?O.E* :am%anga& 7 %residentia assistant assured some F00 investors* inc uding o%erators of dut),free sho%s at the C ar3 5%ecia Economic ?one* that the) !i continue to receive ta( brea3s des%ite a recent 5u%reme Court decision forfeiting ta( incentives !ithin economic ;ones e(ce%t 5ubic" >enato =ia;* %residentia assistant for Centra Bu;on* said businesses in the C ar3 Economic ?one are entit ed to ta( incentives and %rivi eges because this is %art of :resident 7rro)o8s 10,%oint agenda" =ia; said Congress has %assed a +oint reso ution to c arif) the egis ative intent of a recent Court ru ing nu if)ing the granting of ta( incentives and %rivi eges !ithin s%ecia economic ;ones" =ia; gave the assurance during his meeting !ith C ar3 e(ecutives and officia s of the C ar3 Investors and Bocators 7ssociation" JEe don8t have to give incentives since these are a read) there" @etting egis ation

through Congress is the best !a) to sett e the issue*K he said" #he =e%artment of Finance and the $ureau of Interna >evenue had ear ier announced that the ta( incentives en+o)ed b) businesses in the 5ubic Economic ?one do not e(tend to enter%rises in other economic ;ones" Do!ever* the finance de%artment c arified its ru ing" J.o!here in the revenue regu ations is the ta( treatment of ocators in other eco;ones !ithdra!n*K said the statement" Finance 4ndersecretar) Emmanue $onoan said ne!s%a%er re%orts Jgave the !rong im%ression that revenue regu ations ifted the s%ecia ta( treatment of ocators in the

C ar3 eco;one"K 389:;211 '1<2= T8 3&';I4> 3&';< I9329TI/21 The =epartment of 4inance has as*ed 3on ress to step in and as*ed the issue of fiscal incentives ranted to locators of s includin 3lar*.

9he 2o0 also clarifie" that it ha" not with"rawn the special ta$ rate of A percent of gross income earne" being en&oye" by compani

2o0 ?n"ersecretary #manuel Bonoan sai" the 2o0 has written 9ra"e an" %n"ustry !ecretary Juan !antos an" !enate Presi"ent 0

HJust li1e investors, we (2o0) want clear rules that will gui"e us. Congress has to step in an" shoul" be very specific on the ta$ trea

9he !upreme Court (!C) earlier rule" that Camp John Eay special economic ,one is not entitle" to incentives, stressing the Jepub !ubic Bay 0reeport.

Bonoan sai" that ta$ treatment companies in eco,ones manage" by BC2. such as Clar1 coul" be incorporate" in propose" bills a %nvestment (Bo%) an" the Philippine #conomic -one .uthority (Pe,a).

9he 8ower house has passe" Eouse Bill G:<A calling for the rationali,ation of fiscal incentives grante" by various government agen

Bonoan sai" the high tribunal merely invali"ate" the ta$ per1s en&oye" by companies insi"e Camp John Eay special eco,one an" n Ee sai" Jevenue Jegulations 44>:55A, 4:>:55A, an" 4G>:55A release" by the ta$able base of gross income earne" of companies eco,ones.

Powerhouse locators in Clar1 special eco,one inclu"e logistics giant ?P!, tire ma1er Ko1ohama of Japan an" #uropeLs Jolls>Joyc

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&ocal Incentives

Subic

9a$ an" "uty>free importation. !ubic Bay 0reeport (!B0) investors en&oy ta$ an" "uty free e$emptions on importe" raw materials, supplies, capital equipment an" other items for consumption with 0reeport #$emption from all local an" national ta$es with only a A6 corporate ta$ on gross income. !B0 investors are e$empt from all local an" national ta$es such as value>a""e" ta$es, franchise ta$es, e$cise an" a" valorem ta$es. 9hey pay only a final corporate ta$ of A6 of their earne" gross income. ?nrestricte" entry of foreign investments. 0oreign investors may invest up to one hun"re" percent (4556) equity in almost any economic activity in the !B0 e$cept those liste" in the 0oreign %nvestments 7egative 8ist (0%78) as publishe" by the Philippine Boar" of %nvestment (B*%). Fisas available to foreign nationals. 9he !B/. processes an" "irectly grants special resi"ents an" investor visa. 9emporary 3or1ing Permit (93P) an" !ubic !pecial 3or1 Fisas (!!3F) may be grante" to foreign

nationals sub&ect to certain requirement. !ubic !pecial %nvestor Fisa (!!%F), on the other han", can be grante" to foreign investors with an investment of at least ?!@:A5,555.55 #$pan"e" .llowable 2e"uction an" Eigher Percentages of %ncome .llowable from !ources within the Customs 9erritory for Jegional #nterprises. 9he Jegional #nterprises shall en&oy e$pan"e" "e"uctions that shall be allowable for the calculation of gross income earne" for the require" A6 payment. .lso, the Jegional #nterprises may generate revenues from sources within the Customs 9erritory up to A56 of its total revenues.

Clark

9a$ an" "uty>free importation of machinery, equipment, raw materials, supplies an" all other articles inclu"ing finishe" goo"s. 7o local an" national ta$es. %n lieu of ta$es, C!#- enterprises shall pay a a fee of five percent (A6) of their ross %ncome #arne" ( %#). 4556 foreign equity is allowe" for many types of in"ustries inclu"ing manufacturing, tourism, service>oriente" business. C!#- is manage" as a separate customs territory, ensuring free flow of articles within the -one. ?nlimite" purchase an" consumption of ta$ an" "uty free consumer goo"s within the C!#-. 7o e$change control policy is applie" where free mar1et for foreign e$change, gol", securities, an" future shall be allowe" an" maintaine". Ban1ing an" 0inance is liberali,e" with the establishment of foreign currency "epository units of local commercial ban1s an" offshore ban1ing units of foreign ban1s with minimum Central Ban1 regulations. !pecial 3or1ing Fisa renewable every two (:) years to foreign e$ecutives an" other aliens possessing highly>technical s1ills. #$emption form ! ! inspections e$cept "uty>free goo"sMarticles "estine" to commercial establishmentsM"uty>free shops. !implifie" e$port an" import proce"ures. ?nrestricte" use of consigne" equipment. F.9 e$emption form purchases ma"e for the local mar1et.