Professional Documents
Culture Documents
Ra Ii534 (Create)
Ra Ii534 (Create)
H.No. 4157
S. No. 1357
•
~uh!ii: 11ff4e J4ilippiue11
~nngress nf fqe Jqilippines
~rir11 ~uiln
~ig4beuf4 dl:o119re11S
fott1111ll ~gulnrfoe1111i1111
•
Begun and held in Metro Manila, on Monday, the twenty-seventh
day of July, two thousand twenty.
SEC. 3. Section 20 of the National Internal Revenue "(B) The term 'corporation' shall include one
Code of 1997, as amended, is hereby further amended to read person corporations, partnerships, no matter how
as follows: created or organized, joint-stock companies, joint
accounts (cuentas en participacion), associations,
"SEC. 20. SubmissionofReportandPertinent or insurance companies, but does not include
Information by the Commissioner. - general professional partnerships and a joint
venture or consortium formed for the purpose of
"(A) xxx undertaking construction projects or engaging in
petroleum, coal, geothermal and other energy
"(B) Submission of Tax-Re lated Information operations pursuant to an operating consortium
to the Department of Finance. - The Commissioner agreement under a service contract with the
shaIL upon the order of the Secretary of Finance Government. 'General professional partnerships'
specifically identifying the needed information and are partnerships formed by persons for the sole
justification fur such order in relation t.o the grant of purpose of exercising their common profession,
incentives under Title XIII, furnish the Secretary no part of the income of which is derived from
engaging in any trade or business.
4 5
"{A) In General. - Except as otherwise or other activity' exceeds fifty percent (50%) of the
provided in this Code, an income tax rate of total gross income derived by such educational
twenty-five percent (25%) effective July 1, 2020, institutions or hospitals from all sources, the tax
is hereby imposed upon the taxable income derived prescribed in Subsection (A) hereof shall be
during each taxable year from all sources within imposed on the entire taxable income. For purposes
and without the Philippines by every corporation, of this Subsection, the term 'unrelated trade,
as defined in Section 22(B) of this Code and taxable business or other activity' means any trade, business
under this Title as a corporation, organized in, or other activity, the conduct of which is not
or existing under the laws of the Philippines. substantially related to the exercise or performance
by such educational institution or hospital of its
"Provided, That corporations with net taxable primary purpose or function. 'Proprietary' means a
income not exceeding Five million pesos private hospital, or any private school maintained
(P5,000,000.00) and with total assets not exceeding and administered by private individuals or groups·
One hundred million pesos (Pl00,000,000.00), with an issued permit to operate from the Department
excluding land on which the particular business of Education {DepEd), or the Commission on
entity's office, plant, and equipment are situated Higher Education (CHED), or the Technical
during the taxable year for which the tax is imposed, Education and Skills Development Authority
shall be taxed at twenty percent (20%). (TESDA), as the case may be, in accordance with
existing laws and regulations.
"In the case of corporations adopting the
fiscal-year accounting period, the taxable income "(C) Government-owned or -Controlled
shall be computed without regard to the specific Corporations, Agencies or Instrumentalities. -
date when specific sales, purchases and other The provisions of existing special or general laws
transactions occur. Their income and expenses for to the contrary notwithstanding, all corporationa,
the fiscal year shall be deemed to have been earned agencies, or instrumentalities owned or controlled
and spent equally for each month of the period. by the Government, except the Government
Service Insurance System (GSIS), the Social Security
"The corporate income tax rate shall be System (SSS), the Home Development Mutual Fund
applied on the amount computed by multiplying (HDMF), the Philippine Health Insurance
the number of months covered by the new rate Corporation (PHIC), and the local water districts shall
within the fiscal year by the taxable income of pay such rate of tax upon their taxable income as are
the corporation for the period, divided by twelve. imposed by this Section upon corporations or
associations engaged in a similar business, industry,
or activity.
"(B) Proprietary Educational Institutions
andHospitcls. - Proprietaryeducationalinstitutions
and hospitals which are nonprofit shall pay a tax "(D) Rates of Tax on Certain Passive Incomes.
of ten percent (10%) on their taxable income - xxx
except those covered by Subsection (D) hereof:
Provided, That beginning July 1, 2020 until "xx x
June 30, 2023, the tax rate herein imposed shall
be one percent (1 %): Provided, further, That if "(4) Intercorporate Dividends. - Dividends
the gross income from 'unrelated trade, business received by a domestic corporation shall not be
8
9
! subject to tax under this Title: Provided, That for
foreign-sourced dividends to be exempt, the funds "SEC. 28. Rates of Income Tax on Foreign
from such dividends actually received or remitted Corporations. -
into the Philippines are reinvested in the business
operations of the domestic corporation in the "(l) In General. - Except as otherwise
Philippines within the next taxable year from the provided in this Code, a corporation organized,
time the foreign-soµrced dividends were received authorized, or existing under the laws of any
and shall be limited to funding the working capital foreign country, engaged in trade or business
requirements, capital expenditures, dividend within the Philippines, shall be subject to an
payments, investment in domestic subsidiaries, income tax equivalent to twenty-five percent (25%)
and infrastructure project: Provided, further, That of the taxable income derived in the preceding
the domestic corporation holds directly at least taxable year from all sources within the Philippines
twenty percent (20%) of the outstanding shares effective July 1, 2020.
