TAXATION

FAR EASTERN UNIVERSITY – MANILA

OMNIBUS INVESTMENT CODE [BOOK 1 of E.O. 226] - (901)

Composition of the Board

The Board of Investments shall be composed of seven (7) governors: The Secretary of Trade and Industry, three (3)
Undersecretaries of Trade and Industry to be chosen by the President; and three (3) representatives from other
government agencies and the private sector.

The Secretary of Trade and Industry shall be concurrently Chairman of the Board and the Undersecretary of the
Department of Trade and Industry for Industry and Investments shall be concurrently the Vice-Chairman of the
Board and its Managing Head.

The three (3) representatives from the other government agencies and the private sector shall be appointed by the
President for a term of four (4) years: Provided, That upon the expiration of his term, a governor shall serve as such
until his successor shall have been appointed and qualified: Provided, further, That no vacancy shall be filled except
for the unexpired portion of any term, and that no one may be designated to be governor of the Board in an acting
capacity but all appointments shall be ad interim or permanent.

Declaration of Policy

Declaration of Investment Policies. To accelerate the sound development of the national economy in consonance
with the principles and objectives of economic nationalism and in pursuance of a planned economically feasible and
practical dispersal of industries and the promotion of small and medium scale industries, under conditions which will
encourage competition and discourage monopolies, the following are declared policies of the State:

1. The State shall encourage private Filipino and foreign investments in industry, agriculture, forestry, mining,
tourism and other sectors of the economy which shall: provide significant employment opportunities relative to
the amount of the capital being invested; increase productivity of the land, minerals, forestry, aquatic and other
resources of the country, and improve utilization f the products thereof; improve technical skills of the people
employed in the enterprise; provide a foundation for the future development of the economy; meet the tests of
international competitiveness; accelerate development of less developed regions of the country; and result in
increased volume and value of exports for the economy.

2. The State shall ensure the holistic development by safeguarding the well-being of the social, cultural and
ecological life of the people. For this purpose, consultation with affected communities will be conducted whenever
necessary.

3. The State shall extend to projects which will significantly contribute to the attainment of these objectives, fiscal
incentives without which said projects may not be established in the locales, number and/or pace required for
optimum national economic development. Fiscal incentive systems shall be devised to compensate for market
imperfections, to reward performance contributing to economic development, be cost-efficient and be simple to
administer.

4. The State considers the private sector as the prime mover for economic growth. In this regard, private initiative
is to be encouraged, with deregulation and self-regulation of business activities to be generally adopted where
dictated by urgent social concerns.

5. The state shall principally play a supportive role, rather than a competitive one, providing the framework, the
climate and the incentives within which business activity is to take place.

6. The State recognizes that there are appropriate roles for local and foreign capital to play in the development of
the Philippine economy and that it is the responsibility of Government to define these roles and provide the
climate for their entry and growth.

7. The State recognizes that industrial peace is an essential element of economic growth and that it is a principal
responsibility of the State to ensure that such condition prevails.

8. Fiscal incentives shall be extended to stimulate the establishment and assist initial operations of the enterprise,
and shall terminate after a period of not more than 10 years from registration or start-up of operation unless a
specific period is otherwise stated.

The foregoing declaration of investment policies shall apply to all investment incentive schemes.
Board of Investment (BOI)

Powers and Duties of the Board. The Board shall be responsible for the regulation and promotion of investments
in the Philippines. It shall meet as often as may be necessary generally once a week on such day as it may fix.

Notice of regular and special meetings shall be given all members of the Board. The presence of four (4) governors
shall constitute a quorum and the affirmative vote of four (4) governors in a meeting validly held shall be necessary
to exercise its powers and perform its duties, which shall be as follows:
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(1) Prepare annually the Investment Priorities Plan as defined in Article 26, which shall contain a listing of specific
activities that can qualify for Incentives under Book I of this Code, duly supported by the studies of existing and
prospective demands for such products and services in the light of the level and structure of income, production,
trade, prices and relevant economic and technical factors of the regions as well as existing facilities;

(2) Promulgate such rules and regulations as may be necessary to implement the intent and provisions of this
Code relevant to the Board;

(3) Process and approve applications for registration with the Board, imposing such terms and conditions as it
may deem necessary to promote the objectives of this Code, including refund of incentives when appropriate,
restricting availment of certain incentives not needed by the Project in the determination of the Board, requiring
performance bonds and other guarantees, and payment of application ,registration, publication and other
necessary fees and when warranted may limit the availment of the tax holiday incentive to the extent that the
investor’s country law or treaties with the Philippines allows credit for taxes paid in the Philippines;

