Entitlement for new or expansion projects

a) New projects — In exceptional cases, ECOZONE Export or Free Trade

Enterprises undertaking new activities distinct from their registered operations
may qualify as new projects subject to the setting up of separate books of
accoun& In sach cases, the income tax holiday sha//app/y on/y to sales of the
new produc&.

b) Expansion projects — The income tax holiday for expansion projects, as

defined in Section 2(w), Rule I of the IRR of PEZA Act described below, shall
apply only to the extent of the actual increase in production.

Expansion shall mean installation of additional facilities and/or equipment

that will result in the increase Of production capacity. It may include
modernization and rehabilitation.

Modemization or rehabilitation to be registrable may or may not result in

increase in capacity but the following conditions should be met:
1. The area must be listed in the Investment Priorities Plan specifically for
modernization or rehabilitation;
2. Phases/stages of production sought to be modernized/rehabilitated
must be identified; and
3. Must result in any of the following:
a. Substantial reduction of production cost; or
b. Significant increase in productive efficiency including
debottlenecking; or
c. Meaningful upgrading of product quality; or
d. Keeping abreast with the state of the art in the of registered
product.