House Bill No. 8918 TRABAHO BILL

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Commissioner, subject to review by the Secretary of Finance: PROVIDED, THAT THE POWER TO INTERPRET THE PROVISIONS OF TITLE XIII OF THIS CODE, SHALL BE UNDER THE EXCLUSIVE AND ORIGINAL JURISDICTION OF THE SECRETARY OF FINANCE. The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions thereof administered by the Bureau of Internal Revenue is vested in the Commissioner, subject to the exclusive appellate jurisdiction of the Court of Tax Appeals. SEC. 3. Section 5 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: “SECTION 5. Power of the Commissioner to Obtain Information and to Summon, Examine, and Take Testimony of Persons. – In ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluation tax compliance, the Commissioner is authorized: (A) xxx (B) xxx (C) xxx (D) xxx; [ and ] (E) xxx; AND (F) IN CASE THE INFORMATION OR RECORDS REQUESTED ARE NOT FURNISHED WITHIN THE PERIOD PRESCRIBED IN THE WRITTEN NOTICE, OR WHEN THE INFORMATION OR RECORDS SUBMITTED ARE INCOMPLETE, THE COMMISSIONER OR HIS DULY AUTHORIZED REPRESENTATIVE, SHALL ISSUE A SUBPOENA DUCES TECUM STATING THEREIN THE RELEVANT FACTS, SPECIFYING THE PARTICULAR DOCUMENTS OR RECORDS NOT MADE AVAILABLE AND THE TAXPAYER LIABLE OR THE THIRD PARTY/OFFICE CONCERNED: PROVIDED, THAT INFORMATION OR RECORDS DULY RECEIVED OR ALREADY WITHIN THE CUSTODY OF THE BUREAU SHALL NOT BE COVERED BY ANY SUBPOENA DUCES TECUM. 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 THE SERVICE OF SUBPOENA DUCES TECUM SHALL BE EFFECTED BY THE REVENUE OFFICERS ASSIGNED TO INVESTIGATE THE CASE. HOWEVER, SUCH SERVICE MAY BE MADE BY ANY OTHER INTERNAL REVENUE OFFICER AUTHORIZED FOR THE PURPOSE. THE SUBPOENA DUCES TECUM SHALL BE SERVED THROUGH PERSONAL SERVICE, BUT IF NOT PRACTICABLE, IT SHALL BE SERVED BY SUBSTITUTED SERVICE IN ACCORDANCE WITH THE RULES OF THE COURT. A CRIMINAL ACTION SHALL BE INSTITUTED FOR FAILURE TO OBEY THE SUBPOENA DUCES TECUM. BOOKS, RECORDS, AND DOCUMENTS SUBMITTED AS A RESULT OF A SUBPOENA DUCES TECUM SHALL BE UNDER THE CUSTODIANSHIP OF THE RECEIVING OFFICER WHO SHALL BE RESPONSIBLE FOR ITS SAFEKEEPING AND PRESERVATION, SUBJECT TO APPLICABLE RULES. SEC. 4. A new section shall be inserted as Section 6-A of the National Internal Revenue Code of 1997, as amended, to read as follows: “SECTION 6-A– SERVICE OF LETTER OF AUTHORITY, AND ASSESSMENT NOTICES ISSUED BY THE BUREAU. - THE NOTICE TO THE TAXPAYER HEREIN REQUIRED MAY BE SERVED BY THE COMMISSIONER OR HIS DULY AUTHORIZED REPRESENTATIVE THROUGH PERSONAL SERVICE AT HIS REGISTERED ADRESS. IN CASE PERSONAL SERVICE IS NOT PRACTICABLE, THE NOTICE SHALL BE SERVED BY SUBSTITUTED SERVICE IN ACCORDANCE WITH THE RULES OF THE COURT. SEC. 5. Section 20 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: “SEC. 20. Submission of Report and Pertinent Information by the Commissioner. – (A) xxx (B) SUBMISSION OF TAX-RELATED INFORMATION TO THE DEPARTMENT OF FINANCE. – THE COMMISSIONER SHALL, UPON THE REQUEST OF THE SECRETARY OF FINANCE SPECIFICALLY IDENTIFYING THE NEEDED INFORMATION AND JUSTIFICATION FOR SUCH REQUEST, FURNISH THE SECRETARY PERTINENT TAXPAYER INFORMATION: PROVIDED, HOWEVER, THAT THE SECRETARY AND THE RELEVANT OFFICERS HANDLING SUCH 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 SPECIFIC INFORMATION SHALL BE COVERED BY THE PROVISIONS OF SECTION 270, UNLESS TAXPAYER CONSENTS IN WRITING TO SUCH DISCLOSURE. [ (B) ] (C) Report to Oversight Committee. - The Commissioner shall, with reference to Section 204 of this Code, submit to the Oversight Committee referred to in Section 290 hereof, through the Chairmen of the Committee on Ways and Means of the Senate and House of Representatives, a report on the exercise of his powers pursuant to the said Section, every six (6) months of each calendar year.” SEC. 6. Section 22 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: SEC. 22. Definitions. - xxx “(A) xxx (B) xxx (C) xxx (D) xxx (E) The term ‘nonresident citizen’ means; (1) A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact of his physical presence abroad with a definite intention to reside therein. (2) A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either as an immigrant or for employment on a permanent basis. (3) A citizen of the Philippines who works and derives income from abroad and whose employment thereat requires him to be physically present [ abroad most of the time ] FOR 183 DAYS OR MORE during the taxable year. (4) A citizen who has been previously considered as nonresident citizen and who arrives in the Philippines at any time during the taxable year to reside permanently in the Philippines shall likewise be treated as a nonresident citizen for the taxable year in which he arrives in the Philippines with respect to his income derived from sources abroad until the date of his arrival in the Philippines. 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 (5) The taxpayer shall submit proof to the Commissioner to show his intention of leaving the Philippines to reside permanently abroad or to return to and reside in the Philippines as the case may be for purpose of this Section. xxx.” SEC. 7. Section 27 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: “SEC. 27. Rates of Income tax on Domestic Corporations. – (A) In General. - Except as otherwise provided in this Code, AN INCOME TAX RATE OF PERCENT (30%), is hereby imposed upon the taxable income derived during each taxable year from all sources within and without the Philippines by every corporation, as defined in Section 22(B) of this Code and taxable under this Title as a corporation, organized in, or existing under the laws of the Philippines: [ Provided, that effective January 1, 2009, the rate of income tax shall be thirty percent (30%). ] PROVIDED, THAT THE RATE OF CORPORATE INCOME TAX SHALL BE TWENTY EIGHT PERCENT (28%) BEGINNING JANUARY 1, 2021; TWENTY SIX PERCENT (26%) BEGINNING JANUARY 1, 2023; TWENTY FOUR PERCENT (24%) BEGINNING JANUARY 1, 2025; TWENTY TWO PERCENT (22%) BEGINNING JANUARY 1, 2027; AND TWENTY PERCENT (20%) BEGINNING JANUARY 1, 2029: PROVIDED, FURTHER, THAT THE PRESIDENT MAY ADVANCE THE SCHEDULED REDUCTION IN THE CORPORATE INCOME TAX RATE WHEN ADEQUATE SAVINGS ARE REALIZED FROM THE RATIONALIZATION OF FISCAL INCENTIVES, AS CERTIFIED BY THE SECRETARY OF FINANCE. In the case of corporations adopting the fiscal-year accounting period, the taxable income shall be computed without regard to the specific date when specific sales, purchases and other transactions occur. Their income and expenses for the fiscal year shall be deemed to have been earned and spent equally for each month of the period. The corporate income tax rate shall be applied on the amount computed by multiplying the number of months covered by the new rate within the fiscal year by the taxable income of the corporation for the period, divided by twelve. [ Provided, further, That the President, upon the recommendation of the Secretary of Finance, may effective January 1, 2000, allow corporations the option to be taxed at fifteen percent (15%) of gross income as defined hereinafter the following conditions have been satisfied: 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 (1) A tax effort ratio of twenty percent (20%) of Gross National Product (GNP); (2) A ratio of forty percent (40%) of income tax collection to total tax revenues; (3) A VAT tax effort of four percent (4%) of GNP; and (4) A 0.9 percent (0.9%) ratio of the Consolidated Public Sector Financial Position (CPSFP) to GNP. The option to be taxed based on gross income shall be available only to firms whose ratio of cost of sales to gross sales or receipts from all sources does not exceed fifty-five percent (55%). The election of the gross income tax option by the corporation shall be irrevocable for three (3) consecutive taxable years during which the corporation is qualified under the scheme. For purposes of this Section, the term 'gross income' derived from business shall be equivalent to gross sales less sales returns, discounts and allowances and cost of goods sold. ‘Cost of goods sold' shall include all business expenses directly incurred to produce the merchandise to bring them to their present location and use. For a trading or merchandising concern, 'cost of goods sold’ shall include the invoice cost of the goods sold, plus import duties, freight in transporting the goods to the place where the goods are actually sold, including insurance while the goods are in transit. ] [ For a manufacturing concern, 'cost of goods manufactured and sold' shall include all costs of production of finished goods, such as raw materials used, direct labor and manufacturing overhead, freight cost, insurance premiums and other costs incurred to bring the raw materials to the factory or warehouse. In the case of taxpayers engaged in the sale of service, 'gross income' means gross receipts less sales returns, allowances and discounts. ] (B)Proprietary Educational Institutions and Hospitals.– Proprietary educational institutions and hospitals which are nonprofit SHALL pay a tax of ten percent (10%) on their taxable income except those covered by Subsection (D) hereof: PROVIDED, THAT THEY COMPLY WITH ESTABLISHED PERFORMANCE CRITERIA TO BE DETERMINED AND EVALUATED BY THE COMMISSION ON HIGHER EDUCATION (CHED), DEPARTMENT OF EDUCATION (DEPED), AND 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 DEPARTMENT OF HEALTH (DOH): PROVIDED, FURTHER, THAT EDUCATIONAL INSTITUTIONS AND HOSPITALS THAT FAIL TO MEET THE ESTABLISHED PERFORMANCE CRITERIA SHALL PAY A TAX OF TEN PERCENT (10%) ON THEIR TAXABLE INCOME TWO (2) YEARS AFTER THE EFFECTIVITY OF THIS ACT, FIFTEEN PERCENT (15%) IN THE SUCCEEDING THREE (3) YEARS, AND TWENTY PERCENT (20%) THEREAFTER IF THE EDUCATIONAL INSTITUTIONS AND HOSPITALS FAIL TO MEET THE ESTABLISHED CRITERIA. Provided FURTHER, that if the gross income from ‘unrelated trade, business or other activity’ exceeds fifty percent (50%) of the total gross income derived by such educational institutions or hospitals from all sources, the tax prescribed in Subsection (A) hereof shall be imposed on the entire taxable income. For purposes of this Subsection, the term 'unrelated trade, business or other activity' means any trade, business or other activity, the conduct of which is not substantially related to the exercise or performance by such educational institution or hospital of its primary purpose or function. A 'proprietary educational institution' is any private school maintained and administered by private individuals or groups with an issued permit to operate from the Department of Education, Culture and Sports (DECS), or the Commission on Higher Education (CHED), or the Technical Education and Skills Development Authority (TESDA), as the case may be, in accordance with existing laws and regulations. (C) Government-owned or –Controlled Corporations, Agencies or Instrumentalities. - The provisions of existing special or general laws to the contrary notwithstanding, all corporations, agencies, or instrumentalities owned or controlled by the Government, except the Government Service Insurance System (GSIS), the Social Security System (SSS), HOME DEVELOPMENT MUTUAL FUND, the Philippine Health Insurance Corporation (PHIC), and the local water districts (LWDs) shall pay such rate of tax upon their taxable income as are imposed by this Section upon corporations or associations engaged in similar business, industry, or activity. (D) xxx (E) SEC. 8. Section 28 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: “SEC. 28. Rates of Income Tax on Foreign Corporations. – 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 (A) Tax on Resident Foreign Corporations. (1) In General. - Except as otherwise provided in this Code, a corporation organized, authorized, or existing under the laws of any foreign country, engaged in trade or business within the Philippines, shall be subject to an income tax equivalent to THIRTY PERCENT (30%) [ thirty-five percent (35%) ] of the taxable income derived in the preceding taxable year from all sources within the Philippines: [ Provided, That effective January 1, 2009, the rate of income tax shall be thirty percent (30%). ] PROVIDED, THAT THE RATE OF CORPORATE INCOME TAX SHALL BE TWENTY EIGHT PERCENT (28%) BEGINNING JANUARY 1, 2021; TWENTY SIX PERCENT (26%) BEGINNING JANUARY 1, 2023; TWENTY FOUR PERCENT (24%) BEGINNING JANUARY 1, 2025; TWENTY TWO PERCENT (22%) BEGINNING JANUARY 1, 2027; AND TWENTY PERCENT (20%) BEGINNING JANUARY 1, 2029: PROVIDED, FURTHER, THAT THE PRESIDENT MAY ADVANCE THE SCHEDULED REDUCTION IN THE CORPORATE INCOME TAX RATE WHEN ADEQUATE SAVINGS ARE REALIZED FROM THE RATIONALIZATION OF FISCAL INCENTIVES, AS CERTIFIED BY THE SECRETARY OF FINANCE. In the case of corporations adopting the fiscal-year accounting period, the taxable income shall be computed without regard to the specific date when sales, purchases and other transactions occur. Their income and expenses for the fiscal year shall be deemed to have been earned and spent equally for each month of the period. The corporate income tax rate shall be applied on the amount computed by multiplying the number of months covered by the new rate within the fiscal year by the taxable income of the corporation for the period, divided by twelve. [ Provided, however, That a resident foreign corporation shall be granted the option to be taxed at fifteen percent (15%) on gross income under the same conditions, as provided in Section 27 (A). ] (2) xxx (3) xxx [ (4) Offshore Banking Units. - The provisions of any law to the contrary notwithstanding, income derived by offshore banking units authorized by the Bangko Sentral ng Pilipinas (BSP), from foreign currency transactions with nonresidents, other offshore banking units, local commercial banks, including branches of foreign banks that may be authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business with offshore banking units shall be exempt from all taxes except net income from such transactions as may be specified by the Secretary of Finance, upon recommendation of the Monetary Board which 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 shall be subject to the regular income tax payable by banks: Provided, however, That any interest income derived from foreign currency loans granted to residents other than offshore banking units or local commercial banks, including local, branches of foreign banks that may be authorized by the BSP to transact business with offshore banking units, shall be subject only to a final tax at the rate of ten percent (10%). Any income of nonresidents, whether individuals or corporations, from transactions with said offshore banking units shall be exempt from income tax. ] [ (5) ] (4) Tax on Branch Profits Remittances. – Any profit remitted by a branch to its head office shall be subject to a tax of fifteen percent (15%) which shall be based on the total profits applied or earmarked for remittance without any deduction for the tax component thereof [ (except those activities which are registered with the Philippine Economic Zone Authority) ]. Xxx [ (6)] (5) Regional or Area Headquarters and Regional Operating Headquarters of Multinational Companies. – (a) Regional or area headquarters as defined in Section 22(DD) shall not be subject to income tax. (b) Regional operating headquarters as defined in Section 22(EE) shall pay a tax of ten percent (10%) of their taxable income. PROVIDED, THAT REGIONAL OPERATING HEADQUARTERS SHALL BE SUBJECT TO THE REGULAR CORPORATE INCOME TAX TWO (2) YEARS AFTER THE EFFECTIVITY OF THE ACT. [ (7) ] (6) Tax on Certain Incomes Received by a Resident Foreign Corporation. – (a) Interest from Deposits and Yield or any other Monetary Benefit from Deposit Substitutes, Trust Funds and Similar Arrangements and Royalties. – Interest from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements and royalties derived from sources within the Philippines shall be subject to a final income tax at the rate of twenty percent (20%) of such interest: Provided, however, That interest income derived by a resident foreign corporation from a depository bank under the expanded foreign currency deposit system shall be subject to a final income tax at the rate of FIFTEEN PERCENT (15%) [ seven and one-half percent (7 1/2%) ] of such interest income. (b) Income Derived under the Expanded Foreign Currency Deposit System. xxx 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 (c) Capital Gains from Sale of Shares of Stock Not Traded in the Stock Exchange. – A final tax at the rate [ s prescribed below ] OF FIFTEEN PERCENT (15%) is hereby imposed upon the net capital gains realized during the taxable year from the sale, barter, exchange or other disposition of shares of stock in a domestic corporation except shares sold or disposed of through the stock exchange:. [ Not over P100,000 On any amount in excess of P100,000 5% 10% ] (d) Intercorporate Dividends.