(4) After due hearing, decide controversies concerning the implementation of the relevant books of this Code that
may arise between registered enterprises or investors therein and government agencies, within thirty (30) days
after the controversy has been submitted for decision: Provided, That the investor or the registered enterprise
may appeal the decision of the Board within thirty (30) days from receipt thereof to the President;

(5) Recommend to the Commissioner of Immigration and Deportation the entry into the Philippines for
employment of foreign nationals under this Code;

(6) Periodically check and verify, either by inspection of the books or by requiring regular reports, the proportion
of the participation of Philippine nationals in a registered enterprise to ascertain compliance with its qualification
to retain registration under this Code;

(7) Periodically check and verify the compliance by registered enterprises with the relevant provisions of this
Code, with the rules and regulations promulgated under this Code and with the terms and conditions of
registration;

(8) After due notice, cancel the registration or suspend the enjoyment of incentives benefits of any registered
enterprise and/or require refund of incentives enjoyed by such enterprise including interests and monetary
penalties, for (a) failure to maintain the qualifications required by this Code for registration with the Board or (b)
for violation of any provisions of this Code, of the rules and regulations issued under this Code, of the terms and
conditions of registration, or of laws for the protection of labor or of the consuming public: Provided, That the
registration of an enterprise whose project timetable, as set by the board is delayed by one year, shall be
considered automatically canceled unless otherwise reinstated as a registered enterprise by the Board;

(9) Determine the organizational structure taking into account Article 6 of this Code; appoint, discipline and
remove its personnel consistent with the provisions of the Civil Service Law and Rules;

(10) Prepare or contract for the preparation of feasibility and other pre-investment studies for pioneer areas
either upon its own initiative; or upon the request of Philippine nationals who commit themselves to invest
therein and show the capability of doing so: Provided, That if the venture is implemented, then the amount
advanced by the Board shall be repaid within five (5) years from the date the commercial operation of said
enterprise starts;

(11) When feasible and considered desirable by the Board, require registered enterprises to list their shares of
stock in any accredited stock exchange or directly offer a portion of their capital stock to the public and/or their
employees;

(12) Formulate and implement rationalization programs for certain industries whose operation may result in
dislocation, overcrowding or inefficient use of resources, thus impeding economic growth. For this purpose, the
Board may formulate guidelines for progressive manufacturing programs, local content programs, mandatory
sourcing requirements and dispersal of industries. In appropriate cases and upon approval of the President, the
Board may restrict, either totally or partially, the importation of any equipment or raw materials or finished
products involved in the rationalization program;

(13) To the extent that such activities are allowed by the Constitution and relevant laws, to recommend to the
President of the Philippines, the suspension of the nationality requirement provided in this Code in cases of
ASEAN projects, or investments by ASEAN nationals, regional ASEAN or multilateral financial institutions
including their subsidiaries in preferred projects and/or projects allowed through either financial or technical
assistance agreements entered into the by the President, and in the case of regional complementation for the
manufacture of a particular product which seeks to take advantage of economies of scale. For the purpose of this
Act, a multilateral financial institution shall refer to a financial agency or entity, and its affiliates which satisfy the
qualifications:

(1) The Institution is either owned or controlled by member countries but does not possess any national identity;

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 (2) The institution sources its funds from capital stock subscriptions and contributions by member countries; and
(3) The primary responsibility of the institution is to provide funds for developmental purposes and international
economic stability

(14) Extend the period of availment of incentives by any registered enterprise; Provided, That the total period of
availment shall not exceed ten (10) years, subject to any of the following criteria:

(a) The registered enterprise has suffered operational force majeure that has impaired its viability;

(b) The registered enterprise has not fully enjoyed the incentives granted to it for reasons beyond its control;

(c) The project of the registered enterprise has a gestation period which goes beyond the period of availment of
needed incentives; and

(d) The operation of the registered enterprise has been subjected to unforeseen changes in government policies,
particularly, protectionalism policies of importing countries, and such other supervening factors which would
affect the competitiveness of the registered firm;

(15) Regulate the making of investments and the doing of business within the Philippines by foreigners or
business organizations owned in whole or in part by foreigners;

(16) Prepare or contract for the preparation of industry and sectoral development programs and gather and
compile statistical, technical marketing, financial and other data required for the effective implementation of this
Code;

(17) Within four (4) months after the close of the fiscal year, submit annual reports to the President which shall
cover its activities in the administration of this Code, including recommendations on investment policies;

