PHILIPPINE FOREIGN
INVESTMENT
BRIEFPART I BASIC LEGAL
FRAMEWORK
It is a
basic and primordial constitutional
and legal principle in the Philippines that the State shall pursue an
independent
foreign policy. In its relations with other States the paramount
consideration
shall be national sovereignty, territorial integrity, national
interest,
and the right of self-determination.
Foreign
investments in the Philippines
are basically governed by the following laws, rules, regulations and
other
government issuances:
[1] Executive
Order No. 226 -
The
Omnibus Investments Code of 1987 - sets forth the rules
and parameters within which foreign investments in the Philippines may
be made, with emphasis on the grant of incentives to certain sectors.
[2] Republic
Act No. 7042, as amended by Republic Act No. 8179 -The
Foreign Investments Act of 1991- dwells on foreign
investments
without incentives; it reduced the minimum paid-in equity from US
Dollars
Five Hundred Thousand [US$500,000] to US Dollars Two Hundred Thousand
[US$200,000].
[3] Republic
Act No. 7227 -
The Bases Conversion
and
Development Act of 1992 - sets forth the grant of incentives
to industries and enterprises which establish their plants and offices
within the Subic Bay Freeport Zone.
[4] Republic
Act No. 7916 -
The
Special Economic Zone Act of 1995 - treats of incentives
granted to industries and enterprises which situate their operation
within
Special Economic Zones.
[5] Republic
Act No. 7844 -The
Export Development Act of 1994 - provides for incentives to
business enterprises in the export industry.
[6] Republic
Act No. 7721 - liberalized the entry and operations of foreign
banks
and financial institutions in the Philippines.
[7] Republic
Act No. 7652 -
The Investor's Lease
Act- grants to foreign investors the privilege of leasing
private
lands for a period of fifty (50) years [initial] which may be renewed
for
another twenty-five (25) years.
[8] Republic
Act No. 7718 -The
Build-Operate-Transfer Act [BOT]-liberalized the
implementation
of the Build-Operate-Transfer Scheme in certain projects, eased the
restrictions
on government financing and setting and imposition of tolls and charges
and wholly foreign-owned corporations are allowed to undertake certain
projects under this scheme.
[9] Republic
Act No. 7888 - grants authority to the President of the
Philippines
to suspend the nationality requirement under the Omnibus investments
Code
[Executive Order No. 226] in the case of equity investments by
multilateral
financial institutions like the Asian Development Bank [ADB] or the
International
Finance Corporation [IFC].
PART IIPOLICY ON
COMPETITION
Monopolies are not allowed in the
Philippines.
It is a fundamental policy that the State shall regulate or prohibit
monopolies
when public interest so requires. No combination in restraint of trade
or unfair competition shall be allowed.
PART IIIPOLICY ON
EXPROPRIATION
OF PRIVATE PROPERTY
Expropriation
of private property by the
government is a policy which is exceptionally exercised. In
extreme and urgent cases where expropriation becomes necessary for
public
use or in the interest of national welfare, just compensation is
required
by law to be paid to the private owner of the property. Under this
situation,
the affected foreign enterprise or investor has the right to
remit
any and all amounts received as just compensation for the expropriated
property in the currency in which the investment was originally made
and
at the prevailing foreign exchange rate at the time it is remitted.
PART IVPHILIPPINE
CURRENCY
The currency of the Philippines is called
the Philippine Peso [PhP]. A floating exchange rate system is being
maintained
by the Philippine government. Under this system, the exchange
rate
is allowed to be determined principally by prevailing market
forces.
The central bank authority - the Bangko Sentral ng Pilipinas [BSP] -
intervenes
only for the purpose of limiting sharp fluctuations in the exchange
rate
to maintain order in the market conditions.
PART VFOREIGN
EXCHANGE
Reformatory
measures to deregulate the
Philippine foreign exchange system were implemented sometime in
1992.
Consequently, foreign exchange surrender requirements were removed,
access
to foreign currency deposit facilities was liberalized, restrictions on
the repatriation of foreign investments and/or profit remittances were
lifted and limitations on the quantitative restrictions on current
account
transactions deleted.
