under such conditions and/or limited incentives as the BOI may determine; and

2. They obligate themselves to attain the citizenship requirement within thirty (30) years
from the date of registration. However, for enterprises which export seventy percent
(70%) of their total production, they need not comply with this requirement; and

3. They will not engage in a pioneer area which is within the activities reserved by the
Constitution or other laws of the Philippines to Philippine citizens or corporations
owned and controlled by Philippine citizens.

The following incentives are available to a BOI-registered enterprise:

1. Tax Exemptions

a. Income Tax Holiday (ITH)

New projects with a pioneer status for six(6) years;

New projects with a non-pioneer status for (4) years;

Expansion projects for three (3) years, limited to incremental sales revenue/volume as a
general rule;

New or expansion projects in less developed areas ("LDAs")3 for six (6) years, regardless
of status; and,

Modernization projects for three (3) years, limited to incremental sales revenue/volume,
as a general rule.

The ITH is restricted with respect to certain Export Traders and Mining Activities

New registered pioneer and non-pioneer enterprises and those located in LDAs may avail
themselves of a bonus year subject to certain conditions

b. A registered enterprise with a bonded manufacturing warehouse shall be exempt from

customs duties and national internal revenue taxes on its importation of required
supplies/spare parts for consigned equipment or those imported with incentives. The
privilege to operate a bonded manufacturing/trading warehouse subject to Customs rules
and regulations.

c. 10-years exemption from wharfage dues and export tax, duty, impost and fees for
exports of non-traditional export products.
d. For agricultural producers, 10-years exemption from the payment of all taxes and
duties on their importation of breeding stocks and genetic materials.

2. Tax Credits

a. For agricultural producers, 10-years tax credit equivalent to one hundred percent
(100%) of the value of national internal revenue taxes and customs duties on domestic
breeding stocks and genetic materials.

b. Tax credit equivalent to the national internal revenue taxes and duties paid on raw
materials, supplies and semi-manufacture of export products and forming part thereof.

3. Additional Deductions form Taxable Income

a. 5-years additional deduction for labor expense, equivalent of fifty percent (50%) of the
wages of additional skilled and unskilled workers in the direct labor force. This
incentive shall be granted only if the enterprise meets a prescribed capital to labor
ratio and shall not be availed simultaneously with ITH.

b. Registered enterprises locating in LDAs or in areas deficient in infrastructure, public

utilities and other facilities may deduct from taxable income an amount equivalent to
the expenses incurred in the development of necessary and major infrastructure works.
This privilege is not granted to mining and forestry-related projects.

4. Non-fiscal Incentives

a. Employment of foreign nationals in supervisory, technical or advisory positions for

five (5) years form date of registration. The position of president, general manager and
treasurer of foreign-owned registered enterprises or their equivalent shall however not
be subject to the foregoing limitations.

b. Simplification of customs producers for the importation of equipment, spare parts, raw
materials and supplies and export of processed products.

c. Importation of consigned equipment for a period of 10 years from date of registration,

subject to posting of a re-export bond