(18) Provide, directly or through Philippine Diplomatic Missions, such information as may be of interest to
prospective foreign investors;

(19) Collate, analyze and compile pertinent information and studies concerning areas that have been or may be
declared preferred areas of investments; and

(20) Enter into agreements with other agencies of government for the simplification and facilitation of systems
and procedures involved in the promotion of investments, operation of registered enterprises and other activities
necessary for the effective implementation of this Code;

(21) Generally, exercise all the powers necessary or incidental to attain the purposes of this Code and other laws
vesting additional functions on the Board.
Preferred areas of investments

“Preferred areas of investments" shall mean the economic activities that the Board shall have declared as such in
accordance with Article 28 which shall be either non-pioneer or pioneer.

"Pioneer enterprise" shall mean a registered enterprise

(1) engaged in the manufacture, processing or production, and not merely in the assembly or packaging of
goods, products, commodities or raw materials that have not been or are not being produced in the Philippines on
a commercial scale or
(2) which uses a design, formula, scheme, method, process or system of production or transformation of any
element, substance or raw materials into another raw material or finished goods which is new and untried in the
Philippines or
(3) engaged in the pursuit of agricultural, forestry and mining activities and/or services including the industrial
aspects of food processing whenever appropriate, pre-determined by the Board, in consultation with the
appropriate Department, to be feasible and highly essential to the attainment of the national goal, in relation to a
declared specific national food and agricultural program for self-sufficiency and other social benefits of the project
or
(4) Which produces non-conventional fuels or manufactures equipment which utilize non-conventional sources of
energy or uses or converts to coal or other non-conventional fuels or sources of energy in its production
manufacturing or processing operations. Provided, That the final product in any of the foregoing instances,
involves or will involve substantial use and processing of domestic raw materials, whenever available; taking into
account the risks and magnitude of investment: Provided, further, That the foregoing definitions shall not in any
way limit the rights and incentives granted to less-developed-area enterprises provided under Title V, Book I,
hereof.

“Non-pioneer enterprise” shall include all registered producer enterprises other than pioneer enterprises.
Investment Priority Plans

Investment Priorities Plan. Not later than the end of March of every year, the Board of Investments, after
consultation with the appropriate government agencies and the private sector, shall submit to the President an

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Investment Priorities Plans: Provided, however, that the deadline for submission may be extended by the President.

Criteria in Investment Priority Determination. No economic activity shall be included in the Investment Priorities
Plans unless it is shown to be economically, technically and financially sound after thorough investigation and
analysis by the Board.

The determination of preferred areas of investment to be listed in the Investment Priorities Plan shall be based on
long-run comparative advantage, taking into account the value of social objectives and employing economic criteria
along with market, technical, and financial analyses.

The Board shall take into account the following:

(a) Primarily, the economic soundness of the specific activity as shown by its economic internal rate of return;

(b) The extent of contribution of an activity to a specific development goal;

(c) Other indicators or comparative advantage;

(d) Measured capacity as defined in Article 20; and

(e) The market and technical aspects and considerations of the activity proposed to be included.

In any of the declared preferred areas of investment, the Board may designate as pioneer areas the specific products
and commodities that meet the requirements of Article 17 of this Code and review yearly whether such activity, as
determined by the Board, shall continue as pioneer, otherwise, it shall be considered as non-pioneer and accordingly
listed as such in the Investment Priorities Plan or removed from the Investment Priorities Plan.

Approval of the Investment Priorities Plan. The President shall proclaim the whole or part of such plan as in
effect; or alternatively, return the whole or part of the plan to the Board of Investment for revision. Upon the
effectivity of the plan or portions thereof, the President shall issue all necessary directives to all departments,
bureaus, agencies or instrumentalities of the government to ensure the implementation of the plan by the agencies
concerned in a synchronized and integrated manner. No government body shall adopt any policy or take any course
of action contrary to or inconsistent with the plan.
Registration of Investments

