A. Income Tax Holiday (ITH)
- A Board of Investments (BOI) registered enterprise shall be exempt from payment of the income taxes reckoned from the scheduled start of commercial operations, as follows:
– New projects with a pioneer status for 6 years;
– New projects with a non-pioneer status for 4 years;
– Expansion projects for 3 years. As a general rule, exemption is limited to incremental sales revenue/volume;
– New or expansion projects in less developed areas for 6 years, regardless of status; and
– Modernization projects for 3 years. As a general rule, exemption is limited to incremental sales revenue/volume.
- New registered pioneer and non-pioneer enterprises and those located in the less developed areas (LDAs) may avail of a bonus year in each of the following cases:
– The indigenous raw materials used in the manufacture of the registered product must at least be 50% of the total cost of raw materials for the preceding years prior to the extension unless the Board prescribes a higher percentage; or
– The ratio of total imported and domestic capital equipment to the number of workers for the project does not exceed US$10,000 to 1 worker; or
– The net foreign exchange savings or earnings amount to at least US$500,000 annually during the first 3 years of operation.
In no case shall a registered pioneer firm avail of this incentive for a period exceeding 8 years.
B. Exemption from Taxes and Duties on Imported Spare Parts
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.
C. Exemption from Wharfage Dues and Export Tax, Duty, Impost and Fees
All enterprises registered under the IPP will be given a 10-year period from date of registration to avail of the exemption from wharfage dues and any export tax, impost and fees on its non-traditional export products.
D. Reduction of the Rates of Duty on Capital Equipment, Spare Parts and Accessories by virtue by Virtue of E.O. 528
Effective June 17, 2006, BOI-registered enterprises of good standing with project registered as new or expanding under Executive Order 226, otherwise known as the Omnibus Investments Code of 1987, may import machinery, equipment, spare parts and accessories subject to 0% duty for BOI-registered enterprises, classified under AHTN Chapters 40, 59,68,69, 70, 73, 76,82,83,84,85,87,89,90,91 and 96 of the Tariff and Customs Code of the Philippines.
The capital equipment incentive provided under the E.O 528 shall be availed of by the registered enterprise for a period of 5 years from its effectivity or until 17 June 2011.
E. Tax Exemption on Breeding Stocks and Genetic Materials
Agricultural producers will be exempt from the payment of all taxes and duties on their importation of breeding stocks and genetic materials within 10 years from the date of registration or commercial operation.
- Tax credit on tax and duty portion of domestic breeding stocks and genetic materials; a tax credit equivalent to 100% of the value of national internal revenue taxes and customs duties on local breeding stocks within 10 years from date of registration or commercial operation for agricultural producers.
- Tax credit on raw materials and supplies. A 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 shall be granted to a registered enterprise.
G. Additional Deductions from Taxable Income
- Additional deduction for labor expense (ADLE). For the first 5 years from registration, a registered enterprise shall be allowed an additional deduction from taxable income equivalent to 50% of the wages of additional skilled and unskilled workers in the direct labor force. The incentive shall be granted only if the enterprise meets a prescribed capital to labor ratio and shall not be availed of simultaneously with the ITH. This additional deduction shall be doubled if the activity is located in an LDA.
- Additional deduction for necessary and major infrastructure works. Registered enterprises locating in LDAs or in areas deficient in infrastructure, public utilities and other facilities may deduct from their taxable income an amount equivalent to the expenses incurred in the development of necessary and major infrastructure works. The privilege, however, is not granted to mining and forestry-related projects, as they would naturally be located in certain areas to be near their sources of raw materials.
A. Employment of Foreign Nationals
A registered enterprise may be allowed to employ foreign nationals in supervisory, technical or advisory positions for 5 years from date of registration, extendible for limited periods at the discretion of the Board. The positions of President, General Manager and Treasurer of foreign-owned registered enterprises (more than 40%) or their equivalent shall, however, not be subject to the foregoing limitations.
B. Simplification of Customs Procedures
This applies for the importation of equipment, spare parts, raw materials and supplies and exports of processed products.
D. Privilege to Operate a Bonded Manufacturing/Trading Warehouse
Incentives are subject to rules and regulations.
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