- xxx (B) Tax on Nonresident Foreign Corporation. (1) In General. - Except as otherwise provided in this Code, a foreign corporation not engaged in trade or business in the Philippines shall pay a tax equal to THIRTY PERCENT (30%) [ thirty-five percent (35%) ] of the gross income received during each taxable year from all sources within the Philippines, such as interests, dividends, rents, royalties, salaries, premiums (except reinsurance premiums), annuities, emoluments or other fixed or determinable annual, periodic or casual gains, profits and income, and capital gains, except capital gains subject to tax under subparagraph 5 (c): [Provided, That effective January 1, 2009, the rate of income tax shall be thirty percent (30%). ] PROVIDED, THAT THE RATE OF CORPORATE INCOME TAX SHALL BE TWENTY EIGHT PERCENT (28%) BEGINNING JANUARY 1, 2021; TWENTY SIX PERCENT (26%) BEGINNING JANUARY 1, 2023; TWENTY FOUR PERCENT (24%) BEGINNING JANUARY 1, 2025; TWENTY TWO PERCENT (22%) BEGINNING JANUARY 1, 2027; AND TWENTY PERCENT (20%) BEGINNING JANUARY 1, 2029: PROVIDED, FURTHER, THAT THE PRESIDENT MAY ADVANCE THE SCHEDULED REDUCTION IN THE CORPORATE INCOME TAX RATE WHEN ADEQUATE SAVINGS ARE REALIZED FROM THE RATIONALIZATION OF FISCAL INCENTIVES, AS CERTIFIED BY THE SECRETARY OF FINANCE. (2) Nonresident Cinematographic Film Owner, Lessor or Distributor. - A cinematographic film owner, lessor, or distributor shall pay a tax of twenty-five percent (25%) of its gross income from all sources within the Philippines. (3) xxx (4) xxx 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 (5) Tax on Certain Incomes Received by a Nonresident Foreign Corporation. – (a) Interest on Foreign Loans. – xxx (b) Intercorporate Dividends. – A final withholding tax at the rate of fifteen percent (15%) is hereby imposed on the amount of cash and/or property dividends received from a domestic corporation, which shall be collected and paid as provided in Section 57 (A) of this Code, subject to the condition that the country in which the nonresident foreign corporation is domiciled, shall allow a credit against the tax due from the nonresident foreign corporation taxes deemed to have been paid in the Philippines equivalent to [ twenty percent (20%) ]FIFTEEN PERCENT (15%) which represents the difference between the regular income tax [ of thirtyfive percent (35%) ] and the fifteen percent (15%) tax on dividends as provided in this subparagraph: Provided, that EFFECTIVE JANUARY 1, 2019, [ effective January 1, 2009 ], the credit against the tax due shall be equivalent to [ fifteen percent (15%), which represents ] the difference between the regular income tax RATE [ of thirty percent (30%) ] and the fifteen percent (15%) tax on dividends. (c) Capital Gains from Sale of Shares of Stock not Traded in the Stock Exchange. – A final tax at the rate[s prescribed below ]OF FIFTEEN PERCENT (15%) is hereby imposed upon the net capital gains realized during the taxable year from the sale, barter, exchange or other disposition of shares of stock in a domestic corporation, except shares sold, or disposed of through the stock exchange.[ : Not over P100,000 On any amount in excess of P100,000 5% 10% ]” SEC. 9. Section 34 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: “SEC. 34. Deductions from Gross Income. - Except for taxpayers earning compensation income arising from personal services rendered under an employeremployee relationship where no deductions shall be allowed under this Section, in computing taxable income subject to income tax under Sections 24 (A); 25 (A); 26; 27 (A), (B) and (C); and 28 (A) (1), there shall be allowed the following deductions from gross income; (A) Expenses. (1) Ordinary and Necessary Trade, Business or Professional Expenses.- 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 x xx (2) Expenses Allowable to Private Educational Institutions. - In addition to the expenses allowable as deductions under this Chapter, a private educational institution, referred to under Section 27 (B) of this Code, may at its option elect either: (a) to deduct expenditures otherwise considered as capital outlays of depreciable assets incurred during the taxable year for the expansion of school facilities or (b) to deduct allowance for depreciation thereof under Subsection (F) hereof: PROVIDED, THAT ONLY EDUCATIONAL INSTITUTIONS WHICH MEET THE ESTABLISHED PERFORMANCE CRITERIA IN RELATION TO SECTION 27 (B) OF THIS CODE SHALL BE ALLOWED TO CLAIM THIS EXPENSE. (B) Interest.(1) In General. - The amount of interest paid or incurred within a taxable year on indebtedness in connection with the taxpayer's profession, trade or business shall be allowed as deduction from gross income: Provided, however, That the taxpayer's otherwise allowable deduction for interest expense shall be reduced by [ forty-two percent (42%) ]THIRTY THREE PERCENT (33%) of the interest income subjected to final tax [ : Provided, That effective January 1, 2009, the percentage shall be thirtythree percent (33%). ]: PROVIDED, FURTHER, THAT THE FOLLOWING PERCENTAGES SHALL APPLY IF THE CORPORATE INCOME TAX RATE AS PROVIDED IN SECTIONS 27 (A) AND 28(A)(1) IS ADJUSTED AS FOLLOWS: IF RATE IS 28%, INTEREST EXPENSE REDUCTION RATE IS 29% IF RATE IS 26%, INTEREST EXPENSE REDUCTION RATE IS 23% IF RATE IS 24%, INTEREST EXPENSE REDUCTION RATE IS 16% IF RATE IS 22%, INTEREST EXPENSE REDUCTION RATE IS 9% IF RATE IS 20%, INTEREST EXPENSE REDUCTION RATE IS 0%. PROVIDED, FINALLY, THAT IF THE INTEREST INCOME TAX IS ADJUSTED IN THE FUTURE, THE INTEREST EXPENSE REDUCTION RATE SHALL BE ADJUSTED ACCORDINGLY BASED ON THE PRESCRIBED STANDARD FORMULA. (2) xxx (C) Taxes. - xxx (D) Losses. - xxx (E) Bad Debts. - xxx 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 (F) Depreciation. - xxx (G) Depletion of Oil and Gas Wells and Mines. - xxx (H) Charitable and Other Contributions. - xxx (I) Research and Development.- xxx (J) Pension Trusts. - xxx (K) Additional Requirements for Deductibility of Certain Payments. - xxx (L) Optional Standard Deduction (OSD). – In lieu of the deductions allowed under the preceding Subsections, an individual subject to tax under Section 24, other than a nonresident alien, [ may elect a standard deduction in an amount not exceeding forty percent (40%) of his gross sales or gross receipts, as the case maybe. In the case of a ] AND A corporation CLASSIFIED AS A MICRO, SMALL AND MEDIUMSIZED ENTERPRISE AS DETERMINED BY THE DEPARTMENT OF TRADE AND INDUSTRY AND subject to tax under Sections 27(A) and 28 (A)(1), [ it ] may elect a standard deduction in an amount not exceeding forty percent (40%) of its gross income as defined in Section 32 of this Code. Unless the taxpayer signifies in his return his intention to elect the optional standard deduction, he shall be considered as having availed himself of the deductions allowed in the preceding Subsections. Such election when made in the return shall be irrevocable for the taxable year for which the return is made: Provided, That an individual who is entitled to and claimed for the optional standard deduction shall not be required to submit with his tax return such financial statements otherwise required under this Code: Provided, further, That except when the Commissioner otherwise permits, the said individual shall keep such records pertaining to his gross sales or gross receipts, or the said corporation shall keep such records pertaining to his gross income as defined in Section 32 of this Code during the taxable year, as may be required by the rules and regulations promulgated by the Secretary of Finance, upon, recommendation of the Commissioner. Notwithstanding the provision of the preceding Subsections, the Secretary of Finance, upon recommendation of the Commissioner, after a public hearing shall have been held for this purpose, may prescribe by rules and regulations, limitations or ceilings for any of the itemized deductions under Subsections (A) to (J) of this Section: Provided, That for purposes of determining such ceilings or limitations, the Secretary of Finance shall consider the following factors: (1) adequacy of the prescribed limits on the actual expenditure requirements of each particular industry; and (2)effects of inflation on expenditure levels: Provided, 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 further, That no ceilings shall further be imposed on items of expense already subject to ceilings under present law.” SEC. 10. Section 40(C)(2) of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: “SEC. 40. Determination of Amount and Recognition of Gain or Loss. (A) x xx (B) x xx (C) Exchange of Property. – (1) xxx (2) Exception. - No gain or loss shall be recognized TO A CORPORATION OR ON ITS STOCK OR SECURITIES IF SUCH CORPORATION IS A PARTY TO A REORGANIZATION AND EXCHANGES PROPERTY, [ if ] in pursuance of a plan of [ merger or consolidation ] REORGANIZATION SOLELY FOR STOCK OR SECURITIES IN ANOTHER CORPORATION THAT IS A PARTY TO THE REORGANIZATION. A REORGANIZATION IS DEFINED AS: (a) A corporation, which is a party to a merger or consolidation, exchanges property solely for stock in a corporation, which is a party to the merger or consolidation; or (b) [ A shareholder exchanges stock in a corporation, which is a party to the merger or consolidation, solely for the stock of another corporation also a party to the merger or consolidation; or ]THE ACQUISITION BY ONE CORPORATION, IN EXCHANGE SOLELY FOR ALL OR A PART OF ITS VOTING STOCK, OR IN EXCHANGE SOLELY FOR ALL OR A PART OF THE VOTING STOCK OF A CORPORATION WHICH IS IN CONTROL OF THE ACQUIRING CORPORATION, OF STOCK OF ANOTHER CORPORATION IF, IMMEDIATELY AFTER THE ACQUISITION, THE ACQUIRING CORPORATION HAS CONTROL OF SUCH OTHER CORPORATION WHETHER OR NOT SUCH ACQUIRING CORPORATION HAD CONTROL IMMEDIATELY BEFORE THE ACQUISITION; 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 (c) [ A security holder of a corporation, which is a party to the merger or consolidation, exchanges his securities in such corporation, solely for stock or securities in such corporation, a party to the merger or consolidation. ] THE ACQUISITION BY ONE CORPORATION, IN EXCHANGE SOLELY FOR ALL OR A PART OF ITS VOTING STOCK OR IN EXCHANGE SOLELY FOR ALL OR A PART OF THE VOTING STOCK OF A CORPORATION WHICH IS IN CONTROL OF THE ACQUIRING CORPORATION, OR SUBSTANTIALLY ALL OF THE PROPERTIES OF ANOTHER CORPORATION, BUT IN DETERMINING WHETHER THE EXCHANGE IS SOLELY FOR STOCK THE ASSUMPTION BY THE ACQUIRING CORPORATION OF A LIABILITY OF THE OTHER SHALL BE DISREGARDED; (D) A RECAPITALIZATION; OR (E) A REINCORPORATION No gain or loss shall also be recognized if property is transferred to a corporation by a person in exchange for stock or unit of participation in such a corporation of which as a result of such exchange said person, alone or together with others, not exceeding four (4) persons, [ gains control of said corporation ] AND, IMMEDIATELY AFTER, SUCH PERSON OR PERSONS ARE IN CONTROL : Provided, that stocks issued for services shall not be considered as issued in return for property. IN ALL OF THE ABOVE INSTANCES, THE TRANSACTION OR ARRANGEMENT MUST BE UNDERTAKEN FOR A LEGITIMATE OR BONA FIDE BUSINESS PURPOSE AND NOT SOLELY FOR THE PURPOSE OF AVOIDING OR ESCAPING THE BURDEN OF TAXATION. THE PROVISION OF SECTION 50 OF THIS CODE SHALL BE APPLIED AND ENFORCED IN CASES WHERE THE TRANSACTION OR ARRANGEMENT ENTERED INTO IS FOUND TO BE NOT FOR LEGITIMATE OR BONA FIDE BUSINESS PURPOSE. SALE OR EXCHANGES OF PROPERTY USED FOR BUSINESS FOR SHARES OF STOCK COVERED UNDER THIS SUBSECTION SHALL NOT BE SUBJECT TO VALUE ADDED TAX (VAT) xxx” 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 SEC. 11. Section 50 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: “SEC. 50.[ Allocation of Income and Deductions. In the case of two or more organizations, trades or businesses (whether or not incorporated and whether or not organized in the Philippines) owned or controlled directly or indirectly by the same interests, the Commissioner is authorized to distribute, apportion or allocate gross income or deductions between or among such organization, trade or business, if he determined that such distribution, apportionment or allocation is necessary in order to prevent evasion of taxes or clearly to reflect the income of any such organization, trade or business. ] AUTHORITY OF THE COMMISSIONER TO DISTRIBUTE, APPORTION, ALLOCATE, AND IMPUTE INCOME AND DEDUCTIONS TO DISREGARD AND COUNTERACT TAX AVOIDANCE ARRANGEMENTS. – IN CASE OF TWO OR MORE ORGANIZATIONS, TRADES OR BUSINESSES, WHETHER OR NOT ORGANIZED IN THE PHILIPPINES, OWNED OR CONTROLLED DIRECTLY OR INDIRECTLY BY THE SAME INTERESTS, THE COMMISSIONER IS AUTHORIZED TO DISTRIBUTE, APPORTION, ALLOCATE, OR IMPUTE INCOME OR DEDUCTIONS BETWEEN OR AMONG SUCH ORGANIZATION, TRADE OR BUSINESS, IF THE COMMISSIONER DETERMINES THAT SUCH DISTRIBUTION, APPORTIONMENT, ALLOCATION, OR IMPUTATION IS NECESSARY IN ORDER TO PREVENT AVOIDANCE OF TAXES OR TO CLEARLY REFLECT THE INCOME OF ANY SUCH ORGANIZATION, TRADE, OR BUSINESS. IN CASES WHEN A TRANSACTION OR ARRANGEMENT, WHETHER ENTERED INTO BY THE PERSON AFFECTED BY THE TRANSACTION OR ARRANGEMENT OR BY ANOTHER PERSON, THAT DIRECTLY OR INDIRECTLY HAS TAX AVOIDANCE AS ITS PURPOSE OR EFFECT, WHETHER OR NOT ANY OTHER PURPOSE OR EFFECT IS ATTRIBUTABLE TO ORDINARY BUSINESS OR FAMILY DEALINGS, IF THE TAX AVOIDANCE PURPOSE OR EFFECT IS NOT MERELY INCIDENTAL, THE COMMISSIONER IS AUTHORIZED TO DISREGARD AND CONSIDER SUCH TRANSACTION OR ARRANGEMENT AS VOID FOR INCOME TAX PURPOSES, AND MAY ADJUST THE TAXABLE INCOME OF A PERSON AFFECTED BY THE ARRANGEMENT IN A WAY THE COMMISSIONER THINKS APPROPRIATE, IN ORDER TO COUNTERACT A TAX ADVANTAGE OBTAINED BY THE PERSON FROM OR UNDER THE ARRANGEMENT. FOR PURPOSES OF THIS SECTION, THE TERM “TAX AVOIDANCE” INCLUDES: (A) DIRECTLY OR INDIRECTLY ALTERING THE INCIDENCE OF ANY INCOME TAX; (B) DIRECTLY OR INDIRECTLY RELIEVING A PERSON FROM LIABILITY TO PAY 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 INCOME TAX OR FROM A POTENTIAL OR PROSPECTIVE LIABILITY TO FUTURE INCOME TAX; OR (C) DIRECTLY OR INDIRECTLY AVOIDING, POSTPONING, OR REDUCING ANY LIABILITY TO INCOME TAX, OR ANY POTENTIAL OR PROSPECTIVE LIABILITY TO FUTURE INCOME TAX. THERE IS TAX AVOIDANCE IN THE AFOREMENTIONED INSTANCES, WHERE THE TRANSACTION OR ARRANGEMENT IS MOTIVATED BY OBTAINING TAX BENEFIT OR ADVANTAGE WITH NO COMMERCIAL REALITY OR ECONOMIC EFFECT AND THE USE OF THE PROVISIONS OF THE TAXATION LAW ON SUCH TRANSACTION OR ARRANGEMENT WOULD NOT HAVE BEEN THE INTENTION OF THE LAW.” SEC. 12. Sec. 73 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 73. Distribution of Dividends or Assets by Corporations. (A) Definition of Dividends. - The term 'dividends' when used in this Title means any distribution made by a corporation to its shareholders out of its earnings or profits and payable to its shareholders, whether in money or in other property. [ Where a corporation distributes all of its assets in complete liquidation or dissolution, the gain realized or loss sustained by the stockholder, whether individual or corporate, is a taxable income or a deductible loss, as the case may be. ] (B) Stock Dividend. - A stock dividend representing the transfer of surplus to capital account shall not be subject to tax. However, if a corporation cancels or redeems stock issued as a dividend at such time and in such manner as to make the distribution and cancellation or redemption, in whole or in part, essentially equivalent to the distribution of a taxable dividend, the amount so distributed in redemption or cancellation of the stock shall be considered as taxable income to the extent that it represents a distribution of earnings or profits. (C) LIQUIDATING DIVIDENDS. – LIQUIDATING DIVIDENDS ARE DIVIDENDS REPRESENTING THE REMAINING GAINS REALIZED OR LOSS SUSTAINED BY THE STOCKHOLDER IN A COMPLETE LIQUIDATION OR DISSOLUTION BY A CORPORATION AND SHALL BE CONSIDERED AS TAXABLE INCOME OR A DEDUCTIBLE LOSS, AS THE CASE MAY BE. [ (C) ] (D) Dividends Distributed are Deemed Made from Most Recently Accumulated Profits. - Any distribution made to the shareholders or members of a corporation shall be deemed to have been made from the most recently 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 accumulated profits or surplus, and shall constitute a part of the annual income of the distributee for the year in which received. [ (D) ] (E) Net Income of a Partnership Deemed Constructively Received by Partners. - The taxable income declared by a partnership for a taxable year which is subject to tax under Section 27 (A) of this Code, after deducting the corporate income tax imposed therein, shall be deemed to have been actually or constructively received by the partners in the same taxable year and shall be taxed to them in their individual capacity, whether actually distributed or not.” SEC. 13. Sec. 112 (A) (B) of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: “SEC. 112. Refunds [ or Tax Credits ] of Input Tax. – "(A) Zero-rated or Effectively Zero-rated Sales. - Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for [ the issuance of a tax credit certificate or ] refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1) ,(2) and [ (b) ] and Section 108 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales. Provided, finally, that for a person making sales that are zero-rated under Section 108(B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zerorated sales. "(B) Cancellation of VAT Registration. - A person whose registration has been cancelled due to retirement from or cessation of business, or due to changes in or cessation of status under Section 106(C) of this Code may, within two (2) years from the date of cancellation, apply for REFUND. [ the issuance of a tax credit certificate for any unused input tax. which may be used in payment of his other internal revenue taxes ] SEC. 14. SEC. 117 of the National Internal Revenue code of 1997, as amended, is hereby amended to read as follows: “SEC 117. Percentage Tax on Domestic Carriers and Keepers of Garages. –Cars for rent or hire driven by the lessee; transportation contractors, including persons who transport passengers for hire, and other domestic carriers by land for the transport of passengers (except 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 OWNERS/OPERATORS OF TRICYCLES OPERATING NOT MORE THAN TWO (2) UNITS, owners of bancas, and owners of animal-drawn two-wheeled vehicle), and keepers of garages shall pay a tax equivalent to three percent (3%) of their quarterly gross receipts. xxx” SEC. 15. Sec. 119 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “Section 119. Tax on Franchises. - Any provision of general or special law to the contrary notwithstanding, there shall be levied, assessed and collected in respect to all EXISTING franchise agreement or law pertaining TO franchises on radio and/or television broadcasting companies [whose annual gross receipts of the preceding year do not exceed Ten million pesos (P10,000,000.00) ] , subject to Section 236 of this Code, a FRANCHISE tax of three percent (3%) and on gas and water utilities, a FRANCHISE tax of two percent (2%) on the gross receipts derived from the business covered by the law granting the franchise: Provided, however, That radio and/OR television broadcasting companies referred to in this Section shall [ have an option to] be registered as a valueadded taxpayer and pay the tax due thereon.