Qualifications of a Registered Enterprise. To be entitled to registration under the Investment Priorities Plan, an
applicant must satisfy the Board that:
(1) He is a citizen of the Philippines, in case the applicant is a natural person, or in case of a partnership or any
other association, it is organized under Philippine laws and that at least sixty percent (60%) of its capital is
owned and controlled by citizens of the Philippines; or in case of a corporation or a cooperative, it is organized
under Philippine laws and that at least sixty percent (60%) of the capital stock outstanding and entitled to vote is
owned and held by Philippine nationals as defined under Article 15 of this Code, and at least sixty percent (60%)
of the members of the Board of Directors are citizens of the Philippines. If it does not possess the required
degree of ownership as mentioned above by Philippine nationals, the following circumstances must be
satisfactorily established:
(a) That it proposes to engage in a pioneer projects as defined in Article 17 of this Code, which, considering
the nature and extent of capital requirements, processes, technical skills and relative business risks
involved, is in the opinion of the Board of such a nature that the available measured capacity thereof
cannot be readily and adequately filled by Philippine nationals; or, if the applicant is exporting at least
seventy percent (70%) of its total production, the export requirement herein provided may be reduced in
meritorious cases under such conditions and/or limited incentives as the Board may determine;
(b) That it obligates itself to attain the status of a Philippine national, as defined in Article 15, within thirty (30)
years from the date of registration or with such longer period as the Board may require taking into account
the export potential of the project: Provided, That a registered enterprise which exports one hundred
percent (100%) of its total production need not comply with this requirement;
(c) That the pioneer area it will engage in is one that is not within the activities reserved by the Constitution or
other laws of the Philippines to the Philippine citizens or corporations owned and controlled by Philippine
citizens;

(2) The applicant is proposing to engage in a preferred project listed or authorized in the current Investment
Priorities Plan within a reasonable time to be fixed by the Board or, if not so listed, at least fifty percent (50%) of
its total production is for export or it is an existing producer which will export part of production under such
conditions and/or limited incentives as the Board may determine; or that the enterprise is engaged or proposing
to engage in the sale abroad of export products bought by it from one or more export producers; or the
enterprise is engaged or proposing to engage in rendering technical, professional or other services or in exporting
television and motion pictures and musical recordings made or produced in the Philippines, either directly or
through a registered trader.

(3) The applicant is capable of operating on a sound and efficient basis of contributing to the national development of
the preferred area in particular and of the national economy in general; and

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(4) If the applicant is engaged or proposes to engage in undertakings or activities other than preferred projects, it
has installed or undertakes to install an accounting system adequate to identify the investments, revenues, costs
and profits or losses of each preferred project undertaken by the enterprise separately by the enterprise
separately from the aggregate investment, revenues, costs and profits and losses of the whole enterprise or to
establish a separate corporation for each preferred project if the Board should so require to facilitate proper
implementation of this Code.

Application. Applications shall be filed with the Board, recorded in a registration book and the date appearing
therein and stamped on the application shall be considered the date of official acceptance. Whenever necessary, the
Board, through the People's Economic Councils, shall consult the communities affected on the acceptability of
locating the registered enterprise within their community.

Approval and Registration. The Board is authorized to adopt rules and the regulations to facilitate action on
applications filed with it; prescribe criteria for the evaluation of several applications filed in one preferred area;
devise the standard forms for the use of applicants and delegate to the regional offices of Department of Trade and
Industry the authority to receive and process applications for enterprises to be located in their respective regions.
Applications filled shall be considered automatically approved if not acted upon by the Board within twenty (20)
working days from official acceptance thereof.

Criteria for Evaluation of Applications. The following criteria will be considered in the evaluation of applications
for registration under a preferred area:
(a) The extent of ownership and control by Philippine citizens of the enterprises;
(b) The economic rates of return;
(c) The measured capacity Provided, That estimates of measured capacities shall be regularly reviewed and
updated to reflect changes in market supply and demand conditions; Provided, Further, That measured
capacity shall not result in a monopoly in any preferred area of investment which would unduly restrict trade
and fair competition nor shall it be used to deny the entry of any enterprise in any field of endeavor or
activity;
(d) The amount of foreign exchange earned, used or saved in their operations;
(e) The extent to which labor, materials and other resources obtained from indigenous sources are utilized;
(f) The extent to which technological advances are applied and adopted to local conditions;
(g) The amount of equity and degree to which the ownership of such equity is spread out and diversified; and
(h) Such other criteria as the Board may determine.

Appeal from Board's Decision. Any order or decision of the Board shall be final and executory after thirty (30)
days from its promulgation. Within the said period of thirty (30) days, said order or decision may be appealed to the
Office of the President. Where an appeal has been filed, said order or decision shall be final and executory ninety
(90) days after the perfection of the appeal, unless reversed.
Certificate of Registration. A registered enterprise under this Code shall be issued a certificate of registration
under the seal of the Board of Investments and the signature of its Chairman and/or such other officer or employee
of the Board as it may empower and designate for the purpose. The certificate shall be in such form and style as the
Board may determine and shall state, among other matters:
(a) The name of the registered enterprise;

(b) The preferred area of investment in which the registered enterprise is proposing to engage;

(c) The nature of the activity it is undertaking or proposing to undertake, whether pioneer or non-pioneer, and
the registered capacity of the enterprise; and

(d) The other terms and conditions to be observed by the registered enterprise by virtue of the registration
Fiscal Incentives to BOI-registered enterprises
All registered enterprises shall be granted the following incentives to the extent engaged in a preferred area of
investment:
(a) Income Tax Holiday. - For six (6) years from commercial operation for pioneer firms and four (4) years for
non-pioneer firms, new registered firms shall be fully exempt from income taxes levied by the National
Government.