of the foreign corporation and has held the
shareholdings for a minimum of two (2) years at "In the case of corporations adopting the
the time of the dividends distribution. fiscal-year accounting period, the taxable income
shall be computed without regard to the specific
"(E) Minimum Corporate Income Tax on date when sales, purchases and other transactions
Domestic Corporations. occur. Their income and expenses for the fiscal
year shall be deemed to have been earned and
"(l) Imposition of Tax. - A m1mmum spent equally for each month of the period.
corporate income tax of two percent (2%) of the
gross income as of the end of the taxable year, "The corporate income tax rate shall be
as defined herein, is hereby imposed on a corporation applied on the amount computed by multiplying
taxable under this Title, beginning on the fourth the number of months covered by the new rate
taxable year immediately following the year in within the fiscal year by the taxable income of
which such corporation commenced its business the corporation for the period, divided by twelve.
operations, when the minimum income tax is
greater than the tax computed under Subsection "(2) Minimum Corporate Income Tax of
(A) of this Section for the taxable year: Provided, Resident Foreign Corporations. - A minimum
That effective July l, 2020 until June 30, 2023, the corporate income tax of two percent (2%) of gross
rate shall be one percent (1%). income, as prescribed under Section 27(E) of this
Code, shall be imposed, under the same conditions,
"(2) x x x on a resident foreign corporation taxable under
'~
paragraph (1) of this Subsection: Provided, That
{J;
"{3)xxx effective July 1, 2020 until June 30, 2023, the rate
shall be one percent (1%).
"(4) x x x."
"(3)xxx
SEC. 7. Section 28 of the National Internal Revenue
Code of 1997, as amended, is hereby further amended to read "(4) Tax on Branch Profits Remittances.
as follows: xxx
j
10
11
"SEC. 34. Deductions from Gross Income. - "(l) In General. - The amount of interest
Except for taxpayers earnmg compensation income paid or incurred within a taxable year on
arising from personal services rendered under an indebtedness in connection with the taxpayer's
employer-employee relationship where no deductions profession, trade or business shall be allowed
-- shall be allowed under this Section, in computing
taxable income subject to income tax under
as deduction from gross income: Provided, however,
That the taxpayer's otherwise allowable deduction
Sections 24(A); 25(A); 26; 27(A), (B), and (C); and for interest expense shall be reduced by twenty
28(A}(l), there shall be allowed the following percent (20%) of the interest income subjected to
deductions from gross income: final tax: Provided, finally, That if the interest
j
14
15
l
Recognition of Gain or Loss. - of a liability of the others shall be disregarded; or
16
17
-~ "(d) A recapitalization, which shall mean
an arrangement whereby the stock and bonds of "(c) The term 'control', when used in this
a corporation are readjusted as to amount, income, Section, shall mean ownership of stocks in a
or priority or an agreement. of all stockholders corporation after the transfer of property possessing
and creditors to change and increase or decrease at least fifty-one percent (51%) of the total voting
the capitalization or debts of the corporation or power of all classes of stocks entitled to vote:
both; or Provided, That the collective and·not the individual
ownership of all classes of stocks entitled to vote of
'\e) A reincorporation, which shall mean the the transferor or transferors under this Section
furmation of the same corporate business with the shall be used in determining the presence ofcontrol
same assets and the same stockholders surviving
under a new charter. "xx x."
"No gain or loss shall also be recognized if SEC. 11. Section 57 of the National Internal Revenue
property is transferred to a corporation by a person, Code of 1997, as amended, is hereby further amended to read as
alone or together with others, not exceeding four (4) follows:
persons, in exchange for stock or unit of participation
in such a corporation of which as a result of such "SEC. 57. Withholding of Tax at Source. -
exchange the transferor or transferors, collectively,
gains or maintains control of said corporation: "(/'>.) xxx
Provided, That stocks issued for services shall not
be considered as issued in return for property.
"(B) xxx
"Sale or exchanges ofproperty used for business
"(C) xxx
for shares of stock covered under this Subsection
shall not be subject to value-added tax.
'The Department of Finance shall review, at
least once every three (3) years, regulations and
''In all of the foregoing instances of exchange
of property, prior Bureau of Internal Revenue processes for the withholding of creditable tax
confirmation or tax ruling shall not be required for under this Code, and direct the Bureau of Internal
purposes of availing the tax exemption. Revenue to amend rules and regulations for the
same, should it be found during the review
that the existing rules, regulations, and processes
"xx x for the withholding of creditable tax under this
Code adversely and materially impact the taxpayer."