[ : Provided, further, That once the option is exercised, said option shall not be irrevocable ] SEC. 16. Sec. 204 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. – The Commissioner may – (A) Compromise the payment of any internal revenue tax, when: (1) A reasonable doubt as to the validity of the claim against the taxpayer exists; or (2) The financial position of the taxpayer demonstrates a clear inability to pay the assessed tax. The compromise settlement of any tax liability shall be subject to the following minimum amounts: For cases of financial incapacity, a minimum compromise rate equivalent to ten percent (10%) of the basic assessed tax; and For other cases, a minimum compromise rate equivalent to forty percent (40%)of the basic assessed tax. 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Where the basic tax involved exceeds [ One] TEN million pesos [ (P1,000.000) ] (P10,000,000) or where the settlement offered is less than the prescribed minimum rates, the compromise shall be subject to the approval of the Evaluation Board which shall be composed of the Commissioner and the four (4) Deputy Commissioners. xxx” SEC. 17. Sec. 222 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 222. Exceptions as to Period of Limitation of Assessment and Collection of Taxes.(a) xxx (b) If before the expiration of the time prescribed in Section 203 for the assessment of the tax, [ both the Commissioner and ] the taxpayer [ have agreed ] APPLIES WITH THE COMMISSIONER in writing to its assessment after such time, the tax may be assessed within the period [ agreed upon ] SPECIFIED IN THE APPLICATION WHICH SHALL NOT EXCEED SIX (6) MONTHS AT ANY ONE TIME. The FOREGOING period [ so agreed upon ] may be extended by subsequent written [ agreement ]APPLICATION made before the expiration of the period previously [ agreed upon ]APPLIED FOR. xxx” SEC. 18. Sec. 237 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. – (A) Issuance. – xxx “Within five (5) years from the effectivity of this Act and upon the establishment of a system capable of storing and processing the required date, the Bureau shall require taxpayers engaged in the export of goods and service, taxpayers engaged in e-commerce, and taxpayers under the jurisdiction of the Large Taxpayers Service to issue AND TRANSMIT electronic receipts or sales or commercial invoices [ in lieu of manual receipts or sales or commercial invoices ]THRU DESIGNATED ELECTRONIC CHANNELS WITH A PUBLIC CERTIFICATION SYSTEM ACCREDITED BY THE BUREAU, subject to the rules and regulations to be issued by the Secretary of Finance upon recommendation of the Commissioner [ and after a ] following a public hearing [ shall have been ] held for this purpose: Provided, That taxpayers not covered by 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 the mandate of this provision may issue electronic receipts of sales or commercial invoices in lieu of manual receipts or sales or commercial invoices. PROVIDED FURTHER, SUBJECT TO THE RULES AND REGULATIONS TO BE ISSUED BY THE SECRETARY OF FINANCE, THE COMMISSIONER MAY REQUIRE ANY TAXPAYER TO COMPLY WITH THE PROVISIONS OF THIS SECTION. A PUBLIC CERTIFICATION SYSTEM SHALL REFER TO A DIGITAL PERSONAL AUTHENTICATION PROGRAM WITH ABILITY TO VERIFY THE IDENTITY OF ISSUING TAXPAYER AND ATTEST TO THE AUTHENTICITY OF THE INFORMATION IN THE ELECTRONIC RECEIPTS OR SALES OR COMMERCIAL INVOICES. THIS MAY INCLUDE THE USE OF DIGITAL SIGNATURE ISSUED BY CERTIFICATION AUTHORITY AS ACCREDITED BY THE BUREAU OF INTERNAL REVENUE. A DESIGNATED ELECTRONIC CHANNEL SHALL REFER TO ANY MEDIUM OR PORTAL IDENTIFIED BY THE BUREAU WITH AN ABILITY TO RECEIVE THE TRANSACTION DATA OF THE ELECTRONIC RECEIPTS OF SALES OR COMMERCIAL INVOICES FOR ASSIGNMENT OF AN APPROVED ELECTRONIC TAX TRANSACTION NUMBER. AN APPROVED TAX TRANSACTION NUMBER SHALL REFER TO THE UNIQUE ASSIGNED SERVICE NUMBERS AND/OR LETTERS LINKED TO A VALIDATED SALES TRANSACTION REPORTED THROUGH THE DESIGNATED ELECTRONIC CHANNEL. The original of each receipt or invoice shall be issued to the purchaser, customer, or client at the time the transaction is effected, who, if engaged in the business or in the exercise of profession, shall keep and preserve the same in his place of business for a period of three (3) years from the close of the taxable year in which such invoice or receipt was issued, while the duplicate shall be kept and preserved by the issue, also in his place of business, for a like period: Provided, that in case of electronic receipts or sales or commercial invoices, digital record of the same [ shall be kept by the purchaser, customer or client and the issuer for the same period above stated ] BEARING THE APPROVED ELECTRONIC TAX TRANSACTION NUMBER SHALL BE SUFFICIENT COMPLIANCE . The Commissioner may, in meritorious cases, exempt any person subject to internal revenue tax from compliance with the provision of this Section.” SEC. 19. Sec. 237-A of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 “SEC. 237-A. Electronic Sales Reporting System. – Within five (5) years from the effectivity of this Act and upon the establishment of a system capable of storing and processing the required data, the Bureau shall require taxpayers engaged in the export of goods and services, taxpayers engaged in e-commerce, and taxpayers under the jurisdiction of the Large Taxpayers Service to USE A SYSTEM CAPABLE OF ISSUING ELECTRONIC RECEIPTS OR SALES OR COMMERCIAL INVOICES, COLLECT TRANSACTION RECORDS, AND TRANSMIT THE SAME THROUGH THE DESIGNATED ELECTRONIC CHANNELS OF THE BUREAU IN THE STANDARD FORMAT REQUIRED[ electronically report their sales data to the Bureau of through the use of electronic point of sales systems, ] subject to the rules and regulations to be issued by the Secretary of Finance upon recommendation of the Commissioner of Internal Revenue: Provided, That the POINT OF SALE (POS) machines, VALUE ADDED NETWORK (VAN) TERMINALS, fiscal devices, and fiscal memory devices WITH CAPACITY TO MAKE SUCH TRANSMISSION shall be at the expense of the taxpayers: PROVIDED, FURTHER, SUBJECT TO THE RULES AND REGULATIONS TO BE ISSUED BY THE SECRETARY OF FINANCE, THE COMMISSIONER MAY REQUIRE ANY TAXPAYER TO COMPLY WITH THE PROVISIONS OF THIS SECTION. IN YEAR ONE TO YEAR FOUR OF THE IMPLEMENTATION PERIOD, A TAXPAYER WHO ADOPTS THE REQUIRED SYSTEM SHALL BE GRANTED A TAX CREDIT OF 0.1% OF THE PURCHASE VALUE, NET OF VALUE ADDED TAX, FOR EVERY ELECTRONIC RECEIPT OR SALE OR COMMERCIAL INVOICE TRANSMITTED THROUGH THE DESIGNATED ELECTRONIC CHANNELS OF THE BUREAU AND ISSUED AN ELECTRONIC TAX TRANSACTION NUMBER. IN SUPPORT OF THE ELECTRONIC SALES REPORTING SYSTEM, THE BUREAU OF INTERNAL REVENUE MAY GRANT TAX INCENTIVES FOR ELECTRONICALLY TRACEABLE PAYMENTS (ETP) IN THE FORM OF ALLOWABLE DEDUCTIBLE EXPENSE OF UP TO 10% OF THE ETP MADE BY THE TAXPAYER. AN ANNUAL LIMIT ON THE ALLOWED ETP DEDUCTIBLE EXPENSE PER TAXPAYER MAYBE SET BY THE COMMISSIONER WITH THE APPROVAL OF THE SECRETARY OF FINANCE. ELECTRONICALLY TRACEABLE PAYMENTS REFER TO CREDIT CARD, DEBIT CARD, OR OTHER METHODS OF PAYMENT WITH A SYSTEM TO VERIFY OR LINK THE PAYMENT TO THE IDENTITY OF PAYOR. THE BUREAU MAY LIKEWISE ESTABLISH A RECEIPT AND INVOICE LOTTERY PROGRAM FOR ELECTRONIC RECEIPTS OR SALES OR COMMERCIAL INVOICES TRANSMITTED THROUGH 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 THE DESIGNATED ELECTRONIC CHANNELS OF THE BUREAU AND ISSUED AN ELECTRONIC TAX TRANSACTION NUMBER. The data processing of sales and purchase data shall comply with the provisions of Republic Act No. 10173, otherwise known as the "Data Privacy Act" and Section 270 of the NIRC, as amended, on unlawful divulgence of taxpayer information and such other laws relating to the confidentiality of information. The Bureau shall also establish policies, risk management approaches, actions, training, and technologies to protect the cyber environment, organization, and data in compliance with Republic Act No. 10175 or the "Cybercrime Prevention Act of 2012." SEC. 20. Sec. 255 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 255. Failure to File Return, Supply Correct and Accurate Information, Pay Tax Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation. - Any person required under this Code or by rules and regulations promulgated thereunder to pay any tax make a return, keep any record, or supply correct the accurate information, who willfully fails to pay such tax, make such return, keep such record, or supply correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on compensation, at the time or times required by law or rules and regulations shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine of not less than [Ten thousand pesos (P10,000) ] ONE HUNDRED THOUSAND (P100,000) BUT NOT MORE THAN ONE MILLION TWO HUNDRED THOUSAND PESOS (P 1,200,000) and suffer imprisonment of not less than one (1) year but not more than ten (10) years. Any person who attempts to make it appear for any reason that he or another has in fact filed a return or statement, or actually files a return or statement and subsequently withdraws the same return or statement after securing the official receiving seal or stamp of receipt of internal revenue office wherein the same was actually filed shall, upon conviction therefore, be punished by a fine of not less than [ Ten thousand pesos (P10,000) but not more than Twenty thousand pesos (P20,000) ]ONE HUNDRED THOUSAND PESOS (P100,000) BUT NOT MORE THAN ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000) and suffer imprisonment of not less than one (1) year but not more than three (3) years.” SEC. 21. Sec. 256 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 256. Penal Liability of Corporations. - Any corporation, association or general co-partnership liable for any of the acts or omissions penalized under this 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Code, in addition to the penalties imposed herein upon the responsible corporate officers, partners, or employees shall, upon conviction for each act or omission, be punished by a fine of not less than [Fifty thousand pesos (P50,000) but not more than One hundred thousand pesos (P100,000)] TWO HUNDRED THOUSAND PESOS (P200,000) BUT NOT MORE THAN TWO MILLION FOUR HUNDRED THOUSAND PESOS (P2,400,000).” SEC. 22. Sec. 257 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 257. Penal Liability for Making False Entries, Records or Reports, or Using Falsified or Fake Accountable Forms. – (A) Any financial officer or independent Certified Public Accountant engaged to examine and audit books of accounts of taxpayers under Section 232 (A) and any person under his direction who: (1) Willfully falsifies any report or statement bearing on any examination or audit, or renders a report, including exhibits, statements, schedules or other forms of accountancy work which has not been verified by him personally or under his supervision or by a member of his firm or by a member of his staff in accordance with sound auditing practices; or (2) Certifies financial statements of a business enterprise containing an essential misstatement of facts or omission in respect of the transactions, taxable income, deduction and exemption of his client; or (B) Any person who: (1) Not being an independent Certified Public Accountant according to Section 232(B) or a financial officer, examines and audits books of accounts of taxpayers; or (2) Offers to sign and certify financial statements without audit; or (3) Offers any taxpayer the use of accounting bookkeeping records for internal revenue purposes not in conformity with the requirements prescribed in this Code or rules and regulations promulgated thereunder; or (4) Knowingly makes any false entry or enters any false or fictitious name in the books of accounts or record mentioned in the preceding paragraphs; or (5) Keeps two (2) or more sets of such records or books of accounts; or 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 (6) In any way commits an act or omission, in violation of the provisions of this Section; or (7) Fails to keep the books of accounts or records mentioned in Section 232 in a native language, English or Spanish, or to make a true and complete translation as required in Section 234 of this Code, or whose books of accounts or records kept in a native language, English or Spanish, and found to be at material variance with books or records kept by him in another language; or (8) Willfully attempts in any manner to evade or defeat any tax imposed under this Code, or knowingly uses fake or falsified revenue official receipts, Letters of Authority, certificates authorizing registration, Tax Credit Certificates, Tax Debit Memoranda and other accountable forms shall, upon conviction for each act or omission, be punished by a fine not less than [Fifty thousand pesos (P50,000) but not more than One hundred thousand pesos (P100,000)] THREE HUNDRED THOUSAND PESOS (P300,000) BUT NOT MORE THAN ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000) and suffer imprisonment of not less than two (2) years but not more than six (6) years. If the offender is a Certified Public Accountant, his certificate as a Certified Public Accountant shall be automatically revoked or cancelled upon conviction. In the case of foreigners, conviction under this Code shall result in [his] THEIR immediate deportation after serving sentence, without further proceedings for deportation.” SEC. 23. Sec. 258 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 258. Unlawful Pursuit of Business. - Any person who carries on any business for which an annual registration fee is imposed without paying the tax as required by law shall, upon conviction for each act or omission, be punished by a fine of not less than [ Five thousand pesos (P5,000) but not more than Twenty thousand pesos (P20,000) ]FIFTY THOUSAND PESOS (P50,000) BUT NOT MORE THAN THREE HUNDRED THOUSAND PESOS (P300,000) and suffer imprisonment of not less than six (6) months but not more than two (2) years: Provided, That in the case of a person engaged in the business of distilling, rectifying, repacking, compounding or manufacturing any article subject to excise tax, he shall, upon conviction for each act or omission, be punished by a fine of not less than [ Thirty thousand pesos (P30,000) but not more than Fifty thousand pesos (P50,000) ]THREE HUNDRED THOUSAND PESOS (P300,000) BUT NOT MORE THAN SEVEN HUNDRED THOUSAND PESOS (P700,000) and suffer imprisonment of not less than two (2) years but not more than four (4) years.” 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 SEC. 24. Sec. 260 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 260. Unlawful Possession of Cigarette Paper in Bobbins or Rolls, Etc. - It shall be unlawful for any person to have in his possession cigarette paper in bobbins or rolls, cigarette tipping paper or cigarette filter tips, without the corresponding authority therefor issued by the Commissioner. Any person, importer, manufacturer of cigar and cigarettes, who has been found guilty under this Section, shall, upon conviction for each act or omission, be punished by a fine of not less than than[ Twenty thousand pesos (P20,000) but not more than One hundred thousand pesos (P100,000) ] ONE MILLION FIVE HUNDRED THOUSAND PESOS (P1,500,000) BUT NOT MORE THAN FIFTEEN MILLION PESOS (P15,000,000) and suffer imprisonment for a term of not less than six (6) years and one (1) day but not more than twelve (12) years.” SEC. 25. Sec. 261 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 261. Unlawful Use of Denatured Alcohol. - Any person who for the purpose of manufacturing any beverage, uses denatured alcohol or alcohol specially denatured to be used for motive power or withdrawn under bond for industrial uses or alcohol knowingly misrepresented to be denatured to be unfit for oral intake or who knowingly sells or offers for sale any beverage made in whole or in part from such alcohol or who uses such alcohol for the manufacture of liquid medicinal preparations taken internally, or knowingly sells or offers for sale such preparations containing as an ingredient such alcohol, shall upon conviction for each act or omission be punished by a fine of not less than than[Twenty thousand pesos (P20,000) but not more than One hundred thousand pesos (P100,000) ] ONE MILLION FIVE HUNDRED THOUSAND PESOS (P1,500,000) BUT NOT MORE THAN FIFTEEN MILLION PESOS (P15,000,000) and suffer imprisonment for a term of not less than six (6) years and one (1) day but not more than twelve (12) years. Any person who shall unlawfully recover or attempt to recover by distillation or other process any denatured alcohol or who knowingly sells or offers for sale, conceals or otherwise disposes of alcohol so recovered or redistilled shall be subject to the same penalties imposed under this Section.” SEC. 26. Sec. 262 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 262. Shipment or Removal of Liquor or Tobacco Products under False Name or Brand or as an Imitation of any Existing or Otherwise Known Product Name or Brand. - Any person who ships, transports or removes spirituous, compounded or fermented liquors, wines or any manufactured products of 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 tobacco under any other than the proper name or brand known to the trade as designating the kind and quality of the contents of the cask, bottle or package containing the same or as an imitation of any existing or otherwise known product name or brand or causes such act to be done, shall, upon conviction for each act or omission, be punished by a fine of not less than [ Twenty thousand pesos (P20,000) but not more than One hundred thousand pesos (P100,000) ] ONE MILLION FIVE HUNDRED THOUSAND PESOS (P1,500,000) BUT NOT MORE THAN FIFTEEN MILLION PESOS (P15,000,000) and suffer imprisonment of not less than six (6) years and one (1) day but not more than twelve (12) years.” SEC. 27. Sec. 263 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 263. Unlawful Possession or Removal of Articles Subject to Excise Tax without Payment of the Tax.