(b) Additional Deduction for Labor Expense. - For the first five (5) years from registration a registered enterprise
shall be allowed an additional deduction from the taxable income of fifty percent (50%) of the wages
corresponding to the increment in the number of direct labor for skilled and unskilled workers if the project meets
the prescribed ratio of capital equipment to number of workers set by the Board: Provided, That this additional!
deduction shall be doubled if the activity is located in less developed areas as defined in Art. 40

(c) Tax and Duty Exemption on Imported Capital Equipment. - Within five (5) years from the effectivity of this
Code, importations of machinery and equipment and accompanying spare parts of new and expanding registered
enterprises shall be exempt to the extent of one hundred percent (100%) of the customs duties and national
internal revenue tax payable thereon.

(d) Tax Credit on Domestic Capital Equipment. - A tax credit equivalent to one hundred percent (100%) of the
value of the national revenue taxes and customs duties that would have been waived on the machinery,

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 equipment and spare parts, had these items been imported shall be given to the new and expanding registered
enterprise which purchases machinery, equipment and spare parts from a domestic manufacturer

(e) Simplification of Customs Procedures. - Customs procedures for the importation of equipment, spare parts,
raw materials and supplies, and exports of processed products by registered enterprises shall be simplified by
the Bureau of Customs.

(f) Unrestricted Use of Consigned Equipment. - Provisions of existing laws notwithstanding, machinery,
equipment and spare parts consigned to any registered enterprise shall not be subject to restrictions as to period
of use of such machinery, equipment and spare parts.

(g) Employment of Foreign Nationals. - Subject to the provisions of Section 29 of Commonwealth Act Number
613, as amended, a registered enterprise may employ foreign nationals in supervisory, technical or advisory
positions for a period not exceeding five (5) years from its registration, extendible for limited periods at the
discretion of the Board: the period set forth herein.

(h) Exemption on Breeding Stocks and Genetic Materials. - The importation of breeding stocks and genetic
materials within ten (10) years from the date of registration or commercial operation of the enterprise shall be
exempt from all taxes and duties: Provided, That such breeding stocks and genetic materials are (1) not locally
available and/or obtainable locally in comparable quality and at reasonable prices; (2) reasonably needed in the
registered activity; and (3) approved by the Board.

(i) Tax Credit on Domestic Breeding Stocks and Genetic Materials. - A tax credit equivalent to one hundred
percent (100%) of the value of national internal revenue taxes and customs duties that would have been waived
on the breeding stocks and genetic materials had these items been imported shall be given to the registered
enterprise which purchases breeding stocks and genetic materials from a domestic producer: Provided, 1) That
said breeding stocks and genetic materials would have qualified for tax and duty free importation under the
preceding paragraph; 2) that the breeding stocks and genetic materials are reasonably needed in the registered
activity; 3) that approval of the board has been obtained by the registered enterprise; and 4) that the purchase
is made within ten (10) years from date of registration or commercial operation of the registered enterprise.

(j) Tax Credit for Taxes and Duties on Raw Materials. - Every registered enterprise shall enjoy a tax credit
equivalent to the National Internal Revenue taxes and Customs duties paid on the supplies, raw materials and
semi-manufactured products used in the manufacture, processing or production of its export products and
forming parts thereof

(k) Access to Bonded Manufacturing/Trading Warehouse System. - Registered export oriented enterprises
shall have access to the utilization of the bonded warehousing system in all areas required by the project subject
to such guidelines as may be issued by the Board upon prior consultation with the Bureau of Customs.

(l) Exemption from Taxes and Duties on Imported Spare Parts. - Importation of required supplies and spare
parts for consigned equipment or those imported tax and duty free by a registered enterprise with a bonded
manufacturing warehouse shall be exempt from customs duties and national internal revenue taxes payable
thereon, Provided, However, That at least seventy percent (70%) of production is exported; Provided, further,
that such spare parts and supplies are not locally available at reasonable prices, sufficient quantity and
comparable quality; Provided, finally, That all such spare parts and supplies shall be used only in the bonded
manufacturing warehouse of the registered enterprise under such requirements as the Bureau of Customs may
impose.