"(6) Definitions_ -
SEC. 12. Section 109 of the National Internal Revenue
"(a)xxx Code of 1997, as amended, is hereby further amended to read
as follows:
IC(b) X X X
18
19
"(M) Registered business enterprise refers to "(0) Sophisticated refers to the state when a
any individual, partnership, corporation, Philippine product or service requires a high level of technology,
branch of a foreign corporation, or other entity human capital, competencies or know-how, and
organized and existing under Philippine laws and infrastructure to be produced or offered;
registered with an Investment Promotion Agency
excluding service enterprises such as those engaged "(P) Sophistication refers to the level
in customs brokerage, trucking or forwarding services, of technology, human capital, competencies or
janitorial services, security services, insurance, know-how, and infrastructure required for a
banking, and other financial services, consumers' product or service to be offered by an economy like
cooperatives, credit unions, consultancy services, retail that of the Philippines;
enterprises, restaurants, or such other similar
services, as may be determined by the Fiscal
"(Q) Source document refers to input
Incentives Review Board, irrespective of location,
materials and documents reasonably needed by
whether inside or outside the zones, duly accredited
information technology (IT) andlT-enabledindustries
or licensed by any of the Investment Promotion
such as books, directories, magazines, newspapers,
Agencies and whose income delivered within the
brochures, pamphlets, medical records or files, legal
economic zones shall be subject to taxes under the
records or files, instruction materials, and drawings,
National Internal Revenue Code of 1997, as amended;
blueprints, or outlines;
"(N) Research and development refers to
u(R) Specia.l economic zone or ecozone. refers
experimental or other related projects or activities:
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
28
29
"(S) Training refers to courses, curricula, "The period of availment of the Special
certifications or modules provided to Filipino Corporate Income Tax shall be subject to the
employees that are directly related to the production conditions set under paragraphs (A) and (B) of
of goods or performance of services under the Section 296 of this Act:
registered project or activity and that are of a technical
nature, which shall develop or improve the specific "Provided, That the national government
skills or practical knowledge of the employee share shall be threepercent(3%) ofthegrossincome
egpecially in the mechanical, industrial art, scientific earned effective July 1, 2020: Provided, further, That,
field or practical science of a particular position or if applicable, the shares of the local government units
job function in the registered project or activity, or and the Investment Promotion Agencies under the
in preparation for enhancing the value chain." special laws governing the latter shall be observed
and shall not result in the diminution of their
"CHAPTER II respective shares: Provided, finally, That the share
of the local government unit which has jurisdiction
''TAX AND DUTY INCENTIVES over the place of the registered activity of registered
business enterprise outside ecozones and freeports
"SEC. 294. Incentives. - Subject to the shall be two percent (2%) and shall be directly
conditions and period of availment in Sections 295 remitted by the registered business enterprise to such
and 296, respectively, the following types of tax local gov<!'rnment units.
incentives may be granted to registered projects or
activities: "(C) Enhanced Deductions (ED)-For export
enterprise, domestic market enterprise, and critical
"(A) Income Tax Holiday (ITH); domestic market enterprise, the following may be
allowed as deductions:
.<
30 31
"(1) Depreciation allowance of the assets income within the next five (5) consecutive taxable
acqlrired for the entity's production of goods and years immediately following the year of such loss.
services (qualified capital expenditure)- additional
ten percent (10%} for buildings; and additional "(D) Duty exemption on importation of capital
twenty percent (20%} fur machineries and equipment; equipment, raw materials, spare parts, or accessories;
and
"(2} Fifty percent (50%) additional deduction
on the labor expense incurred in the taxable year; "(E) Value-Added Tax (VAT) exemption on
importation and VAT zero-rating on local purchases."
"(3) One hundred percent (100%) additional
deduction on research and development expense "SEC. 295. Conditions of Availment. - The
incurred in the taxable year; tax incentives in the preceding Section shall be
governed by the following rules:
"(4) One hundred percent (100%) additional
deduction on training expense incurred in the taxable "(.A) The income tax holiday shall be followed
year; by the Special Corporate Income Tax rate or Enhanced
Deductions.