- Any person who owns and/or is found in possession of imported articles subject to excise tax, the tax on which has not been paid in accordance with law, or any person who owns and/or is found in possession of imported tax-exempt articles other than those to whom they are legally issued shall be punished by: (a) A fine of not less than [ One thousand pesos (P1,000) ]TWENTY FIVE THOUSAND PESOS (P25,000) [ nor ] BUT NOT more than [ Two thousand pesos (P2,000) ]SEVENTY FIVE THOUSAND PESOS (P75,000) and suffer imprisonment of not less than [ sixty (60) days but not more than one hundred (100) days ] THIRTY (30) DAYS BUT NOT MORE THAN SIX (6) MONTHS if the appraised value, to be determined in the manner prescribed in the [ Tariff and Customs Code ]CUSTOMS MODERNIZATION AND TARIFF ACT, including duties and taxes, of the articles does not exceed [ One thousand pesos (P1,000). ]TWO HUNDRED FIFTY THOUSAND PESOS (P250,000). (b) A fine of not less than [ Ten thousand pesos (P10,000) ] SEVENTY FIVE THOUSAND PESOS (P75,000) but not more than [ Twenty thousand pesos (P20,000) ]ONE HUNDRED FIFTY THOUSAND PESOS (P150,000) and suffer imprisonment of not less than [ two (2) years but not more than four (4) years ]SIX (6) MONTHS AND ONE (1) DAY BUT NOT MORE THAN ONE (1) YEAR if the appraised value, to be determined in the manner prescribed in the [ Tariff and Customs Code ]CUSTOMS MODERNIZATION AND TARIFF ACT, including duties and taxes, of the articles exceeds [ One thousand pesos (P1,000) ] TWO HUNDRED FIFTY THOUSAND PESOS (P250,000) but does not exceed [ Fifty thousand pesos (P50,000) ]FIVE HUNDRED THOUSAND PESOS (P500,000); (c) A fine of not less than [ Thirty thousand pesos (P30,000) ] ONE HUNDRED FIFTY THOUSAND PESOS (P150,000) but not more than 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 [ Sixty thousand pesos (P60,000) ]THREE HUNDRED THOUSAND PESOS (P300,000) and suffer imprisonment of not less than [ four (4) years but not more than six (6) years ] ,ONE (1) YEAR AND ONE (1) DAY BUT NOT MORE THAN THREE (3) YEARS, if the appraised value, to be determined in the manner prescribed in the [ Tariff and Customs Code ]CUSTOMS MODERNIZATION AND TARIFF ACT, including duties and taxes of the articles is more than [ Fifty thousand pesos (P50,000) but does not exceed One hundred fifty thousand pesos (P150,000) ]FIVE HUNDRED THOUSAND PESOS (P500,000) BUT DOES NOT EXCEED ONE MILLION PESOS (P1,000,000); or (d) A fine of not less than [ Fifty thousand pesos (P50,000) ]THREE HUNDRED THOUSAND PESOS (P300,000) but not more than [ One hundred thousand pesos (P100, 000) ] ONE MILLION FIVE HUNDRED THOUSAND PESOS (P1,500, 000) and suffer imprisonment of [ not less than ten (10) years but not more than twelve (12) years ] THREE (3) YEARS AND ONE (1) DAY BUT NOT MORE THAN SIX (6) years, if the appraised value, to be determined in the manner prescribed in the [ Tariff and Customs Code ] CUSTOMS MODERNIZATION AND TARIFF ACT, including duties and taxes, of the articles exceeds [ One hundred fifty thousand pesos (P150,000) ] IS MORE THAN ONE MILLION PESOS (P1,000,000.00) BUT NOT MORE THAN FIVE MILLION PESOS (P5,000,000.00); (E) A FINE OF NOT LESS THAN ONE MILLION FIVE HUNDRED THOUSAND PESOS (P 1,500,000.00) BUT NOT MORE THAN FIFTEEN MILLION PESOS (P15,000,000.00), AND SUFFER IMPRISONMENT OF NOT LESS THAN SIX (6) YEARS AND ONE (1) DAY BUT NOT MORE THAN TWELVE (12) YEARS, IF THE APPRAISED VALUE, TO BE DETERMINED IN THE MANNER PRESCRIBED IN THE CUSTOMS MODERNIZATION AND TARIFF ACT, INCLUDING DUTIES AND TAXES, OF THE ARTICLES IS MORE THAN FIVE MILLION PESOS (P5,000,000) BUT NOT MORE THAN FIFTY MILLION PESOS (P50,000,000); (F) A FINE OF NOT LESS THAN FIFTEEN MILLION PESOS (P 15,000,000.00) BUT NOT MORE THAN FIFTY MILLION PESOS (P50,000,000), AND SUFFER IMPRISONMENT OF NOT LESS THAN TWELVE (12) YEARS AND ONE (1) DAY BUT NOT MORE THAN TWENTY (20) YEARS, IF THE APPRAISED VALUE, TO BE DETERMINED IN THE MANNER PRESCRIBED IN THE CUSTOMS MODERNIZATION AND TARIFF ACT, INCLUDING DUTIES AND TAXES, OF THE ARTICLES IS MORE THAN FIFTY MILLION PESOS (P50,000,000.00) BUT NOT MORE THAN TWO HUNDRED MILLION PESOS (P200,000,000); OR 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 (G) IF THE APPRAISED VALUE OF THE GOODS UNLAWFULLY IMPORTED TO BE DETERMINED IN THE MANNER PRESCRIBED UNDER IN THE CUSTOMS MODERNIZATION AND TARIFF ACT, INCLUDING DUTIES AND TAXES, EXCEEDS TWO HUNDRED MILLION PESOS (P200,000,000) OR IF THE AGGREGATE AMOUNT OF THE APPRAISED VALUE OF THE GOODS WHICH ARE THE SUBJECT OF UNLAWFUL IMPORTATION COMMITTED IN MORE THAN ONE INSTANCE, INCLUDING DUTIES AND TAXES, EXCEEDS TWO HUNDRED MILLION PESOS (P200,000,000), THE SAME SHALL BE PUNISHABLE WITH A PENALTY OF TWENTY YEARS ONE DAY BUT NOT MORE THAN THIRTY YEARS AND A FINE OF NOT LESS THAN FIFTY MILLION PESOS (P50,000,000.00). Any person who is found in possession of locally manufactured articles subject to excise tax, the tax on which has not been paid in accordance with law, or any person who is found in possession of such articles which are exempt from excise tax other than those to whom the same is lawfully issued shall be punished with a fine of not less than (10) times the amount of excise tax due on the articles found but not less than [ Five hundred pesos (P500) ]TWENTY FIVE THOUSAND PESOS (P25,000) and suffer imprisonment of not less than two (2) years but not more than four (4) years. Any manufacturer, owner or person in charge of any article subject to excise tax who removes or allows or causes the unlawful removal of any such articles from the place of production or bonded warehouse, upon which the excise tax has not been paid at the time and in the manner required, and any person who knowingly aids or abets in the removal of such articles as aforesaid, or conceals the same after illegal removal shall, for the first offense, be punished with a fine of not less than ten (10) times the amount of excise tax due on the articles but not less than [ One thousand pesos (P1,000) ]TWENTY FIVE THOUSAND (P25,000) and suffer imprisonment of not less than [ one (1) year but not more than two (2) years ] TWO (2) YEARS BUT NOT MORE THAN FOUR (4) YEARS. The mere unexplained possession of articles subject to excise tax, the tax on which has not been paid in accordance with law, shall be punishable under this Section.” SEC. 28. Sec. 264 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 264. Failure or refusal to Issue Receipts or Sales or Commercial Invoices, Violations related to the Printing of such Receipts or Invoices and Other Violations. - 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 (a) Any person who, being required under Section 237 to issue receipts or sales or commercial invoices, fails or refuses to issue such receipts of invoices, issues receipts or invoices that do not truly reflect and/or contain all the information required to be shown therein, or uses multiple or double receipts or invoices, shall, upon conviction for each act or omission, be punished by a fine of not less than [ One thousand pesos (P1,000) but not more than Fifty thousand pesos (P50,000) ]ONE HUNDRED THOUSAND PESOS (P100,000) BUT NOT MORE THAN FIVE HUNDRED THOUSAND PESOS (P500,000) and suffer imprisonment of not less than [ two (2) years but not more than four (4) years ] FOUR (4) YEARS BUT NOT MORE THAN EIGHT (8) YEARS. (b) Any person who commits any of the acts enumerated hereunder shall be penalized in the same manner and to the same extent as provided for in this Section: (1) Printing of receipts or sales or commercial invoices without authority from the Bureau of Internal Revenue; or (2) Printing of double or multiple sets of invoices or receipts; or (3) Printing of unnumbered receipts or sales or commercial invoices, not bearing the name, business style, Taxpayer Identification Number, and business address of the person or entity.” SEC. 29. Sec. 265 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 265. Offenses Relating to Stamps. - Any person who commits any of the acts enumerated hereunder shall, upon conviction thereof, be punished by a fine of not less than [ Twenty thousand pesos (P20,000) ] SEVEN HUNDRED THOUSAND PESOS (P700,000.00) but not more than [ Fifty thousand pesos (P50,000) ] ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000) and suffer imprisonment of not less than four (4) years but not more than eight (8) years: (a) Making, importing, selling, using or possessing without express authority from the Commissioner, any die for printing or making stamps, labels, tags or playing cards; (b) Erasing the cancellation marks of any stamp previously used, or altering the written figures or letters or cancellation marks on internal revenue stamps; 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 (c) Possessing false, counterfeit, restored or altered stamps, labels or tags or causing the commission of any such offense by another; (d) Selling or offering for sale any box or package containing articles subject to excise tax with false, spurious or counterfeit stamps or labels or selling from any such fraudulent box, package or container as aforementioned; or (e) Giving away or accepting from another, or selling, buying or using containers on which the stamps are not completely destroyed.” SEC.30. Sec. 266 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “Sec. 266. Failure to Obey Summons. - Any person who, being duly summoned to appear to testify, or to appear UNDER SECTION 6-A OF THIS CODE [ and produce books of accounts, records, memoranda or other papers, ] or to furnish information as required under the pertinent provisions of this Code, neglects to appear or to produce such books of accounts, records, memoranda or other papers, or to furnish such information, shall, upon conviction, be punished by a fine of not less than [ Five thousand pesos (P5,000) ] ONE HUNDRED THOUSAND PESOS (₱100,000) but not more than [ ten thousand pesos (P10,000) ] THREE HUNDRED THOUSAND PESOS (₱300,000)) and suffer imprisonment of not less than [ one (1) year but not more than two (2) years.” SEC. 31. Sec. 275 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 275. Violation of Other Provisions of this Code or Rules and Regulations in General. - Any person who violates any provision of this Code or any rule or regulation promulgated by the Department of Finance, for which no specific penalty is provided by law, shall, upon conviction for each act or omission, be punished by a fine of not more than [ One thousand pesos (P1,000) ] TEN THOUSAND PESOS (P10,000) or suffer imprisonment of not more than [ six (6) months ] TWO (2) YEARS, or both.” SEC. 32. A new section is hereby inserted after Section 282 of the National Internal Revenue Code of 1997, as amended, to read as follows: “SEC. 282-A. VIOLATION OF THE PROVISIONS OF THIS CODE AMOUNTING TO ECONOMIC SABOTAGE. – ANY VIOLATION OF SECTION 254 OF THIS CODE THAT ALSO UNDERMINES, WEAKENS OR RENDERS INTO DISREPUTE THE ECONOMIC SYSTEM OR VIABILITY OF THE COUNTRY OR TENDS TO BRING OUT SUCH EFFECTS, IN LIEU OF THE PENALTY SET IN THE PRECEDING 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 PROVISIONS, SHALL CONSTITUTE ECONOMIC SABOTAGE, AND, UPON CONVICTION FOR EACH ACT OR OMISSION, BE PUNISHED BY A FINE OF NOT LESS THAN FIFTY MILIION (P50,000,000) AND RECLUSION TEMPORAL. SEC. 33. Sec. 288 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows: “SEC. 288. Disposition of Incremental Revenue. – (A) XXX (B) XXX (C) XXX (D) XXX (E) XXX (F) XXX (G) STUDENT VOUCHERS. – INCREMENTAL REVENUE FROM TAX PAYMENT OF EDUCATIONAL INSTITUTIONS THAT FAIL TO MEET THE ESTABLISHED PERFORMANCE CRITERIA SHALL FUND A STUDENT VOUCHER PROGRAM TO BE IMPLEMENTED UNDER THE COMMISSION ON HIGHER EDUCTION (CHED) OR THE DEPARTMENT OF EDUCATION (DEPED). (H) UNIVERSAL HEALTHCARE. - INCREMENTAL REVENUE FROM TAX PAYMENT OF HOSPITALS THAT FAIL TO MEET THE ESTABLISHED PERFORMANCE CRITERIA SHALL FUND THE UNIVERSAL HEALTHCARE PROGRAM TO BE IMPLEMENTED UNDER THE DEPARTMENT OF HEALTH (DOH). (I) HOUSING VOUCHERS. – INCREMENTAL REVENUES FROM TAX PAYMENTS OF REAL ESTATE DEVELOPERS SHALL FUND A HOUSING VOUCHER PROGRAM TO BE IMPLEMENTED UNDER THE NATIONAL HOUSING AUTHORITY. SEC. 34. Sec. 290 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows: “SEC. 290. Congressional Oversight Committee. – xxx The Committee shall, among others, in aid of legislation: 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 (1) (2) (3) (4) xxx; xxx; xxx; [and] xxx[.]; AND (5) REVIEW THE PERFORMANCE OF FUNCTIONS OF THE INVESTMENT PROMOTION AGENCIES AND THE FISCAL INCENTIVES REVIEW BOARD, PARTICULARLY IN THE GRANT OF INCENTIVES TO REGISTERED ENTERPRISES AND IN THE REVIEW AND EVALUATION OF GRANTED INCENTIVES, RESPECTIVELY, AS WELL AS IN THE FORMULATION OF THE STRATEGIC INVESTMENTS PRIORITY PLAN. xxx” SEC. 35. A new title is hereby inserted beginning Section 291, Title XIII of the National Internal Revenue Code of 1997, as amended, to read as follows: “TITLE XIII CHAPTER I GENERAL PROVISIONS ON TAX INCENTIVES SEC 291. SCOPE AND COVERAGE. – THIS TITLE SHALL COVER ALL EXISTING INVESTMENT PROMOTION AGENCIES (IPAS) AS DEFINED IN THIS CODE OR RELATED LAWS, AND ALL OTHER IPAS AND OTHER SIMILAR AUTHORITIES THAT MAY BE CREATED BY LAW. THE IPAS SHALL MAINTAIN THEIR FUNCTIONS AND POWERS AS PROVIDED UNDER THE SPECIAL LAWS GOVERNING THEM EXCEPT ON THE EXTENT MODIFIED BY THE PROVISIONS OF THIS CODE. SEC. 292. GOVERNING PROVISION FOR IPAS. – ALL IPAS VESTED WITH THE POWER TO CONFER AND ADMINISTER INCENTIVES SHALL GRANT TAX INCENTIVES PROVIDED IN THIS TITLE TO REGISTERED ENTERPRISES ONLY TO THE EXTENT OF THEIR APPROVED REGISTERED ACTIVITY. THE PERIOD OF AVAILMENT OF INCENTIVES SHALL BE RECKONED FROM THE START OF COMMERCIAL OPERATION. INCOME OR SALES DERIVED FROM NON-REGISTERED ACTIVITY OR PROJECT SHALL BE SUBJECTED TO APPROPRIATE TAXES UNDER THIS CODE. 