(m) Exemption from Wharfage Dues and any Export Tax, Duty, Impost and Fee. - The provisions of law to
the contrary notwithstanding, exports by a registered enterprise of its non-traditional export products shall be
exempted from any wharfage dues, and any export tax, duty, impost and fee.

MULTIPLE CHOICE

1. The Philippine Board of Investments is an agency under the

a. National Economic Development Authority
b. Department of Trade and Industry
c. Office of the President
d. Bureau of Domestic Trade

2. The appointing authority of the members of the Board Governors in the Board of Investments
a. President of the Philippines
b. Secretary of Trade and Industry
c. Commission on Appointments
d. Secretary of Labor

3. Which of the following statements is false? The Board of Investments

a. Assists Filipino and foreign investors to venture and prosper in desirable areas of economic activities.
b. Is tasked to promote investments, extend assistance, register, grant incentives to and facilitate the business
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operations of investors in export-oriented manufacturing and service facilities inside selected areas throughout the
country as PEZA Special Economic Zones.
c. Is the lead government agency responsible for the promotion of investments in the Philippines.
d. Assists Filipino and foreign investors to venture in food processing, construction, metal products, and
telecommunications; power and infrastructure projects among others.

4. One of the following is not a function of the Chairman of BOI Board of Governors
a. To preside over the meetings of the Board
b. Recommend to the Board such policies and measures he may deem necessary to carry out the objectives of the
Omnibus Investments Code.
c. To render annual reports to the President and such special reports as may be requested.
d. To act as Managing Head of the Board.

5. All of the following, except one, are qualifications of the members of BOI Board of Governors
a. Natural born Filipino citizen
b. Of good moral character
c. At least 30 years of age
d. Of recognized competence in the fields of economics, finance, banking, commerce, industry, agriculture,
engineering, law, management or labor.

6. Not a power/duty of the governors of the Board of Investments

a. Extend for not more than ten (10) years the period of availment of incentives by any registered enterprise
b. Submit annual reports to the President within four (4) months after the close of the fiscal year.
c. Regulate the making of investments and doing of business within the Philippines by foreigners or business
organizations owned in whole or part by foreigners.
d. Prepared the Investment Priorities Plan at the end of every month.

7. All of the following, except one, are declared policies of the state on the development of national economy
a. Ensure the holistic development by safeguarding the well-being of the social, cultural and ecological life of the
people
b. Principally play a supportive role, rather than a competitive one, providing the framework, the climate and the
incentives within which business activity is to take place.
c. To limit the investments in trade to Filipinos and discourage foreigners to contribute in the economic growth.
d. Recognizes that industrial peace is an essential element of economic growth and that it is a principal responsibility
of the State to ensure that such condition prevails

8. The following are Board of Investments’ preferred areas of investment, except

a. Agriculture
b. Foreign employment
c. Business process outsourcing
d. Shipbuilding

9. Which of the following is not a preferred area of investment by the BOI?

a. Energy
b. Infrastructure
c. Hospital medical services
d. Food production

10. The National Economic Development Authority in coordination with Board of Investment gave tax incentives to
preferred areas of activities, except?
a. Business process outsourcing
b. Electronic industry
c. Renewable energy
d. Medical tourism

11. Which is not a tax incentive given to Board of Investment (BOI) registered enterprises?
a. Income tax holiday
b. Exemption from taxes and duties on imported spare parts
c. Credits and additional deductions from taxable income
d. Exemption from business permit and real property taxes

12. The following is not a fiscal incentive to a BOI registered enterprise:

a. Exemption from value-added tax
b. Exemption from customs duty on importation of breeding stocks
c. Exemption from income tax
d. Tax credit on raw materials and supplies

13. Fiscal incentives to a BOI registered enterprise does not include the following:
a. Income tax holiday
b. Ten-year exemption from wharfage dues on non-traditional export products

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c. Ten-year an additional deduction from taxable income equivalent 50% of the wages of additional skilled and
unskilled workers in the direct labor force
d. Zero-rated VAT application on purchases of raw materials and supplies used in the manufacture and which form
part of the registered export product

14. Refers to the over-all plan prepared by the Board of Investments

a. Comprehensive Land Use Plan
b. Investment Priorities Plan
c. Housing and Urban Development Plan
d. National Development Plan

15. Statement 1: No economic activity shall be included in the Investment Priority Plan unless it is shown to be
economically, technically and financially sound after thorough investigation and analysis by the Board.