"(5} Fifty percent (50%) additional deduction
on domestic input expense incurred in the taxable "(B) At the option of the export enterprise, the
year; domestic market enterprise with a minimum
investment capital of Five hundred million pesos
"(6) Fifty percent (50%} additional deduction (P500,000,000.00}, and the domestic market
on power expense incurred in the taxable year; enterprise engaged in activities that are classified as
'critical,' the Special Corporate Income Tax rate
"(7) Deduction for reinvestment allowance to
or enhanced deductions shall be granted: Provided,
manufacturing industry - When a manufacturing That in no case shall the enhanced deductions
registered business enterprise reinvests its be granted simultaneously with the Special
Corporate Income Tax.
undistributed profit or surplus in any of the projects
or activities listed in the Strategic Investment Priority
Plan, the amount reinvested to a maximum of fifty "The following conditions for the availment of
percent (5.0%} shall be allowed as a deduction from each enhanced deductions shall be complied with:
its taxable income within a period of five (5) years
from the time of such reinvestment; and "(1) The depreciation allowance of the assets
acqlrired for the entity's production of goods and
"(8) Enhanced Net Qperating Loss Carry-Over services (qualified capital expenditure) shall be
· (NOLCO). -Thenetoperatinglossoftheregistered allowed for assets that are directly related to the
project or activity during the first three (3) years registered enterprise's production of goods and
from the start of commercial operation, which had services other than administrative and other
; not been previously offset as deduction from gross support services.
income, may be carried over as deduction from gross
32
33
"(2) The additional deduction on the labor "(1) The capital equipment, raw materials,
expense shall not include salaries, wages, benefits, spare parts, or accessories are directly and
and other personnel costs incurred for managerial, reasonably needed and will be used exclusively in
administrative, indirect labor, and support services. and as part of the direct cost of the registered
project or activity of the registered business
"(3) The additional deduction on research enterprise, and are not produced or manufactured
and development expense shall only apply to domestically in sufficient quantity or of comparable
research and development directly related to the quality and at reasonable prices. Prior approval of
registered project or activity of the entity and shall the Investment Promotion Agency may be secured
be limited to local expenditure incurred for salaries for the part-time utilization of said capital equipment,
of Filipino employees and consumables and payments raw materials, spare parts, or accessories in a
to local research and development organizations. non-registered project or activity to maximize usage
thereof: Provilkd, That the proportionate taxes and
"(4) The additional deduction on training duties are paid on a specific capital equipment, raw
expense shall only apply to trainings, as approved materials, spare parts, or accessories in proportion
by the Investment Promotion Agencies based on to the utilization for non-registered projects or
the Strategic Investment Priority Plan, given to the activities. In the event that the capital equipment,
Filipino employees engaged directly in the registered raw materials, spare parte, or accessories shall be
business enterprise's production of goods and used for a non-registered project or activity of the
services. registered business enterprise at any time within the
first five (5) years from date of importation, the
"(5) The additional deduction on domestic registered business enterprise shall first seek prior
input expense shall only apply to domestic input approval of the concerned Investment Promotion
that are directly related to and actually used in Agency and pay the taxes and customs duties that
the registered export project or activity of the were not paid upon the importation; and
registered business enterprise.
"(2) The approval of the InvestmentPromotion
"(6) The additional deduction on power expense Agency was obtained by the registered business
shall only apply to power utilized for the registered enterprise prior to the importation of such capital
project or activity. equipment, raw materials, spare parts, or accessories.
"(7) The deductionforreinvestmentallowance "Within the first five (5) years from date of
to manufacturing industry shall be determined in importation, approval of the Investment Promotion
the Strategic Investment Priority Plan. Agency must be secured before the sale, transfer, or
<lisposition of the capital equipment, raw materials,
spare parts, or accessories, which were granted
"(C) The duty exemption shall only apply to
tax and customs duty exemption hereunder, and shall
the importation of capital equipment, raw materials,
be allowed only under the following circumstances:
spare parts, or accessories directly and exclusively
used in the registered project or activity by
registered business enterprises: Providtid, That the "(a) If made to another enterprise availing
following conditions are complied with: customs duty exemption on imported capital
equipment, raw materials, spare parts, or accessories;
.~
35
34
of duty exemption on imported capital equipment, accessories if it has violated any of its registration
raw materials, spare parts, or accessories, upon terms and conditions.
payment of any taxes and duties due on the net
book value of the capital equipment, raw materials, "(D) The VAT exemption on importation and
spare parte, or accessories to be sold; VAT zero-rating 011 local purchases shall only
apply to goods and services directly and exclusively
"(c) Exportation of capital equipment, raw used in the registered project or activity by a
materials, spare parts, accessories, source registered business enterprise.
documents, or those required for pollution
abatement and control; "Notwithstanding the provisions in the
preceding paragraphs, sales receipts and other
"(d) Proven technical obsolescence of the income derived from non-registered project or
capital equipment, raw materials, spare parts, activity shall be subject to appropriate taxes
or accessories; or imposed under this Code.
"(e) If donated to the TESDA, state "(E) Notwithstanding any law to the
universities and colleges (SUCs), or DepEd and contrary, the importation of COVID-19 vaocine shall
CHED-accredited schools: Provided, That the be exempt from import duties, taxes and other
donation shall be exempt from import duties and fees, subject to the approval or licenses issued by
taxes, including donor's tax. the Department of Health or the Food and Drug
Administration.