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 UNLESS OTHERWISE PROVIDED IN THIS CODE, VALUE-ADDED TAX SHALL FOLLOW THE DESTINATION PRINCIPLE WHERE EXPORTS ARE ZERO-RATED AND DOMESTIC SALES ARE SUBJECT TO THE REGULAR VALUE-ADDED TAX RATE. SEC. 293. DEFINITIONS - WHEN USED IN THIS TITLE: (A) THE TERM ‘CAPITAL EQUIPMENT’ REFERS TO MACHINERY, EQUIPMENT, MAJOR COMPONENTS THEREOF, FITTINGS AND ACCOMPANIMENTS WHICH ARE DIRECTLY AND REASONABLY NEEDED IN THE REGISTERED ACTIVITY OF THE REGISTERED ENTERPRISE. (B) THE TERM ’EXPORT SALES OF GOODS’ SHALL MEAN THE SALES OF AN EXPORT ENTERPRISE PAID FOR IN FREELY CONVERTIBLE FOREIGN CURRENCY INWARDLY REMITTED TO THE PHILIPPINES, FROM THE FOLLOWING: (1) THE SALE AND ACTUAL SHIPMENT OF GOODS FROM THE PHILIPPINES TO A FOREIGN COUNTRY BY AN EXPORT ENTERPRISE; (2) SALES TO DIPLOMATIC MISSIONS AND INSTITUTIONS COVERED BY INTERNATIONAL TREATY; (3) SALES OF AN EXPORT ENTERPRISE TO AN INTERNATIONAL SEA OR AIR TRANSPORT OPERATIONS OF GOODS, EQUIPMENT, SPARE PARTS, AND SUPPLIES, EXCEPT FUEL, FORMING PART OF DIRECT COSTS AND TO BE USED IN THE AIRCRAFT OR SEACRAFT, AND CAPITAL EQUIPMENT NEEDED FOR THE SHIPPING OR AIR TRANSPORT OPERATIONS; (C) THE TERM ‘EXPORT SALES OF SERVICES’ SHALL MEAN THE SALES OF AN EXPORT ENTERPRISE, PAID FOR IN FREELY CONVERTIBLE FOREIGN CURRENCY INWARDLY REMITTED TO THE PHILIPPINES, FOR THE FOLLOWING: (1) SERVICES RENDERED TO NON-RESIDENT FOREIGN CLIENTS BY EXPORT ENTERPRISES; (2) SERVICES RENDERED TO DIPLOMATIC MISSIONS AND INSTITUTIONS COVERED BY INTERNATIONAL TREATY; 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 (3) SERVICES FOR THE OVERHAUL, REPAIR, AND MAINTENANCE OF INTERNATIONAL SHIPPING, OR AIR TRANSPORT OPERATIONS. (D) THE TERM ‘INVESTMENT PROMOTION AGENCIES’ (IPAS) SHALL REFER TO GOVERNMENT ENTITIES CREATED BY LAW, EXECUTIVE ORDER, DECREE OR OTHER ISSUANCE, IN CHARGE OF PROMOTING INVESTMENTS, ADMINISTERING TAX AND NONTAX INCENTIVES, AND/OR OVERSEEING THE OPERATIONS FOR THE DIFFERENT ECONOMIC ZONES AND FREEPORTS IN ACCORDANCE WITH THEIR RESPECTIVE CHARTERS. THESE INCLUDE THE BOARD OF INVESTMENTS (BOI), REGIONAL BOARD OF INVESTMENTS AUTONOMOUS REGION IN MUSLIM MINDANAO (RBOI-ARMM), PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA), BASES CONVERSION AND DEVELOPMENT AUTHORITY (BCDA), SUBIC BAY METROPOLITAN AUTHORITY (SBMA), CLARK DEVELOPMENT CORPORATION (CDC), JOHN HAY MANAGEMENT CORPORATION (JHMC), PORO POINT MANAGEMENT CORPORATION (PPMC), CAGAYAN ECONOMIC ZONE AUTHORITY (CEZA), ZAMBOANGA CITY SPECIAL ECONOMIC ZONE AUTHORITY (ZCSEZA), PHIVIDEC INDUSTRIAL AUTHORITY (PIA), AURORA PACIFIC ECONOMIC ZONE AND FREEPORT AUTHORITY (APECO), AUTHORITY OF THE FREEPORT AREA OF BATAAN (AFAB), TOURISM INFRASTRUCTURE AND ENTERPRISE ZONE AUTHORITY (TIEZA), AND ALL OTHER SIMILAR AUTHORITIES EXISTING OR THAT MAY BE CREATED BY LAW IN THE FUTURE. (E) THE TERM ‘REGISTERED ENTERPRISE’ SHALL MEAN ANY INDIVIDUAL, PARTNERSHIP, CORPORATION, PHILIPPINE BRANCH OF A FOREIGN CORPORATION, OR OTHER ENTITY ORGANIZED AND EXISTING UNDER PHILIPPINE LAWS AND REGISTERED WITH AN INVESTMENT PROMOTION AGENCY (IPA) AS DEFINED UNDER REPUBLIC ACT NO. 10708, OR THE TIMTA LAW, PROVIDED, HOWEVER, THAT THE TERM "REGISTERED ENTERPRISE” SHALL NOT INCLUDE ANY OF THE FOLLOWING SERVICE ENTERPRISES SUCH AS, BUT NOT LIMITED TO, THOSE ENGAGED IN CUSTOMS BROKERAGE, TRUCKING OR FORWARDING SERVICES, JANITORIAL SERVICES, SECURITY SERVICES, INSURANCE, BANKING, AND OTHER FINANCIAL SERVICES, CONSUMERS’ COOPERATIVES, CREDIT UNIONS, CONSULTANCY SERVICES, RETAIL BUSINESS, RESTAURANTS, OR SUCH OTHER SIMILAR SERVICES, AS MAY BE DETERMINED BY THE IPA BOARD, IRRESPECTIVE OF LOCATION, WHETHER INSIDE OR OUTSIDE THE ZONES, DULY ACCREDITED AND/OR LICENSED BY ANY OF THE IPAS AND WHOSE INCOME DELIVERED WITHIN THE ECONOMIC ZONES SHALL BE SUBJECT TO TAXES 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 UNDER THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED. (F) THE TERM ‘SPECIAL ECONOMIC ZONE’ OR ‘ECOZONE’ SHALL REFER TO A SELECTED AREA, WHICH SHALL BE OPERATED AND MANAGED AS A SEPARATE CUSTOMS TERRITORY THAT IS HIGHLY DEVELOPED OR HAS THE POTENTIAL TO BE DEVELOPED INTO AGRO-INDUSTRIAL, INDUSTRIAL, INFORMATION TECHNOLOGY, TOURIST/RECREATIONAL, WHOSE METES AND BOUNDS ARE FIXED OR DELIMITED BY PRESIDENTIAL PROCLAMATIONS AND WITHIN A SPECIFIC GEOGRAPHICAL AREA. AN ECOZONE MAY CONTAIN ANY OR ALL OF THE FOLLOWING: INDUSTRIAL ESTATES (IES), EXPORT PROCESSING ZONES (EPZS), ICT PARKS AND CENTERS, AND FREE TRADE ZONES: PROVIDED, HOWEVER, THAT AREAS WHERE MINING EXTRACTIONS ARE UNDERTAKEN SHALL NOT BE DECLARED AS ECOZONES: PROVIDED, FURTHER, THAT VERTICAL ECONOMIC ZONES, SUCH AS BUT NOT LIMITED TO BUILDINGS, SELECTED FLOORS WITHIN BUILDINGS, AND SELECTED AREAS ON A FLOOR, SHOULD COMPLY WITH THE MINIMUM CONTIGUOUS LAND AREA AS DETERMINED BY THE FISCAL INCENTIVES REVIEW BOARD (FIRB). (G) THE TERM ‘FREEPORT ZONES’ REFERS TO AN ISOLATED AND POLICED AREA ADJACENT TO A PORT OF ENTRY, WHICH SHALL BE OPERATED AND MANAGED AS A SEPARATE CUSTOMS TERRITORY TO ENSURE FREE FLOW OR MOVEMENT OF GOODS, EXCEPT THOSE EXPRESSLY PROHIBITED BY LAW, WITHIN, INTO, AND EXPORTED OUT OF THE FREEPORT ZONE WHERE IMPORTED GOODS MAY BE UNLOADED FOR IMMEDIATE TRANSSHIPMENT OR STORED, REPACKED, SORTED, MIXED, OR OTHERWISE MANIPULATED WITHOUT BEING SUBJECT TO IMPORT DUTIES. HOWEVER, MOVEMENT OF THESE IMPORTED GOODS FROM THE FREE-TRADE AREA TO A NON-FREE TRADE AREA IN THE COUNTRY SHALL BE SUBJECT TO ALL APPLICABLE INTERNAL REVENUE TAXES AND DUTIES. CHAPTER II TAX AND DUTY INCENTIVES SEC. 294. INCENTIVES. - REGISTERED PROJECTS OR ACTIVITIES UNDER THE STRATEGIC INVESTMENTS PRIORITY PLAN SHALL BE QUALIFIED TO ANY OF THE FOLLOWING INCENTIVES: 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 (A) INCOME TAX INCENTIVES (1) INCOME TAX HOLIDAY (ITH). – THE ITH SHALL BE GRANTED FOR A PERIOD NOT EXCEEDING THREE (3) YEARS: PROVIDED, THAT AFTER THE EXPIRATION OF THE ITH, THE FOLLOWING INCENTIVES MAY BE APPLIED FOR A PERIOD NOT EXCEEDING FIVE (5) YEARS, WHICH INCLUDES THE PERIOD OF ITH AVAILMENT, EXCEPT THOSE PROVIDED UNDER SECTIONS 294 (7) and (9), 295, 296, AND 297. (2) REDUCED CORPORATE INCOME TAX. - A REDUCED TAX RATE OF EIGHTEEN PERCENT (18%) OF THE TAXABLE INCOME AS DEFINED UNDER SECTION 31 OF THIS CODE: PROVIDED, THAT IN THE CASE OF REGISTERED ENTERPRISES WITHIN ECONOMIC ZONES AND FREEPORTS, THE TAX SHALL BE PAID AS FOLLOWS: 15% TO THE NATIONAL GOVERNMENT; 1.5% TO BE DIRECTLY REMITTED TO THE TREASURER’S OFFICE OF THE PROVINCE WHERE THE ENTERPRISE IS LOCATED, IN LIEU OF THE LOCAL BUSINESS TAX; 1.5% TO BE DIRECTLY REMITTED TO THE TREASURER'S OFFICE OF THE MUNICIPALITY OR COMPONENT CITY WHERE THE ENTERPRISE IS LOCATED, IN LIEU OF THE LOCAL BUSINESS TAX; PROVIDED, THAT IF THE ENTERPRISE IS UNDER THE JURISDICTION OF A HIGHLY URBANIZED CITY (HUC), THE 3% SHARE OF THE LGU SHALL BE DIRECTLY REMITTED TO THE TREASURER'S OFFICE OF THE HUC. (3) DEPRECIATION ALLOWANCE OF THE ASSETS THAT IS ACQUIRED FOR THE ENTITY’S PRODUCTIION OF GOODS AND SERVICES (QUALIFIED CAPITAL EXPENDITURE) I. TEN PERCENT (10%) FOR BUILDINGS; AND II. TWENTY PERCENT (20%) FOR MACHINERIES AND EQUIPMENT OR MAY BE COMPUTED USING ACCELERATION DEPRECIATION METHOD ON RATE NOT EXCEEDING TWICE THE RATE WHICH WOULD HAVE BEN USED HAD THE ANNUAL ALLOWANCE BEEN COMPUTEDIN ACCORDANCE WITH THE RULES AND REGULATIONS PRESCRIBED BY THE SECRETARY OF FINANCE AND THE PROVISIONS OF THE NIRC OF 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 1997, AS AMENDED, PROVIDED, THAT THE ASSETS IS ACQUIRED DIRECTLY FOR THE ENTITY’S PRODUCTION OF GOODS AND SERVICES OTHER THAN ADMINISTRATIVE AND OTHER SUPPORT SERVICES. (4) UP TO FIFTY PERCENT (50%) ADDITIONAL DEDUCTION ON THE INCREMENT OF DIRECT LABOR EXPENSE: PROVIDED, THAT THIS DOES NOT INCLUDE INDIRECT LABOR, SALARIES AND WAGES, AND OTHER PERSONNEL COSTS INCURREED FOR ADMINISTRATIVE AND OTHER SUPPORT SERVICES. (5) UP TO ONE HUNDRED PERCENT (100%) ADDITIONAL DEDUCTION ON RESEARCH AND DEVELOPMENT INCURRED IN THE TAXABLE YEAR: PROVIDED, THAT IT IS DIRECTLY RELATED TO THE REGISTERED ACTIVITIY/IES OF THE ENTITY, AND (6) UP TO ONE HUNDRED PERCENT (100%) ADDITIONAL DEDUCTION ON TRAININGS INCURRED: PROVIDED, THAT IT IS GIVEN TO THE EMPLOYEES ENGAGED DIRECTLY IN THE ENTITY’S PRODUCTION OF GOODS AND SERVICES: PROVIDED, FURTHER, THAT THE CONCERNED IPA HAS ISSUED A CORRESPONDING CERTIFICATE OF ENTITLEMENT UPON APPLICATION, AND A CERTIFICATE OF APPROVAL AFTER A REVIEW OF DOCUMENTATION OF TRAININGS SUBMITTED BY THE ENTERPRISE AT THE END OF THE TAXABLE YEAR, OTHERWISE, THIS INCENTIVE SHALL BE DEEMED WAIVED. (7) UP TO ONE HUNDRED PERCENT (100%) DEDUCTION ON INFRASTRUCTURE DEVELOPMENT. – REGISTERED ENTERPRISES ESTABLISHING THEIR ACTIVITY IN AN AREA THAT THE STRATEGIC INVESTMENTS PRIORITY PLAN (SIPP) DESIGNATES AS NECESSARY FOR COUNTRYWIDE DEVELOPMENT OR IN AN AREA FOUND TO BE DEFICIENT IN INFRASTRUCTURE, PUBLIC UTILITIES, AND OTHER FACILITIES, SUCH AS IRRIGATION, DRAINAGE, OR OTHER SIMILAR WATERWORKS INFRASTRUCTURE MAY DEDUCT FROM THE GROSS INCOME AN AMOUNT EQUIVALENT TO UP TO ONE HUNDRED PERCENT (100%) OF NECESSARY AND MAJOR INFRASTRUCTURE WORKS IT MAY HAVE UNDERTAKEN WITH THE PRIOR APPROVAL AND RECOMMENDATION 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 OF THE IPA CONCERNED: PROVIDED, THAT THE TITLE TO ALL SUCH INFRASTRUCTURE WORKS SHALL UPON COMPLETION, BE TRANSFERRED TO THE PHILIPPINE GOVERNMENT: PROVIDED, FURTHER, THAT ANY AMOUNT NOT DEDUCTED FOR A PARTICULAR YEAR MAY BE CARRIED OVER FOR DEDUCTION FOR SUBSEQUENT YEARS NOT EXCEEDING FIVE (5) YEARS FROM COMMERCIAL OPERATION. (8) DEDUCTION FOR REINVESTMENT ALLOWANCE TO MANUFACTURING INDUSTRY. – WHEN A MANUFACTURING REGISTERED ENTERPRISE REINVESTS ITS UNDISTRIBUTED PROFIT OR SURPLUS IN ANY OF THE ACTIVITIES LISTED IN THE SIPP, THE AMOUNT SO REINVESTED TO A MAXIMUM OF FIFTY PERCENT (50%) SHALL BE ALLOWED AS A DEDUCTION FROM ITS TAXABLE INCOME WITHIN A PERIOD OF FIVE (5) YEARS FROM THE TIME OF SUCH REINVESTMENT: PROVIDED, THAT PRIOR APPROVAL AND RECOMMENDATION BY THE IPA CONCERNED OF SUCH REINVESTMENT WAS OBTAINED BY THE REGISTERED ENTERPRISE PLANNING SUCH REINVESTMENT. (9) ENHANCED NET OPERATING LOSS CARRY-OVER (NOLCO). - THE NET OPERATING LOSS OF THE REGISTERED ACTIVITY DURING THE FIRST THREE (3) YEARS FROM THE START OF COMMERCIAL OPERATION WHICH HAD NOT BEEN PREVIOUSLY OFFSET AS DEDUCTION FROM GROSS INCOME MAY BE CARRIED OVER AS DEDUCTION FROM GROSS INCOME WITHIN THE NEXT FIVE (5) CONSECUTIVE TAXABLE YEARS IMMEDIATELY FOLLOWING THE YEAR OF SUCH LOSS. PROVIDED, THAT IN LIEU OF THE ITH UNDER SECTION 294 (A) (1) OR THE REDUCED TAX RATE OF EIGHTEEN PERCENT (18%) UNDER SECTION 294 (A) (2), THE TAX INCENTIVES UNDER SECTION 294 (A) (3), (4), (5), (6), (7), (8) AND (9) MAY BE GRANTED ON AN INDUSTRY-SPECIFIC BASIS AS DETERMINED BY THE BOI IN THE STRATEGIC INVESTMENT PRIORITY PLAN. THE BOI SHALL PRESCRIBED THE LEVEL OF ADDITIONAL DEDUCTION FOR SELECTED INDUSTRIES. PROVIDED, FURTHER, THAT IN NO SUCH CASE SHALL AN INCOME TAX INCENTIVE BE EXTENDED BEYOND THE INITIAL GRANT OF FIVE (5) YEARS, EXCEPT THOSE PROVIDED UNDER SECTION 294 (A)(7) AND (9), SECTIONS 295, 296, AND 297. 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 (B) EXEMPTION FROM CUSTOMS DUTY ON IMPORTATION OF CAPITAL EQUIPMENT AND RAW MATERIALS DIRECTLY AND EXCLUSIVELY USED IN THE REGISTERED ACTIVITY FOR A PERIOD NOT EXCEEDING FIVE (5) YEARS BY REGISTERED ENTERPRISES: PROVIDED, THAT THE FIVE YEARS LIMIT IN THIS SUBSECTION SHALL NOT APPLY TO SPECIAL ECONOMIC ZONES AS DEFINED UNDER THIS TITLE. PROVIDED, FURTHER, THAT EXPANSION OF REGISTERED ACTIVITIES MAY BE GRANTED DUTY EXEMPTION ON CAPITAL EQUIPMENT ONLY, SUBJECT TO THE FOLLOWING CONDITIONS: (1) THE ACTIVITY IS STILL COVERED BY THE STRATEGIC INVESTMENTS PRIORITY PLAN (SIPP) OR IS AN INNOVATION PROJECT AS DEFINED IN THE STRATEGIC INVESTMENT PRIORITY PLAN; (2) CUSTOMS DUTY EXEMPTION WILL ONLY APPLY ON THE INCREMENTAL PORTION OF THE ACTIVITY; AND (3) THE CUSTOMS DUTY EXEMPTION EXTENSION SHALL NOT EXCEED FIVE (5) YEARS. (C) VALUE-ADDED TAX (1) REGISTERED EXPORT ENTERPRISES WHOSE EXPORT SALES MEET THE NINETY PERCENT (90%) THRESHOLD AND ARE LOCATED WITHIN AN ECOZONE, FREEPORT, OR THOSE UTILIZING CUSTOMS BONDED MANUFACTURING WAREHOUSE: VALUE-ADDED TAX ZERO-RATING ON THE EXPORT SALES, OR ON IMPORTATION OR DOMESTIC PURCHASES OF CAPITAL EQUIPMENT AND RAW MATERIALS USED IN THE MANUFACTURE AND PROCESSING OF PRODUCTS AND IMPORTATION OF SOURCE DOCUMENTS SHALL APPLY. (2) REGISTERED EXPORT ENTERPRISES WHOSE EXPORT SALES ARE BELOW NINETY PERCENT (90%) OR ARE LOCATED OUTSIDE AN ECOZONE OR FREEPORT, OR THOSE UTILIZING CUSTOMS BONDED MANUFACTURING WAREHOUSE, REGARDLESS OF EXPORT SALES THRESHOLD: THE VALUEADDED TAX PROVISION IN TITLE IV OF THIS CODE AND SECTION 307 OF THIS ACT SHALL APPLY. FOR THIS PURPOSE, ‘PROCESSING’ SHALL REFER TO THE CONVERSION OF RAW MATERIALS INTO MARKETABLE FORM THROUGH PHYSICAL, MECHANICAL, CHEMICAL, ELECTRICAL, BIOCHEMICAL, BIOLOGICAL, 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 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 A PRODUCT. MERE PACKING OR PACKAGING SHALL NOT CONSTITUTE PROCESSING. ‘SOURCE DOCUMENTS’ REFER TO INPUT MATERIALS AND DOCUMENTS REASONABLY NEEDED BY I.T. AND I.T.-ENABLED INDUSTRIES SUCH AS, BUT NOT LIMITED TO, BOOKS, DIRECTORIES, MAGAZINES, NEWSPAPERS, BROCHURES, PAMPHLETS, MEDICAL RECORDS/FILES, LEGAL RECORDS/FILES, INSTRUCTION MATERIALS, AND DRAWINGS/BLUEPRINTS/OUTLINES. SEC. 295. INCENTIVES FOR AGRIBUSINESS. AGRIBUSINESS PROJECTS OF REGISTERED ENTERPRISES LOCATED OUTSIDE METRO MANILA AND OTHER URBAN AREAS AS IDENTIFIED IN THE STRATEGIC INVESTMENT PRIORITY PLAN SHALL BE ENTITLED TO ADDITIONAL TWO (2) YEARS OF INCENTIVE UNDER SECTION 294, OF WHICH ONE (1) YEAR MAY BE AN ADDITIONAL YEAR OF INCOME TAX HOLIDAY. SEC. 296. PROJECTS LOCATED IN LESS DEVELOPED AREAS OR THOSE RECOVERING FROM ARMED CONFLICT OR A MAJOR DISASTER. PROJECTS OF REGISTERED ENTERPRISES LOCATING IN LESS DEVELOPED AREAS AS IDENTIFIED IN THE STRATEGIC INVESTMENT PRIORITY PLAN, OR THOSE RECOVERING FROM ARMED CONFLICT AND/OR A MAJOR DISASTER AS DETERMINED BY THE OFICE OF THE PRESIDENT SHALL BE ENTITLED TO ADDITIONAL TWO (2) YEARS OF INCENTIVE UNDER SECTION 294, OF WHICH ONE (1) YEAR MAY BE AN ADDITIONAL YEAR OF INCOME TAX HOLIDAY. SEC. 297. RELOCATION PROJECTS. REGISTERED ACTIVITIES PRIOR TO THE EFFECTIVITY OF THIS ACT RELOCATING FROM METRO MANILA AND SELECTED AREAS OF REGIONS III AND IV-A TO OTHER AREAS OF THE COUNTRY SHALL BE ENTITLED TO ADDITIONAL TWO (2) YEARS OF INCENTIVE UNDER SECTION 294, OF WHICH ONE (1) YEAR MAY BE AN ADDITIONAL YEAR OF INCOME TAX HOLIDAY. CHAPTER III THE FISCAL INCENTIVES REVIEW BOARD SEC. 298. EXPANDED FUNCTIONS OF THE FISCAL INCENTIVES REVIEW BOARD. - THE FUNCTIONS AND POWERS OF THE FISCAL INCENTIVES REVIEW BOARD OR FIRB CREATED UNDER PRESIDENTIAL DECREE (PD) NO. 776, AS AMENDED BY PD 1931 AND PD 1955, OFFICE OF 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 THE PRESIDENT MEMORANDUM ORDER NO. 23, SERIES OF 1986 AND EXECUTIVE ORDER 93, SERIES OF 1986, SHALL BE EXPANDED AS FOLLOWS: (A) TO EXERCISE OVERSIGHT FUNCTIONS OVER IPAS. FOR THIS PURPOSE, THE IPAS SHALL SUBMIT TO THE FIRB THE FOLLOWING: (1) LIST OF REGISTERED ENTERPRISE ANNUALLY WITH CORRESPONDING FIRM LEVEL DATA AS MANDATED UNDER THE TAX INCENTIVES MANAGEMENT TRANSPARENCY ACT OR TIMTA LAW; (2) APPROVED AMOUNT OF INVESTMENTS AND EMPLOYMENT GENERATION AND OTHER BENEFITS ON A FIRM-LEVEL BASIS ANNUALLY; AND (3) APPROVED AMOUNT OF TAX INCENTIVES, BOTH INCOME AND NON-INCOME TAX BASED INCENTIVES, ON A FIRM-LEVEL BASIS ANNUALLY. B) TO APPROVE THE GRANT OF INVESTMENT TAX INCENTIVES BY THE INVESTMENT PROMOTION AGENCIES OF THE FOLLOWING: (1) PROJECTS OR ACTIVITIES WHICH MAY POSE RISK TO THE ENVIRONMENT, HEALTH, AND ECONOMIC STABILITY. (2) PROJECTS OR ACTIVITIES WHOSE APPROVAL IN THE INVESTMENT PROMOITON AGENCY BOARD LEVEL ENCOUNTERS A DEADLOCK. (C) TO PUBLISH THE NAMES OF THE REGISTERED ENTERPRISES OR BENEFICIARIES OF TAX INCENTIVES WITH APPROVED ESTIMATED AMOUNT OF THE CORRESPONDING TAX INCENTIVES; AND (D) TO GRANT TAX SUBSIDIES TO GOVERNMENT–OWNED AND/OR -CONTROLLED CORPORATIONS (GOCCS), GOVERNMENT INSTRUMENTALITIES (GIS), GOVERNMENT COMMISSARIES, AND STATE UNIVERSITIES AND COLLEGES (SUCS) AS MAY BE PROVIDED UNDER THE ANNUAL GENERAL APPROPRIATIONS ACT. 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 PROVIDED, THAT, AS CHAIR OF THE FIRB AND AS THE CUSTODIAN OF FISCAL PRUDENCE AND RESPONSIBILITY, THE SECRETARY OF FINANCE SHALL EXERCISE OVERSIGHT FUNCTIONS AND SHALL HAVE VETO POWER OVER THE APPROVAL AND CANCELLATION OF PROJECTS UNDER SEC. 298 (B). PROVIDED, FURTHER, THAT THE SECRETARY OF FINANCE SHALL AUTOMATICALLY BE THE CO-CHAIR OF ALL THE EXISTING AND FUTURE IPAS. PROVIDED, FINALLY, THAT THE NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY (NEDA) AND THE DEPARTMENT OF TRADE AND INDUSTRY (DTI) SHALL BE MEMBERS OF ALL THE EXISTING AND FUTURE IPAS. SEC. 299. COMPOSITION OF THE FIRB - THE FIRB SHALL BE RECONSTITUTED AS FOLLOWS: BOARD PROPER: CHAIRPERSON – SECRETARY OF FINANCE MEMBERS – – SECRETARY OF TRADE AND INDUSTRY DIRECTOR GENERAL OF THE NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY (NEDA) SECRETARY OF BUDGET AND MANAGEMENT EXECUTIVE SECRETARY – – TECHNICAL COMMITTEE: CHAIRPERSON – UNDERSECRETARY OF FINANCE MEMBERS – – – – – – SECRETARIAT: UNDERSECRETARY OF TRADE AND INDUSTRY/BOARD OF INVESTMENT MANAGING HEAD UNDERSECRETARY OF BUDGET AND MANAGEMENT DEPUTY DIRECTOR GENERAL OF NEDA COMMISSIONER OF INTERNAL REVENUE COMMISSIONER OF CUSTOMS EXECUTIVE DIRECTOR OF THE NATIONAL TAX RESEARCH CENTER (NTRC) NATIONAL TAX RESEARCH CENTER 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 CHAPTER IV QUALIFIED ACTIVITIES FOR TAX INCENTIVES SEC. 300. ‘STRATEGIC INVESTMENTS PRIORITY PLAN’ (SIPP). – THE BOARD OF INVESTMENT (BOI), IN COORDINATION WITH THE OFFICE OF THE PRESIDENT, THE CONCERNED IPAS, AND OTHER GOVERNMENT AGENCIES AND THE PRIVATE SECTOR, SHALL FORMULATE THE SIPP TO BE SUBMITTED TO THE PRESIDENT FOR HIS APPROVAL NOT LATER THAN DECEMBER OF THE THIRD YEAR SET FOR PERIODIC REVIEW. THE PLAN SHALL BE VALID FOR A PERIOD OF THREE (3) YEARS SUBJECT TO REVIEW AND AMENDMENT AS THE NEED ARISES. ALL SECTORS OR INDUSTRIES THAT MAY BE INCLUDED IN THE SIPP SHALL UNDERGO AN EVALUATION PROCESS TO DETERMINE THE SUITABILITY AND POTENTIAL OF THE INDUSTRY OR THE SECTOR IN PROMOTING LONG-TERM GROWTH AND DEVLEOPMENT, AND THE NATIONAL INTEREST. THE SIPP SHALL: (A) INCLUDE ACTIVITIES THAT COMPLY WITH THE FOLLOWING: (1) THE ACTIVITY SHALL BE COVERED BY THE PHILIPPINE DEVELOPMENT PLAN OR ITS EQUIVALENT AND OTHER GOVERNMENT PROGRAMS; (2) THE ACTIVITY SHALL TAKE INTO ACCOUNT ANY OF THE FOLLOWING: (a) SUBSTANTIAL AMOUNT OF INVESTMENTS; (b) CONSIDERABLE EMPLOYMENT; GENERATION OF (c) ADOPT INCLUSIVE BUSINESS ACTIVITIES AND VALUE-ADDED PRODUCTION BY MSMES; (d) USE OF MODERN OR NEW TECHNOLOGY; (e) ADOPTION OF ADEQUATE ENVIRONMENTAL PROTECTION SYSTEMS; 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 (f) ADDRESS MISSING GAPS IN THE SUPPLY/VALUE CHAIN OR MOVE UP THE VALUE CHAIN OR PRODUCT LADDER; OR (g) PROMOTION OF MARKET COMPETITIVENESS. (B) IDENTIFY AGRIBUSINESS ACTIVITIES, THE LESS DEVELOPED AREAS OR THOSE RECOVERING FROM ARMED CONFLICT OR A MAJOR DISASTER. (C) DETERMINE SERVICES AND ACTIVITIES THAT CAN SPUR REGIONAL OR GLOBAL OPERATIONS IN THE COUNTRY. (D) INCLUDE EXISTING REGISTERED PROJECTS BEFORE THE EFFECTIVITY OF THIS ACT THAT SHALL RELOCATE FROM METRO MANILA TO OTHER AREAS OF THE COUNTRY. THE ACTIVITIES MUST COMPLY WITH THE SPECIFIC QUALIFICATION REQUIREMENTS OR CONDITIONS FOR A PARTICULAR SECTOR OR INDUSTRY AND OTHER LIMITATIONS AS SET AND DETERMINED BY THE BOI. THE THRESHOLD AMOUNT OF INVESTMENTS AND EMPLOYMENT GENERATION REQUIRED FOR A SPECIFIC ACTIVITY SHALL BE SUBJECT TO A PERIODIC REVIEW EVERY THREE (3) YEARS TAKING INTO CONSIDERATION INTERNATIONAL STANDARDS AND OTHER INDICATORS. SEC. 301. POWER OF THE