Registration
with the central monetary
authority - Bangko Sentral ng Pilipinas [BSP] - of loans and
investments
accounts was lifted except in cases where funding will be made through
the banking system of transactions like repatriation of capital and
remittances
of dividends and profits as well as foreign exchange requirement for
future
debt.
Further,
BSP approval and registration
are required in case of outward investments of residents in an amount
in
excess of US$6,000,000.00, per investor per year should the funds
therefor
be sourced from the banking system. Foreign borrowings by the
public
sector should also be approved by the BSP.
The law
allows the deposit in foreign currency
accounts of any foreign exchange received in the Philippines or
abroad.
It also allows the selling and acquisition of foreign exchange outside
of the Philippine banking system. The only restriction on foreign
exchange
transaction pertains to the payment of foreign loans and/or foreign
investments,
in which case, such may only be serviced with foreign exchange
purchased
through authorized agent banks, if the loan is approved/registered with
the BSP or the investment is registered therewith. Thus, in
case of sales of foreign exchange for payment of foreign obligations
[foreign
loan or foreign investment], the purchaser shall be required by the
authorized
agent bank to present proof of BSP approval and/or registration for
each
loan or investment.
In case of
purchase of foreign exchange
for any non-trade purposes, authorized agent banks may sell foreign
exchange
to residents without need of prior BSP approval subject, however, to
the
following:
[a] Written notarized application
and supporting documents from the foreign exchange purchaser if the
amount
exceeds US$25,000.00.
[b] Simple written application if the
amount
does not exceed US$25,000.00.
This
limitation on non-trade purchase cannot
be circumvented by splitting the foreign exchange purchase into
separate
smaller amounts. Splitting of purchase of foreign exchange is presumed
if the bank sells to any one purchaser, a combined total amount
exceeding
US$25,000.00 within a period of fifteen [15]
banking days.
In cases
of outward payments, the law does
not prescribe any particular currency requirements. However, all
foreign exchange proceeds from exports and invisibles should be
procured
through specified currencies numbering more than twenty [20].
Philippine-peso
denominated bank accounts
may be opened by non-residents - whether an individual or corporate
without
need to secure BSP approval. Non-resident depositors may freely
withdraw
their accounts but non-resident bank accounts may only be credited with
the proceeds from inward foreign exchange remittance or with income
earned
in the Philippines. The maintenance of foreign currency deposit
accounts
with local banks by residents and non-residents alike is not subject to
any further restrictions.
PART VIREPATRIATION
OF FUNDS[SALES
PROCEEDS,
PROFITS, DIVIDENDS, ROYALTIES, LOAN PAYMENTS & LIQUIDATION]
There are no existing restrictive
regulations
on the repatriation of funds related to BSP-registered foreign
investments
such as sales or divestment proceeds, profits, dividends, royalties,
loan
payments and liquidation. As earlier pointed out, BSP registration of
foreign
investments is necessary only in cases where the foreign exchange
required
to service the repatriation of capital and remittance of profits,
dividends,
royalties, loan payments or liquidation proceeds will be sourced from
the
banking system.
Further,
it bears to emphasize that investments
in government or listed securities or money market instruments or bank
deposits need not be registered with the BSP or with the designated
custodian
bank of the investor concerned.
PART VIISOURCES OF
FINANCING
SOURCE 1 -
Foreign
Borrowings
[1] Public
Sector Loans- Under the law, all public sector loans taken
from offshore sources and from Foreign Currency Deposit Units (FCDUs)
must
be approved by the Bangko Sentral ng Pilipinas [BSP]. The BSP approval,
however, is not required in case of short-term interbank borrowings of
public sector banks and short-term FCDU loans for trade financing.
[2] Private
Sector Loans - The approval of and registration with BSP of
the private sector loans are required under the following circumstances:
[a] if the loan is guaranteed by
a public sector entity such as the national government, government
financial
institutions, government-owned or controlled corporations and local
government
units or by a local commercial bank; or
[b] if the loan is granted by an FCDU
and
will specifically or directly be funded from, or collaterized by,
offshore
loans or deposits; or
[c] if the loan is obtained by banks
and
financial institutions with a term exceeding one [1] year and intended
for relending to public and private enterprises.