"Provided, That if the registered business
enterprise sells, transfers, or disposes the "(F) Persons who directly import petroleum
aforementioned imported items without prior products defined under Republic Act No. 8479,
approval, the registered business enterprise and otherwise known as the 'Downstream Oil Industry
the vendee, transferee, or assignee shall be Deregulation Act of 1998', for resale in the Philippine
solidarity liable to pay twice the amount of the customs territory and/or in free zones as defined
duty exemption that should have been paid during under Republic Act No. 10863, otherwise known as
its importation: Provided, further, That the sale, the Customs Modernization and TariffAct, shall not
transfer, or disposition of the capital equipment, be entitled to the foregoing tax and duty incentives,
raw materials, spare parts, or accessories made and shall be subject to appropriate taxes imposed
after five (5) years from date of importation shall under this Code.
require that prior notice be given by the registered
business enterprise to the Investment Promotion "Any law to the contrary notwithstanding,
Agency: Provided, finally, That even if the sale, the importation of petroleum products by any
transfer, or disposition of the capital equipment, person, including registered business enterprises,
raw materials, spare parts or accessories was made shall be subject to the payment of applicable
after five (5) years from date of importation with duties and taxes as provided under Republic Act
f notice to the Investment Promotion Agency, No. 10863, otherwise known as the Customs
the registered business enterprise is still liable to
-:
36
37
Modernization and Tariff Act, and this Code,
respectively, upon importation into the Philippine "Registered business enterprises, whose
customs territory and/or into free zones as defined performance commitments include job generation,
under Republic Act No. 10863, otherwise known as shall maintsin their employment levels to the extent
the Customs Modernization and TariffAct: practicable, and in the case of reduced employment
or when the performance commitment for job
"Provided, That the importer can file for claims generation is not met, the registered business
for the refund of duties and taxes applicable under enterprises must submit to their respective
Republic Act No. 10863, otherwise known as the Investment Promotion Agencies and the Fiscal
Customs Modernization and Tariff Act, and this Incentives Review Board their justification for the
Code, respectively, for direct or indirect export of same."
petroleum products, and/or other tax-exempt sales
under the Customs Modernization and Tariff Act "SEC. 296. Period ofAvailment. - The period
and other special laws within the period provided of availment of incentive by the registered business
therein: enterprise shall be as follows:
''Provided, further, That the importers who "(A) For export enterprise and for domestic
subsequently export fuel, subject to the appropriate market enterprise under the Strategic Investment
rules of the fuel marking program, may apply for Priority Plan engaged in activities that are
a refund of duties and taxes, as applicable under classified as 'critical': income tax holiday of
Republic Act No. 10863, otherwise known as the four (4) to seven (7) years, depending on location
Customs Modernization and Tariff Act, and this and industry priorities as specified in this Section,
Code. and 'followed by special corporate income tax
rate or enhanced deductions for ten (10) years.
'XG) Crude oil that is intended to be refined
at a local refinery, including the volumes that are "A qualified expansion or entirely new pro~ct
lost and not converted to petroleum products or activity registered under this Act may qualify to
when the crude oil actually undergoes the refining avail of a new set of incentives and its period of
process, shall be exempt from payment of applicable availment, granted under Sections 294 and 296 of
duties and taxes uponimportation: this Act, respectively, subject to the qualifications
set forth in the Strategic Investment Priority Plan
''Provided, That applicable duties and taxes and performance review ·by the Fiscal Incentives
on petroleum products shall be payable only upon . ' Review Board: Provided, That existing registered
lifting of the petroleum products produced from projects or activities prior to the effectivity of this
the imported crude oil, subject to rules and regulations Act may qualify to register and avail of the incentives
that may be prescribed by the Bureau of Customs granted under this Act for the prescribed period,
and the Bureau oflnternal Revenue, to ensure that subject to the criteria and conditions set forth in the
crude oil shall not be lifted from the refinery without Strategic Investment Priority Plan;
payment of appropriate duties and taxes.
"(B) For domestic market enterprise under the
Strategic Investment Priority Plan not classified as
critical, income tax holiday for four (4) to seven (7)
·}·
::.s
39
years followed by special corporate income tax or
enhanced deductions for five (5) years: "For the purpose of this Section, the
determination of the category shall be based on
"Provided, That only domestic market both location and industry of the registered
enterprise, which has an investment capital project or activity, and other relevant factors as
of not less than Five hundred million pesos ..< may be defined in the Strategic Investment
(PS00,000,000.00), shall be eligible for the special Priority Plan.
corporate income tax rate.