PRESIDENT TO GRANT INCENTIVES. - THE PRESIDENT MAY, IN THE INTEREST OF NATIONAL ECONOMIC DEVELOPMENT AND UPON THE RECOMMENDATION OF THE BOARD OF INVESTMENTS AND THE ECONOMIC MANAGERS, GRANT INCENTIVES IN ADDITION TO THOSE THAT ARE PROVIDED UNDER THIS CODE, INCLUDING A LONGER PERIOD, TO HIGHLY DESIRABLE PROJECTS: PROVIDED, THAT THE BENEFITS THAT THE GOVERNMENT MAY DERIVE FROM SUCH INVESTMENT THERETO IS CLEAR AND CONVINCING AND FAR OUTWEIGH THE COST OF INCENTIVES THAT WILL BE GRANTED. SEC. 301-A. CRITERIA FOR AVAILMENT. THE BOARD OF INVESTMENTS SHALL CONSIDER THE FOLLOWING CRITERIA IN DETERMINING THE TYPES OF INCENTIVES AND THE DURATION THEREOF THAT MAY BE GRANTED: (A) THE PROJECT HAS A COMPREHENSIVE SUSTAINABLE DEVELOPMENT PLAN WITH CLEAR INCLUSIVE BUSINESS APPROACHES AND INNOVATIONS; OR 45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 (B) MINIMUM INVESTMENT OF FIVE HUNDRED MILLION US DOLLARS (US$500,000,000) OR A MINIMUM DIRECT EMPLOYMENT GENERATION OF AT LEAST ONE THOUSAND FIVE HUNDRED (1,500) WITHIN THREE YEARS FROM THE START OF COMMERCIAL OPERATION. THE THRESHOLD SHALL BE SUBJECT TO A PERIODIC REVIEW EVERY THREE (3) YEARS TAKING INTO CONSIDERATION INTERNATIONAL STANDARDS AND OTHER INDICATORS. THE BOI MAY IMPOSE OTHER TERMS AND CONDITIONS TAKING INTO CONSIDERATION THE AMOUNT OR KIND OF INCENTIVES THAT WILL BE GRANTED TO SUCH INVESTMENTS. SEC. 301-B. USE OF RESOURCES. - IN THE EXERCISE OF THE POWER OF THE PRESIDENT TO GRANT INCENTIVES, THE GOVERNMENT MAY UTILIZE ITS RESOURCES SUCH AS LAND USE, WATER APPROPRIATION, POWER PROVISION, AMONG OTHERS, AS MAY BE IDENTIFED BY THE BOI. SEC. 302. AMENDMENTS. – SUBJECT TO PUBLICATION REQUIREMENTS AND THE CRITERIA FOR INVESTMENT PRIORITY DETERMINATION, THE BOI MAY, AT ANY TIME, INCLUDE ADDITIONAL AREAS IN THE SIPP, ALTER ANY OF THE TERMS OF THE DECLARATION OF AN INVESTMENT AREA, AND TEMPORARILY OR PERMANENTLY SUSPEND ACTIVITIES ON THE SIPP IF IT CONSIDERS THAT SUCH ACTIVITY IS NO LONGER A PRIORITY. IN NO CASE SHALL THE IPAS ACCEPT APPLICATIONS UNLESS THE ACTVITY IS LISTED IN THE SIPP. SEC. 303. PUBLICATION. – UPON APPROVAL OF THE PLAN, IN WHOLE OR IN PART, OR UPON APPROVAL OF AN AMENDMENT THEREOF, THE PLAN OR THE AMENDMENT, SPECIFYING AND DECLARING THE AREAS OF INVESTMENTS SHALL BE PUBLISHED IN AT LEAST ONE (1) NEWSPAPER OF GENERAL CIRCULATION OR THE OFFICIAL GAZETTE AND ALL SUCH AREAS SHALL BE OPEN FOR APPLICATION UNTIL PUBLICATION OF AN AMENDMENT OR DELETION THEREOF. SEC. 304. QUALIFICATIONS OF A REGISTERED ENTERPRISE FOR TAX INCENTIVES. – IN THE REVIEW AND GRANT OF TAX INCENTIVES, A REGISTERED ENTERPRISE MUST: A. BE ENGAGED IN AN ACTIVITY INCLUDED IN THE SIPP; B. INSTALL AN ADEQUATE ACCOUNTING SYSTEM THAT SHALL IDENTIFY THE INVESTMENTS, REVENUES, COSTS AND PROFITS OR LOSSES OF EACH REGISTERED PROJECT UNDERTAKEN BY THE ENTERPRISE SEPARATELY FROM THE AGGREGATE 46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 INVESTMENTS, REVENUES, COSTS AND PROFITS OR LOSSES OF THE WHOLE ENTERPRISE; OR ESTABLISH A SEPARATE CORPORATION FOR EACH REGISTERED PROJECT IF THE IPA SHOULD SO REQUIRE; C. COMPLY WITH THE E-INVOICE AND E-SALES REQUIREMENT IN ACCORDANCE WITH SECTION 237-A OF THIS CODE. CHAPTER V AVAILMENT OF TAX INCENTIVES SEC. 305. INCOME TAX-BASED INCENTIVES. – ALL REGISTERED ENTERPRISES ARE REQUIRED TO FILE ALL THEIR TAX RETURNS USING THE ELECTRONIC/ONLINE FACILITIES OF THE BUREAU OF INTERNAL REVENUE (BIR). ON AVAILING THE INCOME TAX-BASED INCENTIVES, THE REGISTERED ENTERPRISE SHALL BE REQUIRED TO SECURE A CERTIFICATE OF ENTITLEMENT ISSUED BY THE IPA AND ATTACH THE SAME TO ITS INCOME TAX RETURN (ITR) OR ANNUAL INFORMATION RETURN (AIR), WHICHEVER IS APPLICABLE. THEREAFTER, THE REGISTERED ENTERPRISE SHALL FILE ITS CLAIM WITH THE BIR FOR VALIDATION. FAILURE TO SECURE AND ATTACH THE CERTIFICATION TO THE ITR OR AIR, AND/OR FILE THE INCENTIVE AVAILMENT APPLICATION SHALL CAUSE THE FORFEITURE OF THE INCENTIVE FOR THAT TAXABLE PERIOD. SEC. 306. CUSTOMS DUTY EXEMPTION ON CAPITAL EQUIPMENT. IMPORTATION OF CAPITAL EQUIPMENT, MACHINERY AND SPARE PARTS EXCLUSIVELY USED FOR CAPITAL EQUIPMENT AND MACHINERY INCLUDING CONSIGNMENT THEREOF BY REGISTERED ENTERPRISES MAY BE EXEMPTED TO THE EXTENT OF ONE HUNDRED PERCENT (100%) OF THE CUSTOMS DUTY: PROVIDED, THAT THE FOLLOWING CONDITIONS ARE COMPLIED WITH: (A) THE CAPITAL EQUIPMENT AND/OR SPARE PARTS ARE DIRECTLY AND REASONABLY NEEDED AND WILL BE USED EXCLUSIVELY IN AND AS PART OF THE DIRECT COST OF THE REGISTERED ACTIVITY OF THE REGISTERED ENTERPRISE, AND ARE NOT MANUFACTURED DOMESTICALLY IN SUFFICIENT QUANTITY, OF COMPARABLE QUALITY AND AT REASONABLE PRICES. PRIOR APPROVAL OF THE IPA MAY BE SECURED FOR THE PART TIME UTILIZATION OF SAID EQUIPMENT IN A NONREGISTERED ACTIVITY TO MAXIMIZE USAGE THEREOF: PROVIDED, THAT THE PROPORTIONATE TAXES AND DUTIES ARE PAID ON A SPECIFIC EQUIPMENT AND MACHINERY IN PROPORTION TO ITS UTILIZATION FOR NON-REGISTERED 47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 ACTIVITIES. IN THE EVENT THAT IT SHALL BE USED FOR A NONREGISTERED ACTIVITY OF THE REGISTERED ENTERPRISE AT ANYTIME WITHIN THE FIRST FIVE (5) YEARS FROM DATE OF IMPORTATION, THE REGISTERED ENTERPRISE SHALL FIRST SEEK PRIOR APPROVAL OF THE AUTHORITY, AND PAY THE TAXES AND CUSTOMS DUTIES THAT WERE NOT PAID UPON ITS IMPORTATION; AND (B) THE APPROVAL OF THE IPA WAS OBTAINED BY THE REGISTERED ENTERPRISE PRIOR TO THE IMPORTATION OF SUCH CAPITAL EQUIPMENT AND/OR SPARE PARTS. APPROVAL OF THE IPA MUST BE SECURED BEFORE THE SALE, TRANSFER OR DISPOSITION OF THE CAPITAL EQUIPMENT AND/OR SPARE PARTS WHICH WERE GRANTED TAX AND CUSTOMS DUTY EXEMPTION HEREUNDER, AND SHALL BE ALLOWED ONLY UNDER THE FOLLOWING CIRCUMSTANCES: (1) IF MADE TO ANOTHER ENTERPRISE ENJOYING CUSTOMS DUTY EXEMPTION ON IMPORTED CAPITAL EQUIPMENT AND/OR SPARE PARTS; (2) IF MADE TO ANOTHER ENTERPRISE NOT DUTY EXEMPTION ON IMPORTED CAPITAL EQUIPMENT AND/OR SPARE PARTS, UPON PAYMENT OF ANY TAXES AND DUTIES DUE ON THE NET BOOK VALUE OF THE CAPITAL EQUIPMENT AND/OR SPARE PARTS TO BE SOLD; (3) EXPORTATION OF CAPITAL EQUIPMENT, MACHINERY, SPARE PARTS OR SOURCE DOCUMENTS, OR THOSE REQUIRED FOR POLLUTION ABATEMENT AND CONTROL; OR (4) FOR REASONS OF PROVEN TECHNICAL OBSOLESCENCE. PROVIDED, THAT IF THE REGISTERED ENTERPRISE SELLS, TRANSFERS OR DISPOSES THE AFOREMENTIONED IMPORTED ITEMS WITHOUT PRIOR APPROVAL, THE REGISTERED ENTERPRISE AND THE VENDEE, TRANSFEREE, OR ASSIGNEE SHALL BE SOLIDARILY LIABLE TO PAY TWICE THE AMOUNT OF THE DUTY EXEMPTION THAT SHOULD HAVE BEEN PAID DURING ITS IMPORTATION: PROVIDED, FURTHER, THAT EVEN IF THE SALE, TRANSFER OR DISPOSITION OF THE CAPITAL EQUIPMENT WAS MADE AFTER FIVE (5) YEARS FROM DATE OF IMPORTATION WITH THE APPROVAL OF THE IPA, THE REGISTERED ENTERPRISE IS STILL LIABLE TO PAY THE DUTIES BASED ON THE NET BOOK VALUE OF THE CAPITAL EQUIPMENT IF IT HAS VIOLATED ANY OF ITS REGISTRATION TERMS AND CONDITIONS. 48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 SEC. 307. VAT REFUND MECHANISM ON IMPORTATION OF CAPITAL EQUIPMENT AND RAW MATERIALS. THE VAT ON IMPORTATION OF CAPITAL EQUIPMENT AND RAW MATERIALS PAID BY EXPORT REGISTERED ENTERPRISES THAT DID NOT MEET THE NINETY PERCENT (90%) THRESHOLD OR ARE LOCATED OUTSIDE THE ECOZONE, FREEPORT, OR THOSE UTILIZING THE CUSTOMS BONDED MANUFACTURING WAREHOUSE REGARDLESS OF THE THRESHOLD SHALL BE REFUNDED. THE VAT REFUND MECHANISM UNDER SECTIONS 106 AND 108 OF THIS CODE SHALL APPLY. CHAPTER VI FINAL PROVISIONS SEC. 308. NO DOUBLE REGISTRATION OF ENTERPRISES. –- REGISTERED ENTERPRISES SHALL NOT BE ALLOWED TO REGISTER THEIR ACTIVITIES IN MORE THAN ONE (1) IPA. SEC. 309. GOVERNANCE RULES. – THE DIFFERENT IPAS MAY REQUIRE DOMESTIC 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 WITHIN FIVE (5) YEARS FROM DATE OF REGISTRATION. SEC. 310. INVESTMENTS PRIOR TO THE EFFECTIVITY OF THIS ACT. EXISTING REGISTERED ACTIVITIES GRANTED THE INCOME TAX HOLIDAY SHALL BE ALLOWED TO CONTINUE WITH THE AVAILMENT OF THE SAID INCENTIVE FOR THE REMAINING PERIOD OF THE ITH OR FOR A PERIOD OF FIVE (5) YEARS ONLY, WHICHEVER COMES FIRST: PROVIDED, THAT OTHER TAX INCENTIVES GRANTED TO EXISTING REGISTERED ACTIVITIES, SUCH AS THE FIVE PERCENT (5%) TAX ON GROSS INCOME EARNED IN LIEU OF ALL TAXES, BOTH NATIONAL AND LOCAL, SHALL BE ALLOWED TO CONTINUE FOLLOWING THE SCHEDULE STATED HEREIN: (A) TWO (2) YEARS FOR ACTIVITIES ENJOYING THE TAX INCENTIVE FOR MORE THAN TEN (10) YEARS; (B) THREE (3) YEARS FOR ACTIVITIES ENJOYING THE TAX INCENTIVE BETWEEN FIVE (5) AND TEN (10) YEARS; (C) FIVE (5) YEARS FOR ACTIVITIES ENJOYING THE TAX INCENTIVE BELOW FIVE (5) YEARS. 49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 PROVIDED, THAT THE FIVE PERCENT (5%) TAX ON GROSS INCOME EARNED SHALL COMMENCE AFTER THE ITH PERIOD HAS LAPSED ONLY FOR THE REMAINING YEARS WITHIN THE FIVE-YEAR PERIOD. SEC. 311. SUSPENSION AND FORFEITURE OF TAX INCENTIVES OF REGISTERED ENTERPRISES, REFUND AND PENALTIES; WAIVER AND CONDONATION. THE IPA MAY IMPOSE FINES AND PENALTIES, SUSPEND AND/OR FORFEIT THE INCENTIVES GRANTED TO THE 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. WHEN THERE IS PROBABLE CAUSE TO BELIEVE THAT THE REGISTERED ENTERPRISE HAS VIOLATED ITS REGISTRATION TERMS AND CONDITIONS, THE IPA SHALL SUSPEND THE AVAILMENT OF INCENTIVES UNTIL PROVEN OTHERWISE: PROVIDED, THAT FOR PROJECTS UNDER SECTION 298 (B), THE CONCERNED IPA SHALL RECOMMEND TO THE FIRB THE SUSPENSION OF ITS AVAILMENT OF INCENTIVES. IN CASE OF CANCELLATION OF THE CERTIFICATE OF REGISTRATION, THE CONCERNED IPA MAY, IN APPROPRIATE CASES, REQUIRE THE REFUND OF INCENTIVES AVAILED AND PAYMENT TO THE APPROPRIATE AGENCY, AND IMPOSE CORRESPONDING FINES AND PENALTIES. FOR THIS PURPOSE, THE IPA SHALL PREPARE A SCHEDULE OF FEES, FINES AND PENALTIES TO BE IMPOSED ON ERRING REGISTERED ENTERPRISES DEPENDING ON THE GRAVITY OF THE VIOLATION INCURRED. IN MERITORIOUS CASES, THE IPA MAY WAIVE, CONDONE OR REDUCE FINES OR PENALTIES IMPOSED ON REGISTERED ENTERPRISES BY THE IPAS: PROVIDED, THAT THE MINIMUM COMPROMISE RATE, IN CASE OF REDUCTION, SHALL NOT BE LESS THAN FORTY PERCENT (40%) OF THE BASIC ASSESSED FINES OR PENALTIES. SEC. 312. STRUCTURAL ADJUSTMENT FUND. THE FOLLOWING AMOUNTS SHALL BE APPROPRIATED TO COMPENSATE WORKERS THAT MAY BE DISPLACED BY THE RATIONALIZATION OF FISCAL INCENTIVES AND TO MITIGATE ITS NEGATIVE IMPACT, AS WELL AS TO IMPROVE EMPLOYABILITY OF WORKERS. 1. THE AMOUNT OF FIVE HUNDRED MILLION PESOS (P500,000,000) SHALL BE APPROPRIATED ANNUALLY, IN ADDITION TO ANY ADJUSTMENT FUND APPROPRIATED UNDER THE THE BUDGET OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, TO PROVIDE TARGETED CASH GRANTS OR OTHER SUPPORT PROGRAMS TO 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 DISPLACED WORKERS OF FIRMS THAT MAY BE AFFECTED BY THE RATIONALIZATION OF FISCAL INCENTIVES. 2. THE AMOUNT OF FIVE HUNDRED MILLION PESOS (P500,000,000) SHALL BE APPROPRIATED ANNUALLY TO PROVIDE TARGETED TRAININGS TO DISPLACED WORKERS OF FIRMS THAT MAY BE AFFECTED BY THE RATIONALIZATION OF FISCAL INCENTIVES 3. THE AMOUNT OF FIVE BILLION PESOS (P5,000,000,000) SHALL BE ALLOCATED ANNUALLY FOR THE SKILLS UPGRADE PROGRAM OF THE IT-BPO INDUSTRY. THE FUND SHALL BE SOLELY USED TO PAY FOR FORMAL ACADEMIC OR TRAINING PROGRAMS OF ACCREDITED PRIVATE OR PUBLIC SCHOOLS AND TRAINING CENTERS. 4. THE AMOUNT OF FIFTEEN BILLION PESOS (P15,000,000,000), IN ADDITION TO ANY ADJUSTMENT FUND APPROPRIATED UNDER THE BUDGET OF PERTINENT GOVERNMENT DEPARTMENTS/AGENCIES, SHALL BE APPROPRIATED FOR THE DEVELOPMENT OF INFRASTRUCTURE SURROUNDING AND WITHIN THE AREAS/LOCALITIES OF SPECIAL ECONOMIC ZONES AND FREEPORTS TO BE AFFECTED BY THIS ACT. THIS SUBSIDY SHALL LIKEWISE BE UTILIZED TO SUPPORT RESEARCH AND DEVELOPMENT; COSTS OF POWER, WATER AND OTHER UTILITIES; LEASE OF PROPERTIES; AND OTHER ECONOMIC ACTIVITIES RELEVANT TO DEVELOPING THE ABOVEMENTIONED AREAS/LOCALITIES. PROVIDED, THAT RELEASES TO THE INVESTEMENT PROMOTION AGENCIES SHALL BE GOVRNED BY IMPEMENTING GUIDELINES TO BE PROMULGATED BY THE DEPARTMENT OF FINANCE AND THE DEPARTMENT OF BUDGET AND MANAGEMENT. PROVIDED, FURTHER, THAT EARMARKING FOR THESE FUNDS IN THIS SECTION SHALL BE TERMINATED FIVE YEARS AFTER THE EFFECTIVITY OF THIS ACT. SEC. 313. ALL INTERNAL REVENUE TAX AND DUTY OBLIGATIONS OF GOVERNMENT-OWNED AND/OR CONTROLLED CORPORATIONS SHALL BE CHARGEABLE TO THE TAX EXPENDITURE FUND OF THE GOVERNMENT UPON THE ESTABLISHMENT AND IMPLEMENTATION OF AN ENHANCED TAX EXPENDITURE FUND SYSTEM THAT GRANTS TAX SUBSIDY WITHIN THIRTY (30) DAYS FROM THE FILING OF APPLICATION WITH THE FIRB. SEC. 314. THE NAME OF RECIPIENTS OF INCENTIVES AND THE AMOUNT OF INCENTIVES AVAILED SHALL BE REPORTED BY THE INVESTMENT 51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 PROMOTION AGENCIES ANNUALLY TO CONGRESS. THE REPORT SHALL BE MADE AVAILABLE TO THE PUBLIC. SEC. 36. Title XIII of the National Internal Revenue Code of 1997, as amended, is hereby retitled as Title XIV. SEC. 37. Title XIV of the National Internal Revenue Code of 1997, as amended, is hereby retitled as Title XV. SEC. 38. Amendatory Clause. – (A) To ensure that the DOF, NEDA and DTI are represented in the Governing Boards of all IPAS, where the DOF shall automatically serve as Co-chair, and DTI and NEDA as members, pursuant to Section 299 of this Act, the following provisions, among others, are amended accordingly: i. Article 4 of Executive Order No. 226, as amended, entitled “The Omnibus Investments Code of 1987;” ii. Sections 9 and 13 (c) of Republic Act No. 7227, entitled “An Act Accelerating the Conversion of Military Reservations into Other Productive Uses, Creating the Bases Conversion and Development Authority for this Purpose, Providing Funds therefor and for Other Purposes;” iii. Section 3 of Executive Order No. 80, series of 1993, entitled “Authorizing the Establishment of the Clark Development Corporation as the Implementing Arm of the Bases Conversion and Development Authority for the Clark Special Economic Zone, and Directing All Heads of Departments, Bureaus, Offices, Agencies and Instrumentalities of Government to Support the Program;” iv. Section 6 of Executive Order No. 132, series of 2002, entitled “Authorizing the Creation of the Poro Point Management Corporation as the Implementing Arm of the Bases Conversion Development Authority over the Poro Point Special Economic and Freeport Zone and Renaming the John Hay Poro Point Development Corporation as the John Hay Management Corporation;” v. Section 9 of Republic Act No. 7903, entitled “An Act Creating a Special Economic Zone and Freeport in the City of Zamboanga Creating for this Purpose the Zamboanga City Special Economic Zone Authority, Appropriating Funds therefor, and for other Purposes;” vi. Section 14 of Republic Act No. 9728, entitled “An Act Converting the Bataan Economic Zone Located in the Municipality of Mariveles, Province of Bataan, into the Freeport Area of Bataan (FAB), Creating for this Purpose the 52 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Authority of the Freeport Area of Bataan (AFAB), Appropriating Funds therefor and for other Purposes;” vii. Section 65 of Republic Act No. 9593, entitled “An Act Declaring a National Policy for Tourism as an Engine of Investment, Employment, Growth and National Development, and Strengthening the Department of Tourism and its Attached Agencies to Effectively and Efficiently implement that Policy, and Appropriating Funds therefor;” viii. Section 15 of Republic Act No. 9490, entitled “An Act Establishing the Aurora Special Economic Zone in the Province of Aurora, Creating for the Purpose the Aurora Special Economic Zone Authority, Appropriating Funds Therefor and for other Purposes,” as amended by Republic Act No. 10083; ix. Section 7 of Republic Act No. 7922, entitled “An Act Establishing a Special Economic Zone and Freeport in the Municipality of Santa Ana and the Neighboring Islands in the Municipality of Aparri, Province of Cagayan Providing Funds Therefor, and for other Purposes;” x. Section 6 of Presidential Decree No. 538, entitled “Creating and Establishing the PHIVIDEC Industrial Authority and Making It a Subsidiary Agency of the Philippine Veterans Investment Development Corporation Defining its Powers, Functions and Responsibilities, and for Other Purposes,” as amended by Executive Order No. 1031, series of 1985; xi. Section 11 of Republic Act No. 7916, entitled “An Act Providing for the Legal Framework and Mechanisms for the Creation, Operation, Administration, and Coordination of Special Economic Zones in the Philippines, Creating For This Purpose, The Philippine Economic Zone Authority (PEZA), and for Other Purposes.” (B) The following laws are hereby amended to mandate all internal revenue tax and duty obligations of the relevant entities be chargeable to the Tax Expenditure Fund (TEF) pursuant to Section 313 of this Act: i. Section 18 of Republic Act No. 7884, entitled “An Act Creating the National Dairy Authority to Accelerate the Development of the Dairy Industry in the Philippines, Providing for a Dairy Development Fund, and for Other Purposes;” ii. Section 8 of Republic Act No. 7903, entitled “An Act Creating Special Economic Zone and Freeport in the City of Zamboanga for this Purpose the Zamboanga City Special Economic Zone Authority, Appropriating Funds Therefor, and for Other Purpose;” 53 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 iii. Section 12-a of Republic Act No. 10083, entitled “An Act Amending Republic Act No. 9490, otherwise known as the Aurora Special Economic Zone Act of 2007;” iv. Sections 29, 57, 74, 95 (c) of Republic Act No. 9593, entitled “An Act Declaring Tourism as Engine of Investment, Employment, Growth and National Development and Strengthening the Department of