Statement 2: The determination of preferred areas of investment to be listed in the Investment Priorities Plan shall be
based on long-run comparative advantage, taking into account the value of social objectives and employing economic
criteria along with the market, technical, and financial analyses.

Which of the above statements is false?

a. Statement 1 only c. Both statements
b. Statement 2 only d. Neither statements

16. Pioneer enterprise shall mean a registered enterprise, except

a. Engaged in the manufacture, processing or production of goods, products, commodities or raw materials that have
not been or are not being produced in the Philippines on a commercial scale.
b. Which uses a design, formula, scheme, method, process or system of production or transformation of any element,
substance or raw materials into another raw material or finished goods which is new and untried in the Philippines.
c. Which produces non-conventional fuels or manufactures equipment which utilize non-conventional sources of
energy or uses or converts to coal or other non-conventional fuels or sources of energy in its production,
manufacturing or processing operations
d. Engaged in the assembly or packaging of goods, products, commodities or raw materials that have not been or are
not being produced in the Philippines on a commercial scale.

17. To be entitled to registration under the Investment Priorities Plan, an applicant must satisfy that Board of
Investments that the applicant is except
a. Filipino citizen
b. It if is a partnership or association, that it is organized under the laws of the Philippines and that at least 60% of
its capital is owned or controlled by Filipinos.
c. It if is a corporation, it is organized under Philippine laws and that at least 60% of the authorized capital stock is
owned and held by Philippine nationals.
d. If it is a corporation, it is organized under Philippine laws and that at least sixty 60% of the capital stock
outstanding and entitled to vote is owned and held by Philippine nationals, and at least 60% of the members of the
Board of Directors are citizens of the Philippines.

18. One of the following statements is false. Which is it?

a. Foreign owned firms are not eligible to register their activity with the BOI
b. Filipino enterprises are eligible to register their activity with the BOI of their project is listed as a preferred project
in the current Investment Priorities Plan (IPP)
c. An activity which is not listed with the BOI may also be entitled to incentives if at least 50% of the production is for
export (for 60% Filipino and 40% foreign-owned enterprises);
d. An activity of more than 40% foreign-owned enterprises which is not listed with the BOI may also be entitled to
incentives if at least 70% of its production is for export.

19. Not a documentary requirement for registration of firms with the Board of Investments
a. Certificate of Incorporation
b. Audited Financial Statements and Income Tax Return for the past three years
c. NBI clearance
d. Board resolution expressing intention to register with the BOI

20. Which of the following is the last step in the registration procedure with the Board of Investments
a. Pay registration fee
b. File BOI Form 501 with supporting documents and filing fee
c. Submit evaluation report to the BOI Management Committee
d. Secure Certificate of Registration

21. The following are the contents of a certificate if registration issued by the Board of Investments
a. Signature of the DTI Secretary or duly authorized representative
b. Seal of the Board of Investments
c. Name of the registered enterprise
d. Preferred area of investment in which the registered enterprise is proposing to engage

9. Omnibus Investment Code Page 8 of 10

22. Which of the following is false regarding registration of enterprises with the Board of Investments?
a. Any order or decision of the Board shall be final and executor after thirty (30) days from its promulgation
b. If the application is denied by the Board, the applicant may appeal said order or decision to the Office of the
President
c. Where an appeal has been filed, said order or decision shall be final and executory ninety (90) days after the
perfection of the appeal, unless reversed
d. Applications for registration filed shall be considered automatically approved if not acted upon by the Board within
thirty (30) working days from the official acceptance thereof.

23.
Statement 1: The Board of Investments shall be composed of seven (7) governors.
Statement 2: The Secretary of Trade and Industry shall be concurrently Chairman of the Board and the
Undersecretary of the Department of Trade and Industry of Investments shall be concurrently the Vice-
Chairman of the Board and its Managing Head.
Statement 3: The three (3) representatives from the other government agencies and the private sector shall
be appointed by the President for a term of four (4) years.
Statement 4: The Board of Investment shall be responsible for the regulation and promotion of investments
in the Philippines

a. True;True;True;True b True;False;False:True c. True;False;False;False d. True;True;False;False