•r ''I'he location of the registered project or activity
"A qualified expansion or entirely new project shall be prioritized according to the level of
or activity registered under this Act may qualify development as follows: (1) National Capital Region;
to avail of a new set of incentives and its period (2) metropolitan areas or areas contiguous and
of availment granted under Sections 294 and 296 adjacent to the National Capital Region; and (3) all
of this Act, respectively, subject to the qualifications other areas. The metropolitan areas shall be
set forth in the Strategic Investment Priority Plan determined by the National Economic and
and performance review by the Fiscal Incentives Development Authority.
Review Board: Provided, That existing registered
projects or activities prior to the effectivity of "The industry of the registered project or
this Act may qualify to register and avail of the activity shall be prioritized according to
incentives granted under this Act for the national industrial strategy specified in the
prescribed period, subject to the criteria and Strategic Investment Priority Plan. The Strategic
conditions set forth in the Strategic Investment Investment Priority Plan shall define the coverage
Priority Plan. of the tiers and provide the conditions for
qualifying the activities:
"The period of availment of the foregoing
incentives shall commence from the actual start "(1) Tier I shall include activities that
of commercial operations with the registered (i) have high potential for job creation; (ii) take
business enterprise availing of the tax incentives place in sectors with market failures resulting
within three (3) years from the date of registration, in underprovision of basic goods and servioos;
unless otherwise provided in the Strategic (iii) generate value creation through innovation,
Investment Priority Plan and its corresponding upgrading or moving up the value chain; (iv) provide
guidelines: Provided, That after the expiration .' essential support for sectors that are critical to
industrial development; or (v) are emerging owing
of the transitory period under Section 311(C),
export enterprises registered prior to the effectivity to potential comparative advantage.
of this Act shall have the option to reapply and
avail of the incentives g:ranted under Section 294(B) "These activities shall include agriculture,
for the same period provided under this Section, fishing, forestry, and agribusiness activities,
and may still be extended for a certain period including handicrafts intended for export, and
not exceeding ten (10) years at any one time, subject energy; ecozone and freeport zone development;
to the conditions and qualifications set forth manufacturing of medical supplies, devices and
in the Strategic Investment Priority Plan and equipment, and construction of healthcare
performance review by the Fiscal Incentives facilities; facilities for environmentally-sustainable
Review Board. disposal of waste; infrastructure; manufacturing
40 41
and service industries that are emerging resulting productivity, efficiency, breakthroughs in science
from innovation, upgrading or addressing gaps and health, and high-paying jobs; and manufacturing
in the supply and value chain; mass housing, of FDA-approved investigational drugs, medicines
as well as infrastructure, transportation, utilities, and medical devices.
logistics and support services; the provision of
cyber security services; and planned developments ~·
"The period of availment of incentives based
that use technologies and digital solutions that I on the combination of both location and industry
are crucial to the country's development. priorities, as determinedin the Strategic Investment
"These activities shall include agriculture, ., Industry Tiers Tier! Tier!! Tier ill
"(K) To decide on issues, on its own initiative "(0) To exercise all other powers necessary
or upon the recommendation of the Investment or incidental to attain the purposes of this Act
PJ:omotion Agency, after due hearing, concerning and other laws vesting additional functions on
the approval, disapproval, cancellation, suspension, the Fiscal Incentives Review Board.
withdrawal, or forfeiture of tax incentives or tax
subsidy in accordance with this Act. The Fiscal "The functions of the Fiscal Incentives
Incentives Review Board shall decide on the Review Board under Sections 297(A)(l) and (5),
matter within ninety (90) days from the date (E), (G), (H), (J), and (K) shall be exercised in relation
when the Fiscal Incentives Review Board declares to the grant of tax incentives to registered projects
the issues submitted for resolution. A business or activities with the total investment capital of
enterprise adversely affected by the decision of more than One billion pesos (Pl,000,000,000.00),
the Fiscal Incentives Review Board may, within as provided herein.
thirty (30) days from receipt of the adverse
decision, appeal the same to the Court of Tax "Notwithstanding the provisions in the
Appeals; preceding paragraphs, tax and duty incentives
granted through legislative franchises shall be
49
48
- Undersecretary of
excepted from the foregoing expanded powers of Trade and Industry
the Fiscal Incentives Review Board to review, and Board of
withdraw, suspend, or cancel tax incentives and Investments Managing
subsidies." · Head or Assistant
Secretary of Trade and
"SEC. 298. Composition of the Fiscal Industry
Incentives Reuiew Board. - The Fiscal Incentives
Review Board shall be reconstituted as follows: Undersecretary or
Assistant Secretary of
"Chairperson - Secretary of Finance Budgetand
Management
"Co-Chairperson - Secretary of Trade
and Industry Deputy or Assistant
Director General of the
"Members - Executive Secretary National Economic and
of the Office of the Development Authority
President
Commissioner or Deputy
- Secretary of Budget Commissioner of
and Management Internal Revenue
"Provided, That the Fiscal Incentives Review "The Strategic Investment Priority Plan shall
Board secretariat is authorized to determine contain the following:
its organizational structure and staffing pattern,
and create such services, divisions, and units, "(A) Priority projects or activities that are
as it may require or deem necessary in the future, included in the Philippine Development Plan or its
subject to the approval by the Department of equivalent, or other government programs, taking
Budget and Management: Provided, finally, That into account any of the following:
nothing herein modifies the existing organizational
structure and staffing pattern of the Investment "(l) Substantial amount of investments;
53
52
"(6) Addressing missing links and other gaps ''In no case shall the Investment Promotion
in the supply or value chain or otherwise moving up Agencies accept applications unless the project or
the value chain or product ladder; activity is listed in the Strategic Investment
Priority Plan. Projects or activities not listed in
"(l) Promotion of market competitiveness; the Strategic Investment Priority Plan shall be
automatically disapproved."