Tourism or Tourism Act of 2009;” v. Section 10 of Presidential Decree No. 538, entitled “Creating and Establishing the PHIVIDEC Industrial Authority and Making it a Subsidiary Agency of the Philippine Veterans Investment Development Corporation Defining its Powers, Functions and Responsibilities, and for Other Purposes;” vi. Section 16 (a) (b) of Republic Act No. 9497, entitled “An Act Creating the Civil Aviation Authority of the Philippines, Authorizing the Appropriation of Funds Therefor, and for Other Purposes;” vii. Section 14 of Republic Act No. 7354, entitled “An Act Creating the Philippine Postal Corporation, Defining its Powers, Functions and Responsibilities, Providing For Regulation of the Industry and for Other Purposes Connected Therewith;” viii. Section 8 and 14 of Presidential Decree No. 269, entitled “Creating the National Electrification Administration as a Corporation, Prescribing its Powers and Activities, Appropriating the Necessary Funds Therefore and Declaring a National Policy Objective for the Total Electrification of the Philippines on an Area Coverage Service Basis, the Organization, Promotion and Development of Electric Cooperatives to Attain the Said Objective, Prescribing Terms and Conditions for their Operations, the Repeal Of Republic Act 6038, and for Other Purposes;” ix. Section 2 and 19 of Republic Act No. 9679, entitled “An Act Amending The Home Development Mutual Fund Otherwise Known as the Pag-Ibig Fund;” x. Section 17 (c) under section 8 of Republic Act No. 9576, entitled “An Act Increasing the Maximum Deposit Insurance Coverage, and in connection therewith, to strengthen the regulatory and administrative authority, and financial capability of the Philippine Deposit Insurance Corporation (PDIC) amending for this purpose Republic Act Numbered Three Thousand Five Hundred Ninety One, as amended otherwise known as the PDIC Charter and for other purposes;” xi. Section 13 of Republic Act No. 7820, entitled “An Act Creating the Partido Development Administration, Defining its Powers and Functions, Providing Funds Therefor, and for Other Purposes;” 54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 xii. Section 5 (j) of Republic Act No. 9510, entitled “An Act Establishing the Credit Information System and for Other Purposes;” xiii. Section 13 (e) of Presidential Decree No. 857, entitled “Providing for the Reorganization of Port Administrative and Operation Functions in the Philippines, Revising Presidential Decree No. 505 dated July 11, 1974, Creating the Philippine Port Authority, by substitution, and for other Purposes;” xiv. Section 19 of Republic Act No. 6847, entitled “An Act Creating and Establishing the Philippine Sports Commission, Defining its Powers, Functions, and Responsibilities, Appropriating Funds Therefor, and for Other Purposes;” xv. Section 8 (a) (b) and section 13 of Republic Act No. 6395, entitled “An Act Revising the Charter of the National Power Corporation;” and xvi. Section 21 of Republic Act No. 7306, entitled “An Act Providing for the Establishment of the People’s Television Network, Inc., Defining its Powers and Functions, Providing for its Sources of Funding and for Other Purposes.” Sec. 39. Repealing Clauses. – (A) The tax treatment provisions of entities covered by the following franchise laws are hereby amended or repealed effective two (2) years from the implementation of this Act, provided that the tax treatment provisions of entities covered by franchise laws pertaining to energy and telecommunications shall be deferred for an additional two (2) years. i. Section 8 of Republic Act No. 7962, entitled “An Act Granting the Philippine Broadcasting Corporation a Franchise to Construct, Install, Operate and Maintain Radio and Television Broadcasting Stations Within the Philippines, and for Other Purposes;” ii. Section 8 of Republic Act No. 7963, entitled “An Act Granting the Cebu Broadcasting Company a Franchise to Construct, Install, Operate and Maintain Radio and Television Broadcasting Stations Within the Philippines and for Other Purposes;” iii. Section 8 of Republic Act No. 7966, entitled “An Act Granting the ABSCBN Broadcasting Corporation a Franchise to Construct, Install, Operate and Maintain Television and Radio Broadcasting Stations in the Philippines and for Other Purposes;” iv. Section 8 of Republic Act No. 7967, entitled “An Act Granting the Pacific Broadcasting System, Inc. a Franchise to Construct, Install, Operate and Maintain Radio and Television Broadcasting Stations Within the Philippines and for Other Purposes;” 55 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 v. Section 9 of Republic Act No. 7908, entitled “An Act Granting the Multi Media Telephony Incorporated, a Franchise to Construct, Establish, Operate and Maintain Radio Paging System in the Philippines, and for Other Purposes;” vi. Section 8 of Republic Act No. 7969, entitled “An Act Granting the Central Catv, Inc. a Franchise to Establish, Maintain and Operate for Commercial Purposes Cable/Community Antenae Television Systems in the Philippines;” vii. Section 8 of Republic Act No. 8060, entitled “An Act Granting Palawan Broadcasting Corporation a Franchise to Install, Construct, Operate and Maintain Commercial Radio and Television Broadcasting Stations throughout the Philippines;” viii. Section 8 of Republic Act No. 8063, entitled “An Act Granting the Beacon Communications Systems, Inc., a Franchise to Construct, Install, Establish, Operate and Maintain Commercial Radio Stations in the Philippines;” ix. Section 9 Republic Act No. 8066, entitled “An Act Granting the Isla Paging Company, A Franchise to Construct, Maintain, Establish, and Operate Commercial Radio Paging Services in the Philippines;” x. Section 8 of Republic Act No. 8067, entitled “An Act Granting the Radio Gubat Network, Inc., a Franchise to Construct, Install, Operate and Maintain Radio Broadcasting Stations in the Bicol Region;” xi. Section 8 of Republic Act No. 8068, entitled “An Act Granting a Franchise to Agusan Communications Foundation, Inc., to Construct, Operate and Maintain Stations for Radio and Television in the Province of Agusan Del Sur and for Other Purposes;” xii. Section 8 of Republic Act No. 8071, entitled “An Act Granting Vismin Radio and Television Broadcasting Network, Incorporated a Franchise To Construct, Install, Operate and Maintain for Commercial Purposes Radio and Television Broadcasting Stations in the Visayas and Mindanao, and for Other Purposes;” xiii. Section 8 of Republic Act No. 8080, entitled “An Act Granting the AsianPacific Broadcasting Company, Inc., a Franchise to Construct, Install, Operate and Maintain Broadcasting Stations in the Philippines;” xiv. Section 8 of Republic Act No. 8094, entitled “An Act Granting the Ipil Broadcasting News Network, Inc. a Franchise to Construct, Install, Operate and Maintain Radio and Television Broadcasting Stations in Zamboanga Del Sur and for Other Purposes;” 56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 xv. Section 8 of Republic Act No. 8096, entitled “An Act Granting the Allied Broadcasting Center, Incorporated a Franchise to Construct, Operate and Maintain Stations for Radio in Cebu City and Other Areas in the Philippines Where Frequencies Are Still Available For Radio Broadcasting For Educational And Cultural, As Well As For Commercial Purposes;” xvi. Section 8 of Republic Act No. 8097, entitled “An Act Granting the Partido Broadcasting Corporation a Franchise to Construct, Install, Establish, Operate and Maintain Broadcast and Cable Radio and Television Stations In the Bicol Region;” xvii. Section 8 of Republic Act No. 8098, entitled “An Act Granting Broadcast Enterprises and Affiliated Media (BEAM), Inc., a Franchise to Establish, Construct, Operate and Maintain Commercial Radio and Television Broadcast Stations Including Cable Television Systems in the Philippines;” xviii. Section 8 of Republic Act No. 8099, entitled “An Act Granting A Franchise to Sagay Broadcasting Corporation (SBC) to Construct, Operate and Maintain Stations For Radio and Television In the Philippines and for Other Purposes;” xix. Section 7 of Republic Act No. 8102, entitled “An Act Granting the Ultimate Entertainment, Inc., a Franchise to Construct, Install, Maintain And Operate Radio Broadcasting Stations Within the Philippines;” xx. Section 8 of Republic Act No. 8116, entitled “An Act Granting the Vimcontu Broadcasting Corporation a Franchise to Construct, Install, Operate and Maintain Radio and Television Broadcasting Stations, within the Philippines and for Other Purposes;” xxi. Section 8 of Republic Act No. 8119, entitled “An Act Granting the Good News Sorsogon Foundation, Inc., A Franchise to Construct, Install, Operate and Maintain for Religious, Educational and Commercial Purposes, Radio and Television Broadcasting Stations within the Philippines and for Other Purposes;” xxii. Section 5 of Republic Act No. 8120, entitled “An Act Granting The Andres Bonifacio College Broadcasting System, Inc., a Franchise to Construct, Maintain and Operate Radio Broadcasting Stations and Stations for Television in The Island of Mindanao for Educational, Cultural, and Commercial Purposes;” xxiii. Section 8 of Republic Act No. 8121, entitled “An Act Granting the M.S. Network Management, Inc. a Franchise to Construct, Install, Operate and Maintain for Commercial Purposes, Radio Broadcasting Stations in the Philippines and for Other Purposes;” 57 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 xxiv. Section 7 of Republic Act No. 8123, entitled “An Act Granting the Royal Broadcasting Corporation. a Franchise to Construct, Operate and Maintain for Commercial Purposes, Radio and Television Broadcasting Stations in the Philippines and for Other Purposes;” xxv. Section 8 of Republic Act No. 8128, entitled “An Act Granting a Franchise to the Oriental Mindoro Management Resources Corporation (OMARCO) to Construct, Install, Establish, Operate, Manage and Maintain a Network of Radio and Television Stations Anywhere in the Philippines, and for Other Purposes;” xxvi. Section 8 of Republic Act No. 8132, entitled “An Act Granting Jose M. Luison and Sons, Inc., a Franchise to Construct, Install, Operate and Maintain for Commercial Purposes Radio and Television Broadcasting Stations in the Philippines;” xxvii. Section 7 of Republic Act No. 8144, entitled “An Act Granting the Azimuth Broadcasting Corporation a Franchise to Construct, Operate and Maintain for Commercial Purposes Radio and Television Broadcasting Stations in the Philippines;” xxviii. Section 8 of Republic Act No. 8145, entitled “An Act Granting the Radyo Pilipino Corporation a Franchise To Construct, Install, Operate and Maintain Commercial Radio and Television Broadcasting Stations, Satellite and Cable Stations in the Philippines;” xxix. Section 14 of Republic Act No. 8147, entitled “An Act Granting the Southern Broadcasting Network a Franchise to Construct, Maintain, Establish and Operate Commercial Radio/Television Broadcasting Stations, in the Philippines;” xxx. Section 8 of Republic Act No. 8149, entitled “An Act Granting the Tagbilaran Broadcasting System a Franchise to Construct, Install, Operate and Maintain Radio and Television Broadcasting Stations, in the Visayas Region, and for Other Purposes;” xxxi. Section 8 of Republic Act No. 8154, entitled “An Act Granting Prime Broadcasting Network, Incorporated, a Franchise to Construct, Operate and Maintain Stations for Radio and Television in the Philippines;” xxxii. Section 4 of Republic Act No. 8158, entitled “An Act Extending the Franchise Granted to Jorge D. Bayona Under Republic Act Numbered Fifty-Seven Hundred Eighty-Nine, assigning it in Favor of PBN Broadcasting Network Inc., and Renewing the Term thereof for another Twenty-Five (25) Years from the Date of the Effectivity of this Act;” 58 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 xxxiii. Section 8 of Republic Act No. 8169, entitled “An Act Granting GV Broadcasting System, Inc., a Franchise to Construct, Install, Maintain and Operate for Commercial Purposes Radio Broadcasting Stations in the Island of Luzon and for Other Purposes;” xxxiv. Section 9 of Republic Act No. 7953, entitled “An Act Amending Republic Act Numbered Sixty – Six Hundred Thirty - Two, entitled “An Act Granting the Philippine Racing Act, Inc., a Franchise to Operate and Maintain a Race Track for Horse Racing in the Province of Rizal, and Extending the said Franchise by 25 Years from theExpiration of the Term thereof;” xxxv. Section 12 of Republic Act No. 8407, entitled “an act amending Republic Act Numbered Sixty – Six Hundred Thirty - One, entitled “An Act Granting Manila Jockey Club, Inc., a Franchise to Construct, Operate and Maintain a Race Track for Horse Racing in the City of Manila or any Place within the Provinces of Bulacan, Cavite or Rizal and Extending the Said Franchise by 25 Years from the Expiration of the Term Thereof;” xxxvi. Section 9 of Republic Act No. 8298, entitled “An Act Amending Republic Act Numbered Seventy-Nine Hundred Seventy-Eight, entitled “An Act Granting the Metro Manila Turf Club, Inc., a Franchise to Construct, Operate and Maintain a Racetrack for Horse Racing in the City of Kalookan;” and xxxvii. Section 12 of Republic Act No. 8446, entitled “An Act Granting the FilAsia Racing Club a Franchise to Construct, Operate and Maintain a Racetrack for Horse Racing in Rizal or Tarlac, or Pampanga or Batangasor Quezon City.” xxxviii. Section 9 of Republic Act No. 7399, entitled “An Act Granting the Aliw Broadcasting Corporation a Franchise to Install, Construct, Operate and Maintain Commercial Radio Television Broadcasting Stations throughout the Philippines.” xxxix. Section 8 of Republic Act No. 7295, entitled, “An Act Granting the Bright Star Broadcasting Network Corporation a Franchise to Construct, Install, Operate and Maintain for Commercial Purposes Radio and Television Broadcasting Stations in the Philippines and for Other Purposes” xl. Section 8 of Republic Act No. 7530, entitled, “An Act Extending the Franchise Granted to the Catholic Bishop’s Conference of the Philippines, Inc. (Formerly the Catholic Welfare Organization to Construct, Operate and Maintain Radio Broadcasting and Television Stations in the Philippines Under Republic Act Numbered Fifty-One Hundred and Seventy-Two to Another Twenty-Five (25) Years from August 4, 1992 and for Other Purposes” xli. Section 4 of Republic Act No. 7582, entitled “An Act Renewing the Franchise Granted to the Consolidated Broadcasting Systems, Inc., Previously Known as the Audience, Incorporated, to Construct, Maintain and Operate Radio 59 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Broadcasting and Television Stations in the Philippines Under Republic Act Numbered Thirty-Nine Hundred and Two, to another Twenty-five (25) Years from the date of Approval of this Act” xlii. Section 8 of Republic Act No. 7576, entitled “An Act Granting the Cotabato Television Corporation a Franchise to Construct, Install, Operate and Maintain for Commercial, Educational and Cultural Purposes Radio and Television Broadcasting Stations in the City of Cotabato and the Provinces of Maguindanao, Sultan Kudarat and North Cotabato and for Other Purposes” xliii. Section 8 of Republic Act No. 7299, entitled “An Act Extending the Franchise Granted to the Eagle Broadcasting Corporation to Establish, Operate and Maintain Radio Broadcasting and Television Stations in the Philippines Under Republic Act Numbered Forty-Nine Hundred and Sixteen to Another Twenty-Five (25) Years from November 2, 1993 and for Other Purposes” (RA 10773) xliv. Section 8 of Republic Act No. 7485, entitled “An Act Granting Filipinas Broadcasting Association, Inc. A Franchise to Construct, Operate and Maintain for Commercial Purposes Radio Broadcasting and Television Stations in the Visayas and Mindanao and for Other Purposes” xlv. Section 9 of Republic Act No. 7223, entitled, “An Act Granting Gateway U.H.F. Television Broadcasting Inc. a Franchise to Construct, Install, Operate and Maintain for Commercial Purposes UHF Television Broadcasting Stations in the Philippines, and for Other Purposes” xlvi. Section 8 of Republic Act No. 8027 entitled “An Act Granting a Franchise to the Kaissar Broadcasting Network, Inc. (KBNI), to Construct, Install, Establish, Operate, Manage and Maintain a Network of Radio and Television Stations Anywhere in the Philippines, and for Other Purposes” xlvii. Section 8 of Republic Act No. 7303, entitled “An Act Granting the Kalayaan Broadcasting System, Incorporated a Franchise to Construct, Install, Operate and Maintain Radio Broadcasting Stations in the Island of Mindanao and for Other Purposes” xlviii. Section 8 of Republic Act No. 7395, entitled “An Act Granting the Mabuhay Broadcasting System, Inc., a Franchise to Construct, Install, Operate and Maintain Radio Broadcasting Stations in the Island of Luzon and for Other Purposes” xlix. Section 8 of Republic Act No, 7577, entitled “An Act Granting to the Majlis Al Da’Wah Al Islamiah Fil-Philippines, Inc. a Franchise to Establish, Operate and Maintain Radio and Television Broadcasting Stations in Mindanao” 60 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 l. Section 8 of Republic Act No 7816, entitled “An Act Granting the Manila Broadcasting Company a Franchise to Construct, Install, Operate and Maintain Radio and Television Broadcasting Stations Within the Philippines, and for Other Purposes” li. Section 8 of Republic Act No. 7510, entitled “An Act Granting the Masbate Community Broadcasting Co., Inc., a Franchise to Construct, Install, Operate and Maintain Radio and Television Broadcasting Stations