24.
Statement 1: “Preferred areas of Investments” shall mean the economic activities that the Board of
Investment shall have declared as such in accordance with Article 28 which shall be either non-pioneer or
pioneer.
Statement 2: “Pioneer Enterprise” Shall mean a registered enterprise engaged in the manufacture,
processing, or production, and not merely in the assembly or packaging goods, products, commodities, or raw
materials that have not been or are not being produced in the Philippines commercial scale.
Statement 3: Not later than the end of March of every year, the Board of Investments, after consultation
with the appropriate government agencies and the private sector, shall submit to the President an Investment
Priorities Plan.
Statement 4: No economic activity shall be included in the Investment Priorities Plan unless it is shown to be
economically, technically, and financially sound after thorough investigation and analysis by the Board of
Investment.

a. True;True;True;True b True;False;False:True c. True;False;False;False d. True;True;False;False

25.
Statement 1: The determination of preferred areas of Investment to be listed in the Investment Priorities
Plan shall be based on long-run comparative advantage, taking into account the value of social objectives and
employing economic criteria along with the market, technical, and financial analyses.
Statement 2: To be entitled to registration under the Investment Priorities Plan, an applicant must satisfy
the Board of Investment that he is a citizen of the Philippines, in case the applicant is a natural person.
Statement 3: To be entitled to registration under the Investment Priorities Plan, an applicant must satisfy
the Board of Investment, in case of a partnership or any other association, that is organized under Philippine
laws and that at least sixty percent (60%) of its capital is owned and controlled by citizens of the Philippines.
Statement 4: To be entitled to registration under the Investment Priorities Plan, an applicant must satisfy
the Board of Investment, in case of a corporation or a cooperative that it is organized under Philippine laws
and that at least sixty percent (60%) of the capital stock outstanding and entitled to vote is owned and held
by Philippine nationals as defined under Article 15 of this Code, at least sixty percent (60%) of the members
of the Board of Directors are citizens of the Philippines

a. True;True;True;True b True;False;False:True c. True;False;False;False d. True;True;False;False

26.
Statement 1: Applications shall be filled with the Board of Investment, recorded in a registration book and
the date appearing therein and tamped on the application shall be considered the date of official acceptance.
Statement 2: The Board of Investment is authorized to adopt rules and regulation to facilitate action on
applications filed with it; prescribe criteria for evaluation of several applications filled in one preferred area;
devise standard forms for the use of applicants and delegate to the regional offices of the Department of
Trade and Industry the authority to receive and process application for enterprises to be located in their
respective regions.
9. Omnibus Investment Code Page 9 of 10
 Statement 3: Applications filed shall be considered automatically approved if not acted upon by the Board
within twenty (20) working days from official acceptance thereof
Statement 4: Any order or decision of the Board shall be final and executory after thirty (30) days from its
promulgation.

a. True;True;True;True b True;False;False:True c. True;False;False;False d. True;True;False;False

27.
Statement 1: Within the said period of thirty (30) days, said order or decision may be appealed to the Office
of the President.
Statement 2: Where an appeal has been filed, said order or decision shall be final and executory ninety (90)
after the perfection of the appeal, unless reversed.
Statement 3: A registered enterprise under this Code shall be issued a certificate of registration under the
seal of the Board of Investments and the Signature of its Chairman and/or such other officer or employees of
the Board as it may empower and designate for the purpose.
Statement 4: For six (6) years from commercial operation for pioneer firms and four (4) years for non-
pioneer firms, new registered firms shall be fully exempt from income taxes levied by the National
Government.

a. True;True;True;True b True;False;False:True c. True;False;False;False d. True;True;False;False

28.
Statement 1: For the first five (5) years from registration a registered enterprise shall be allowed an
additional deduction from the taxable income of fifty percent (50%) of the wages corresponding to the
increment in the number of direct labor for skilled and unskilled workers it the project meets the prescribed
ratio of capital equipment to number of workers set by the Board of Investment.
Statement 2: Within five (5) years from the effectivity of this Code, importations of machinery and
equipment and accompanying spare parts of new and expanding registered enterprises shall be exempt to the
extent of one hundred percent (100%) of the customs duties and national interval revenue tax payable
thereon.
Statement 3: A tax credit equivalent to one hundred percent (100%) of the value of the national revenue
taxes and customs duties that would have been waived on the machinery, equipment and spare parts, had
these items been imported.
Statement 4: Shall be given to the new and expanding registered enterprise which purchases machinery,
equipment and spare parts from a domestic manufacturer.
Statement 5: Subject to the provisions of Section 29 of Commonwealth Act Number 613, as amended, a
registered enterprise may employ foreign nationals in supervisory, technical or advisory positions for a period
not exceeding five (5) years from its registration, extendible for limited periods at the discretion of the Board:
the period set from herein.

a. True;True;True;True;True
b. True;False;False:True;True
c. True;False;False;False;False
d.True;True;False;False;False

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