"(8) Enhancement of the capabilities of
Filipino enterprises and professionals .to produce "SEC. 301. Power of the President to Grant
and offer increasingly sophisticated products and Incentives. - Notwithstanding the provisions of
services; Sections 295 and 296, the President may, in the
interest of national economic development and
"(9) Contribution to Philippine food security upon the recommendation of the Fiscal Incentives
. and increase incomes in the agriculture and Review Board, modify the mix, period or manner
· fisheries sector; or of availment of incentives provided under this
Code or craft the appropriate financial support
package for a highly desirable project or a specific
"(10) Services and activities that can promote
industrial activity based on defined development
regional and global operations in the country.
strategies for creating high-value jobs, building
new industries to diversify economic activities, and
"(B) Scope and coverage of location and attracting significant foreign and domestic capital
industry tiers in Section 296; and or investment, and the fiscal requirements of the
activity or project, subject to maximum incentive
"(C) T~rms and conditions on the grant of levels recommended by the Fiscal Incentives
enhanced deductions under Section 294(C). Review Board: Provided, That the grant of income
tax holiday shall not exceed eight (8) years and
"All sectors or industries that may be included thereafter, a special corporate income tax rate of
in the Strategic Investment Priority Plan shall
55
54
(9) Sections 5, 9, and 10 of Republic Act No. 9728, entitled: (3) Section l(c) and (d) of Executive Order No. 93, series of
"An Act Converting the Bataan Economic Zone Located in the 1986, entitled: "Withdrawing All Tax and Duty Incentives, Subject
Municipality ofMariveles, Province of Bataan, into the Freeport to Certain Exceptions, Expanding the Powers of the Fiscal
Area of Bataan (FAB), Creating for this Purpose the Authority Incentives Review Board and for Other Purposes"; and
of the Freeport Area of Bataan (AFAB), Appropriating Funds
Therefor and for Other Purposes"; (4) Memorandum Order No. 23, series of 1986, entitled:
''Expanding the Membership of the Fiscal Incentives Review
(10) Section 16 ofRepublicActNo. 7844, entitled: "AnAct Board (FIRB)".
to Develop Exports as a Key Towards the Achievement of the
National Goals Towards the Year 2000''; (d) The provisions of the following laws on the Investment
Priorities Plan that are inconsistent with the provisions of this
(11) Sections 86(a), (c), (d), (e), (f), and 88 of Republic Act Act are hereby repealed:
No. 9593, entitled: "An Act Declaring a National Policy for
Tourism as an Engine ofinvestment, Employment, Growth and (1) Articles 7(1), 22, 26, 27, 28, 29, 30, 31 and 32 of
National Development, and Strengthening the Department Executive O~der No. 226, series of 1987, entitled: The Omnibus
of Tourism and its Attached Agencies to Effectively and Investments Code of1987, as amended; and
Efficiently Implement That Policy, and Appropriating Funds
Therefor"; and (2) Sections 2 and 3 of Executive Order No. 458, series of
1991, entitled: "Devolving the Powers and Functions of the
(12) Section l(a) and (e) of Presidential Decree No.1955, Board of Investments Over Investments Within the
entitled: "Withdrawing, Subject to Certain Conditions, the Duty Autonomous Region in Muslim Mindanao to the Autonomous
and Tax Privileges Granted to Private Business Enterprises Regional Government sndfor Other Purposes".
and/or Persons Engaged in Any Economic Activity, and
for Other Purposes".