Except
for the foregoing types of loans, other
categories of private sector loans are not subject to prior approval by
the BSP. Registration with BSP, however, is still required
in order to purchase foreign exchange from the banking system to
service
the loan. The following may be cited: [a] private
sector
loans from FCDUs or offshore sources regardless of their maturity to be
paid using foreign exchange purchased from outside of the banking
system;
[b] short-term loans of public and private financial institutions
incurred in normal interbank transactions and with maturity not
exceeding
one [1] year; [c] short-term loans of the private sector in the
form
of export advances from buyers abroad; [d] short-term loans
of
private sector borrowers from FCDUs such as those incurred: [i]
by
community and service exporters [provided these loans are used to
finance
export-related import costs of goods and services as well as peso cost
requirements]; and [ii] by producers or manufacturers, including
oil companies and public utility concerns [provided the loans are used
to finance import costs of goods and services necessary in the
production
of goods by the borrower concerned].
It must be
emphasized that proceeds from
FCDU loans are not allowed to be deposited in an FCDU account if the
same
shall be serviced using foreign exchange purchased from the banking
system.
[3] Short-term
loans of private sector exporters or importers - These
loans
from participating creditor banks under the Revolving Trade Facility
(RTF)
Agreement are subject to the following conditions:
[a] the loans are not
covered
by a guarantee from a government financial institution or corporation;
[b] the loans shall be
exclusively
used to finance specific trade transactions in an amount equivalent to
the import bills to be liquidated and/or in the case of export
financing
transactions, to the borrower's pre-export financing requirements;
[c] proceeds of loans
intended
to pay for foreign exchange requirements shall be paid directly to the
supplier or creditor while amounts intended to fund pre-export
peso
costs shall be inwardly-remitted and sold to the banking system;
[d] the loans shall be
granted
against BSP-approved short-term relending programs of foreign
creditors.
Creditors shall submit to the BSP their short-term relending program
for
Philippine borrowers indicating their proposed credit limit together
with
a list of prospective borrowers/beneficiaries. These relending programs
shall be valid for one year but shall be subject to semi-annual review
if commitments and/or utilization for the semester shall be below fifty
percent [50%] of total relending limit;
[e] drawdown and
registration
requirements shall be complied with;
[f] any assignment of
the
loan by the creditor shall require prior BSP approval; and
[g] the borrower shall
submit
to BSP the required documents at least five days after its credit line
is approved by the creditor. [4] Priority
projects - Projects considered priority for foreign
financing
under the socio-economic development plan include the following:
[a] export-oriented projects;
[b] BOI-registered projects;
[c] those listed in the Annual
Priorities
Plan (APP); and
[d] other projects which may be
declared
priority by the National Economic Development Authority [NEDA] or by
the
Congress of the Philippines.
The law requires that the proceeds of
all
loans, irrespective of maturity, shall exclusively finance foreign
exchange
requirements of eligible projects. However, loans of direct and
indirect
exporters and public sector borrowers may be used to finance both
foreign
exchange costs and local costs of their projects.
SOURCE 2 - Domestic
Borrowings
Foreign
firms may avail of domestic loans.
Except for the requirement that the banks should report the level of
domestic
borrowings of foreign firms to the BSP for monitoring purposes, there
are
no restrictions on domestic borrowings.
PART VIIIINVESTMENT
PROPOSAL
AND APPROVAL
Any
investment proposal shall comply with
certain requirements of the law. More specifically, the following
conditions apply:
[2] Acquisition
- must comply with Section 40 of the Corporation
Code and subject to the restrictions regarding foreign equity
ownership
under the 1987 Constitution.
[3] Real
Estate/Land
- the foreign equity is up to forty percent [40%] only.
[4] Management
Contract - must comply with Section 44 of the Corporation
Code.
[5] Joint
Venture
- may be entered into without legal restriction on registration
unless
the parties thereto form another business organization requiring
registration
such as a corporation or partnership.
[6] Greenfield
Investments - must comply with the requirements under the Corporation
Code.
[7] Media
- no foreign equity is allowed.
