Aquino extends tax benefits of new, expanding businesses
MANILA, Philippines—President Benigno Aquino has extended the exemption from the payment of tariffs on capital equipment, spare parts and accessories imported by new and expanding businesses registered with the Board of Investments or those located in the country’s freeports and economic zones, Malacañang said.
Executive Secretary Paquito Ochoa, Jr., said the President signed Executive Order No. 70 on March 29 to reduce the rates of duty on certain articles spelled out in an earlier issuance, EO No. 528 released in 2006, upon the recommendation of the National Economic and Development Authority.
“The effectivity of EO No. 528 is only for five years, from 2006 or until the enactment of a law amending EO No. 226, or the Omnibus Investments Code of 1987, which aims to facilitate investment in the country through a cohesive and consolidated investments incentives law,” Ochoa said in a statement.
A law amending the investments code has yet to be passed, the Executive Secretary said.
Ochoa said the new executive order will ease the cost of importing capital equipment by investors for their start-up operations and expansion in the Philippines.
“There is a need to continue providing this incentive because allowing zero percent duty importation will make our country more competitive in its efforts to lure investors amid the progressively competitive Asian market for foreign direct investments today,” Ochoa said.
EO No. 70 mandates that the zero percent duty shall be granted to BOI-registered new and expanding enterprises on articles or equipment classified under specific chapters of the Tariff and Customs Code of the Philippines upon the issuance of a certificate of authority by BOI.
The EO said that the zero-percent duty shall only be applied on articles or equipment that “are not manufactured domestically in sufficient quantity, of comparable quality and at reasonable prices, and are reasonably needed and will be used exclusively by the project in its registered activity.”
It also bans the selling, transfer or disposal of the articles exempted from duty without prior approval of the BoI within five years from the date of its importation.
The EO said violators will be fined twice the amount of the duty foregone or P500,000, “whichever is higher,” without prejudice to other applicable penalties under the investments code.