71
70
Privilege Within the Subic Special Economic and Free which provide for the mandatory.inclusion in the Investment
Port Zone". Priorities Plan that are inconsistent with the provisions of
this Act are hereby amended:
(c) To expand the powers and functions of the Fiscal
Incentives Review Board, the provisions of the following laws (1) Sections 4(d) and 13(i) of Republic Act No. 9728,
that are inconsistent with this Act are hereby amended: entitled: "An Act Converting the Bataan Economic Zone
Located in the Municipality of Mariveles, Province of Bataan,
(1) Section 13 of Republic Act No. 7903, entitled: "AnAct into the Freeport Area of Bataan (FAB), Creating for this
Creating a Special Economic Zone and Free Port in the City Purpose the Authority of the Freeport Area of Bataan (AFAB),
of.Zamboanga Creating for This Purpose the Zamboanga Appropriating Funds Therefor and for Other Purposes",
City Special Economic Zone Authority, Appropriating Funds as amended by Republic Act No. 11453;
Therefor, andfor Other Purposes";
(2) Section 12(£) of Republic Act No. 9490, as amended,
(2) Section 10 of Republic Act No. 7922, entitled: "An Act entitled: "An Act Establishing the Aurora Special Economic
Establishing a Special Economic Zone and Free Port in the Zone in the Province of Aurora, Creating for the Purpose the
Municipality of Santa Ana and the Neighboring Islands in the Aurora Special Economic Zone Authority, Appropriating Funds
Municipality ofAparri, Province of Cagayan, Providing Funds Therefor andfor Other Purposes";
Therefor, and for Other Purposes";
(3) Section 6(£) of Republic Act No. 7922, entitled: "An Act
(3) Section 17 of Republic Act No. 7227, entitled: "AnAct Establishing a Special Economic Zone and Free Port in the
Accelerating the Conversion of Military Reservations into Municipality of Santa Ana and the Neighboring Islands in
Other Productive Uses, Creating the Bases Conversion and the Municipality of Aparri, Province of Cagayan, Providing
Development Authority for this Purpose, Providing Funds Funds Therefor, and for Other Purposes";
Therefor and for Other Purposes";
(4) Section 21 of Republic Act No. 7916, as amended,
(4) Section 20 of Republic Act No. 9490, entitled: "An Act entitled: "An Act Providing for the Legal Framework and
Establishing the Aurora Special Economic Zone in the Mechanisms for the Creation, Operation, Administration, and
Province of Aurora, Creating for the Purpose the Aurora Coordination of Special Economic Zones in the Philippines,
Special Economic Zone Authority, Appropriating Funds Creating for this Purpose, the Philippine Economic Zone
Therefor and for Other Purposes"; and Authority (PEZA), and for Other Purposes";
(5) Section 22 of Republic Act No. 9728, entitled: "An Act (5) Section 5 of Executive Order No. 80, series of 1993
Converting the Bataan Economic Zone Located in the entitled: "Authorizing the Establishment of the Clark
Municipality of Mariveles, Province of Bataan, into the Development Corporation as the Implementing Arm of the
Freeport Area of Bataan (FAB), Creating for this Purpose the Bases Conversion and Development Authority for the Clark
Authority of the Freeport Area of Bataan (AFAB), Appropriating Special Economic Zone, and Directing All Heads of
Funds Therefor and for Other Purposes". Departments, Bureaus, Offices, Agencies and Instrumentalities
of Government to Support the Program";
(d) The provisions of the following laws on the
Investment Priorities Plan, including sll other laws, decrees, (6) Sections 4(b) and 13(b)(7) of Republic Act No.7227,
executive orders, rules and regulations, or parts thereof entitled: "An Act Accelerating the Conversion of Military
Reservations into Other Productive Uses, Creating the Bases
76 77
Conversion and Development Authority for this Purpose, SEC. 22. Ef{ectivity. - This Act shall take effect fifteen
Providing Funds Therefor and for Other Purposes"; and (15) days after its complete publication in the Official Gazette
or in a newspaper of general circulation.
m Section l(F) of Executive Order No. 458, series
of 1991, entitled: "Devolving the Powers and Functions of
the Board of Investments Over Investments Within the
Autonomous Region in Muslim Mindanao to the Autonomous
Regional Government and for Other Purposes".
WRD~YQ.VELASCO
SEC. 19. Separability Clause. - If any provision or part Speaker of the House
of this Act is declared invalid or unconstitutional, such of Representatives
declaration shall be confined in its operation to the clause,
sentence, paragraph, or part thereof directly involved in the This Act which is a consolidation of House Bill No.4157
case, whereas the parts or provisions not affected thereby and Senate Bill No. 1357 was passed by the House of
shall remain in full force and effect. Representatives and the Senate 0£.J,be PbjJippines on
February 3, 2021.
SEC. 20. Appropriation. - The National Tax Research
<
Center, as the secretariat of the Fiscal Incentives Review
Board, shall be provided with an initial appropriation of One ~ - ''J/b<c--
I -
hundred million pesos (Pl00,000,000.00) to be drawn from MYRA MARIE D. VILLARICA .
the available funds from the National Treasury not otherwise Secretary of the Senate
appropriated. Appropriations for the succeeding years shall be
included in the annual General Appropriations Act.
!i~.... :A.
.ii.
~c
-
• 'llD nn.xn~
2011 - 01RllO
I
~--0-IRECTV_u_R1'_,~-1-----'