in the Islands of Masbate and Romblon and the whole of the Visayas, and for Other Purposes” lii. Section 8 of Republic Act No. 7477, entitled “An Act Granting the People’s Broadcasting Service, Inc., a Franchise to Construct, Install, Operate and Maintain for Commercial Purposes Radio Broadcasting and Television Stations in the Philippines and for Other Purposes” liii. Section 8 of Republic Act No. 7163, entitled “An Act Granting the Progressive Broadcasting Corporation a Franchise to Construct, Install, Operate and Maintain for Commercial Purposes Radio Broadcasting Stations and Television Stations in Metro Manila and in Regions I, VI, and VII and for Other Purposes” liv. Section 8 of Republic Act No 8032, entitled “An Act Granting the Philippine Radio Corporation a Franchise to Construct, Install, Establish, Operate and Maintain Commercial Radio Stations in the Philippines” lv. Section 8 of Republic Act No. 7635, entitled “An Act Granting Radio Sorsogon Network, Inc. a Franchise to Construct, Install, Operate and Maintain Radio/television Broadcasting Stations Within the Bicol Region and For Other Purposes” lvi. Section 8 of Republic Act No 7158, entitled “An Act Granting the Rinconada Broadcasting Corporation a Franchise to Construct, Install, Operate and Maintain for Commercial Purposes Radio Broadcasting Stations and Television Stations in the Philippines and for Other Purposes” lvii. Section 8 of Republic Act No. 7397, entitled “An Act Granting SBS Radio Network, Inc. a Franchise to Construct, Install, Operate and Maintain Radio Broadcasting Stations in the Philippines and for Other Purposes” lviii. Section 8 of Republic Act No. 7579, entitled “An Act Granting the Radio Veritas-Global Broadcasting System, Incorporated, a Franchise to Construct, Install, Operate and Maintain for Religious, Educational, Cultural and Commercial Purposes Radio and Television Broadcasting Stations in the Philippines, and for Other Purposes” 61 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 lix. Section 8 of Republic Act No. 7580, entitled “An Act Granting the South Cotabato Communications Corporation a Franchise to Construct, Install, Operate and Maintain Radio and Television Broadcasting Stations Within the Province of South Cotabato” lx. Section 8 of Republic Act No. 7511, entitled “An Act Granting the Subic Broadcasting Corporation a Franchise to Construct, Install, Operate and Maintain Radio and Television Broadcasting Stations in the Philippines and for Other Purposes” lxi. Section 8 of Republic Act No 8122, entitled “An Act Granting the Swara Sug Media Corporation of the Philippines A Franchise to Construct, Install, Operate and Maintain For Commercial Purposes Radio and Television Broadcasting Stations in the Philippines and for Other Purposes” lxii. Section 9 of Republic Act No. 7529, entitled “An Act Granting Vanguard Radio Network Company, Inc. a Franchise to Construct, Install, Operate and Maintain radio and Television Broadcasting Stations in the Island of Luzon and for Other Purposes” lxiii. Section 8 of Republic Act No. 7634, entitled “An Act Authorizing the Transfer and Assignment to the Bohol Chronicle Radio Corporation of the Franchise to Construct, Operate and Maintain Television and Radio Broadcasting Stations in the Province of Bohol granted under Republic Act Numbered FortySeven Hundred and Ninety-Two to Zoilo Dejaresco, Jr., and all the Properties and Rights Acquired Thereunder of Zoilo Dejareso, Jr., and Renewing the terms of the Said Franchise to Another Twenty-Five (25) Years from the Date of Effectivity of this Act” lxiv. Section 8 of Republic Act No. 8153, entitled “An Act Granting the Rex Electronics Communications System, Inc. a Franchise to Construct, Operate and Maintain Public Radiotelephone and Radiotelegraph Stations for the Reception and Transmission of Radiotelephone and Radiotelegraph Communications Within the Philippines” (B) The provisions of the following laws, including the tax incentives, that are inconsistent with this Act are hereby amended or repealed effective two (2) years from the implementation of this Act, provided that the tax treatment provisions of entities covered by special laws pertaining to energy, agriculture, and telecommunications shall be deferred for an additional two (2) years. i. Section 37 of Republic Act No. 6848, entitled “An Act Providing For the 1989 Charter of the Al-Amanah Islamic Investment Bank of the Philippines, Authorizing its Conduct of Islamic Banking Business, and Repealing for this Purpose Presidential Decree Numbered Two Hundred And Sixty-Four as Amended by Presidential Decree Numbered Five Hundred and Forty-Two;" 62 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 ii. Section 17 of Republic Act No. 7906, entitled “An Act Providing for the Regulation of the Organization and Operations of Thrift Banks, and for Other Purposes;” iii. Section 15 of Republic Act No. 7353, entitled “An Act Providing for the Creation, Organization and Operation of Rural Banks, and for Other Purposes;” iv. Book I Title III, Article 39 (A), (B), (C), (D), (E), (G), (I) and (J); Title IV Article 40, Book III Articles 59, 60, 61, Book IV Article 69, Book VI Articles 77, and 78 of Executive Order No. 226, series of 1987, entitled “the Omnibus Investments Code of 1987;” v. Section 1 of Republic Act No. 7918, entitled “An Act Amending Article 39, Title III of Executive Order No. 226, otherwise Known as the Omnibus Investments Code of 1987, as Amended, and for Other Purposes;” vi. Articles 62, 63, 64, 65, 66, 67 and 69 of Republic Act No. 8756, entitled “An Act Providing for the Terms, Conditions and Licensing Requirements of Regional or Area Headquarters, Regional Operating Headquarters, Regional Warehouses of Multinational Companies Amending for the Purpose Certain Provisions of Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987;” vii. Executive Order No. 22 series of 2017 amending Executive Order No. 70 series of 2012 and Executive Order No. 528, series of 2006 and Executive Order No. 313, series of 2004, entitled “Reducing the Rates of Duty on Capital Equipment, Spare Parts and Accessories Imported by Board of Investments Registered New and Expanding Enterprises;” viii. Section 12 of Republic Act No. 8047, entitled “An Act Providing for the Development of the Book Publishing Industry through the Formulation and Implementation of a National Book Policy and a National Book Development Plan;” ix. Section 17 (1) to (8) in so far as tax exemption and/or VAT zero rating on domestic merchandise is concerned, and Section 18 (a), (b), (c) and (f) of Presidential Decree No. 66, entitled “Creating the Export Processing Zone Authority and Revising Republic Act No. 5490;” x. Section 4 (e) and (f), in so far as tax exemption and/or VAT zero rating on domestic merchandise is concerned, of Republic Act No. 7903, entitled “An Act Creating Special Economic Zone and Freeport in the City of Zamboanga and Establishing for this Purpose the Zamboanga City Special Economic Zone Authority, Appropriating Funds Therefor, and for Other Purposes;” 63 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 xi. Section 4 (b) (c), in so far as tax exemption and/or VAT zero rating on domestic merchandise is concerned, of Republic Act No. 7922, entitled “An Act Establishing a Special Economic Zone and Freeport in the Municipality of Santa Ana and the Neighboring Islands in the Municipality of Aparri, Province of Cagayan Providing Funds Therefor, and for other Purposes;” xii. Section 4 of Republic Act No. 8748, entitled “An Act Amending Republic Act No. 7916, otherwise Known as the Special Economic Zone Act of 1995;” xiii. Sections 23 and 24 of Republic Act No. 7916, entitled “An Act Providing for the Legal Framework and Mechanisms for the Creation, Operation, Administration, and Coordination of Special Economic Zones in the Philippines, Creating for the Purpose the Philippine Economic Zone Authority (PEZA), and for Other Purposes;” xiv. Section 1 of Republic Act No. 9400 amending Section 12 (b) of Republic Act No. 7227, in so far as tax exemption and VAT zero rating of domestic merchandise and capital equipment are concerned, Section 12 (c), Section 2 amending Section 15, second, third and last paragraph of Republic Act No. 7227, Section 3, first and second paragraph; Sections 4 and 5 entitled “An Act Amending Republic Act No. 7227, as amended, otherwise known as the Bases Conversion and Development Act of 1982, and for other Purposes,”; xv. Section 1 of Executive Order No. 619, entitled “Creating and Designating Special Economic Zones Pursuant to Republic Act No. 7916, as amended by Republic Act No. 8784, in relation to Republic Act No. 7227, as amended by Republic Act No. 9400, inside the Clark Freeport Zone;” xvi. Sections 5, 6, 7, 8 and 9 of Republic Act No. 9490, entitled “An Act Establishing the Aurora Special Economic Zone in the Province of Aurora, creating for the Purpose the Aurora Special Economic Zone Authority, Appropriating Funds Therefor and for Other Purposes; xvii. Sections 3 (e) (f) (h) and 4 of Republic Act No. 10083, entitled “An Act Amending Republic Act No. 9490;” xviii. Section 4 (f), in so far as tax exemption and/or Value Added Tax or VAT zero rating on domestic merchandise and capital equipment are concerned, and Sections 5, 6 and 10 of Republic Act No. 9728, entitled “An Act Converting the Bataan Economic Zone Located in the Municipality of Mariveles, Province of Bataan, into the Freeport Area of Bataan (FAB), Creating for this Purpose the Authority of the Freeport Area of Bataan (AFAB), Appropriating Funds Therefor and for Other Purposes;” xix. Sections 36 (e) and (f) of Presidential Decree No. 705, entitled “Revising PD No. 389, otherwise known as the Forestry Reform Code of the Philippines;” 64 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 xx. Section (b) (1) (c) of Republic Act No. 9003, entitled “An Act Providing for an Ecological Solid Waste Management Program, Creating the Necessary Institutional Mechanisms and Incentives, Declaring Certain Acts Prohibited and Providing Penalties, Appropriating Funds Therefor and for Other Purposes;” xxi. Section 26 a (1) (3) of Republic Act No. 9275, entitled “An Act Providing for Comprehensive Water Quality Management and for Other Purposes;” xxii. Sections 16 and 17 of Republic Act No. 7844, entitled “An Act to Develop Exports as a Key Towards the Achievement of the National Goals Towards the Year 2000;” xxiii. Section 13 of Republic Act No. 10817, entitled “An Act Instituting the Philippine Halal Export Development and Promotion Program, Creating for the Purpose the Philippine Halal Export Development and Promotion Board, and for Other Purposes;” xxiv. Section 14 of Republic Act No. 8423, entitled “An Act Creating the Philippine Institute of Traditional and Alternative Health Care (PITAHC) To Accelerate the Development of Traditional and Alternative Health Care in the Philippines, Providing for a Traditional and Alternative Health Care Development Fund and for other Purposes;” xxv. Section 20 (d) (1) to (5) of Republic Act No. 10884, entitled “An Act Strengthening the Balanced Housing Development Program, amending for the Purpose Republic Act No. 7279, as amended, otherwise known as the Urban Development and Housing Act of 1992;” xxvi. Republic Act No. 7718, entitled “An Act Amending Certain Sections of Republic Act No. 6957, Entitled “An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector, and for Other Purposes;” xxvii. Section 6 (c) (d) (f) and Sections 7 and 8 of Republic Act No. 7103, entitled “An Act to Strengthen the Iron and Steel Industry and Promote Philippine Industrialization and for Other Purposes;” xxviii. Section 3 (a) to (d) and (h) of Republic Act No. 8502, entitled “An Act to Promote the Development of the Jewelry Manufacturing Industry, Providing Incentives Therefor and for Other Purposes;” xxix. Section 5 (a) (b) of Republic Act No. 10771, entitled “An Act Promoting the Creation of Green Jobs, Granting Incentives and Appropriating Funds Therefor;” 65 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 xxx. Section 9 (h) (10) of Republic Act No. 9501, entitled “Promoting Entrepreneurship by Strengthening Development And Assistance Programs to Micro, Small and Medium Scale Enterprises Amending RA 6977, otherwise known as the Magna Carta For Small Enterprises;” xxxi. Section 7 of Republic Act No. 9178, entitled “An Act to Promote the Establishment of Barangay Micro Business Enterprises (BMBES), Providing Incentives and Benefits Therefor, and for Other Purposes;” xxxii. Chapter XV, Section 83; Chapter XVI, Sections 90, 91, 92, 93 of Republic Act No. 7942, entitled “An Act Instituting a New System of Mineral Resources Exploration, Development, Utilization and Conservation;” xxxiii. Chapter II, Section 4 and Chapter VIII, Section 19 of Republic Act No. 9295, entitled “An Act Promoting the Development of Philippine Domestic Shipping, Shipbuilding, Ship Repair and Ship Breaking, Ordaining Reforms in Government Policies Towards Shipping in the Philippines and for other Purposes;” xxxiv. Section 6 of Republic Act No. 7471, as amended, entitled “An Act to Promote the Development of Philippine Overseas Shipping;” xxxv. Sections 86, 88 and 95 (a) and (b) of Republic Act No. 9593, entitled “An Act Declaring a National Policy for Tourism as an Engine of Investment, Employment, Growth and National Development, and Strengthening the Department of Tourism and its Attached Agencies to Effectively and Efficiently Implement that Policy, and Appropriating Funds Therefor;” xxxvi. Section 8, in so far as investment incentives are concerned, of Republic Act No. 10816, entitled “An Act Providing for the Development and Promotion of Farm Tourism in the Philippines;” xxxvii. Section 8 of Presidential Decree 1491- Amending Section 8 of Presidential Decree no. 538 (Philippine Veterans Investment Development Corporation);” xxxviii. Section 8, in so far as tax exemption and VAT zero rating of domestic merchandise are concerned, and Section 9 of Presidential Decree No. 538, entitled “Creating and Establishing the PHIVIDEC Industrial Authority and Making it a Subsidiary Agency of the Philippine Veterans Development Corporation, Defining its Powers, Functions and Responsibilities, and for Other Purposes;” xxxix. Section 1 (1.1) of Executive Order No. 97-A s. 1993, entitled “Further Clarifying the Tax and Duty-Free Privilege within the Subic Special Economic and Free Port Zone;” 66 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 xl. Sections 4(f) and 5(c)(k), in so far as tax exemption and/or VAT zero rating on domestic merchandise is concerned, and Section 12-b of Republic Act No. 10083, entitled “An Act Amending Republic Act No. 9490, otherwise known as the Aurora Special Economic Zone Act of 2007;” xli. Section 5 (5.1) and (5.2) of Executive Order No. 290 series of 2004, entitled “Implementing the Natural Gas Vehicle Program for Public Transport;” xlii. Sections 18 and 20 of Republic Act No. 6847, entitled “An Act Creating and Establishing the Philippine Sports Commission, Defining its Powers, Functions, And Responsibilities, Appropriating Funds therefor, and for Other Purposes;” xliii. Section 22 of Republic Act No. 9337, entitled “An Act Amending Sections 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 and 288 of the National Internal Revenue Code of 1997, as Amended, and for Other Purposes,” xliv. Sections 1 (6) and 2 of Presidential Decree No. 776, entitled “Repealing All Laws, Acts, Decrees, Orders and Ordinances Granting Exemptions from Taxes, Duties, Fees, Imposts and Other Charges under Certain Exceptions and Creating a Fiscal Incentives Board” xlv. Section 2 of Presidential Decree No. 1931, s. 1984, entitled “Directing the Rationalization of Duty and Tax Exemption Privileges Granted to GovernmentOwned or Controlled Corporations and All Other Units of Government” xlvi. Section 1 (c), (d) Executive Order No. 93, series of 1986, entitled “Withdrawing All Tax and Duty Incentives, Subject to Certain Exceptions, Expanding the Powers of the Fiscal Incentives Review Board and for other Purposes” xlvii. Section 1 (a) and (b) of Presidential Decree No. 1955, entitled “Withdrawing, Subject to Certain Conditions, the Duty and Tax Privileges Granted to Private Business Enterprises and/or Persons Engaged in any Economic Activity and for Other Purposes” ( C ) Memorandum Order No. 23, s. 1986, entitled “Expanding the Membership of the Fiscal Incentives Review Board”, is hereby repealed. (D) In general. – All other laws, decrees, Executive Orders, rules and regulations, or parts thereof which are contrary to or inconsistent with this Code are hereby repealed, amended or modified accordingly. 67 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 SEC. 40. Implementing Rules and Regulations. – Within thirty (30) days from the effectivity of this Act, the Secretaries of Finance and Trade and Industry, shall, upon consultations with the Commissioner of Internal Revenue and Board of Investments and other Investment Promotion Agencies, promulgate the necessary rules and regulations for its effective implementation. SEC. 41. Separability Clause. – If any clause, sentence, paragraph, or part of this Code shall be adjudged by any Court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder of said Code, but shall be confined in its operation to the clause, sentence, paragraph, or part thereof directly involved in the controversy. SEC. 42. Effectivity. This Act shall take effect on January 1, 2019 following its complete publication in the Official Gazette or in a newspaper of general circulation. Approved, 68