[8] Telecommunications
- foreign equity is allowed up to forty percent [40%].
[9] Transportation
- foreign equity is allowed up to forty percent [40%].
[10] Agriculture
- there is no limitation if private land is used for this
purpose.
However, foreign equity is required up to forty percent [40%] in case
of
public land.
[11] Infrastructure- allowed but subject to the provisions of the
Build-Operate-Transfer
[BOT] Law and Presidential Decree No. 1594.
[12] Mining
- allowed but subject to the conditions under the Revised Mining Act of
1995.
PART
IXAPPLICATION
AND APPROVAL FORMS
The
following application and approval forms
are required:
[1] For formation of a
new
corporation with more than forty percent [40%] foreign equity - S.E.C.
Form No. F-100.chanrobles virtual law library
[2] For establishment of
a branch office of a foreign corporation - S.E.C.
Form No. F-103.chanrobles virtual law library
[3] Board
of Investments [BOI] registration form.chanrobles virtual law library
[4] Philippine
Economic Zone Authority [PEZA] registration form.chanrobles virtual law library
PART XPERIODS
WHEN
PROCESSINGAND APPROVAL
OF APPLICATION COMPLETED
The
investment laws in the Philippines
explicitly prescribe the following periods within which the processing
and approval of foreign investment proposal and/or applications should
be completed from the time of submission of all required documents:
[1] The BOI shall
approve
or disapprove an application within twenty [20] working days after
official
acceptance thereof. If application involves less than PhP5,000,000.00
production
cost and applicant is an exporter, the period is seven [7] days.
[1987
Omnibus Investment Code]
[2] The SEC [in the case
of
corporation or partnership] or the BTRCP [in the case of sole
proprietorship]
shall act on the application within fifteen [15] days from official
acceptance
thereof. [Foreign
Investments Act]
[3] The PEZA processes and
evaluates
an application within two [2] weeks. Approval thereof is made
during
the regular monthly meeting of its Board.
PART XIENTRY OF
NON-RESIDENT
PERSONNEL Enterprises registered under the Omnibus
Investments
Code [Executive Order No. 226] are permitted to employ foreign
nationals
in supervisory, technical, or advisory positions during its first five
years from registration. Those majority foreign-owned registered
enterprises are allowed to employ foreign nationals as president,
treasurer
and general managers for an indefinite period of time. In the
case
of Offshore Banking Units [OBUs], they are allowed to employ foreign
nationals
as executives in their respective units. The same may be said for
executives in area headquarters of multinational corporations.
For
non-resident personnel of foreign firms,
the entry visa requirements and description of the nature of the entry
restriction are as follows:
a. Special
Investors Resident Visa [SIRV] - This is issued to any
alien,
except nationals coming from North Korea and Cambodia and such other
countries
that may be classified restricted in the future, who meets the
following
qualifications:
1. he/she had not been
convicted
of a crime involving moral turpitude;
2. he/she had not been afflicted
with any loathsome, dangerous or contiguous disease;
3. he/she had not been
institutionalized
for any mental disorder or disability; and
4. he/she is willing and able to
invest the amount of at least US$75,000 in the Philippines. The special feature of this visa is the
grant
to the investor of the privilege to reside in the Philippines for as
long
as his investment exists. He shall be entitled to import his used
household
goods and personal effects, tax and duty-free, as an alien coming
to settle in the Philippines for the first time under Sec. 105(h) of
the
Tariff and Customs Code of the Philippines. Moreover, the investor's
spouse
and unmarried children under 21 years of age who join him in the
Philippines
may be issued the same visa.
b. Pre-arranged
Employment Visa- This is granted pursuant to Sec. 9(g) of the
Philippine
Immigration Law. This is available for employment in any
executive
or managerial position.
c. International
Treaty Investors Visa - This is granted under Sec. 9(d) of the
Philippine
Immigration Law. The required investment is at least P300,000.00.
Only Germans, Japanese and Americans are parties to this treaty.
PART XIIRESTRICTIONS
ON EMPLOYMENTOF FOREIGN
TECHNICAL
OR MANAGERIAL PERSONNELAND
ACCOMPANYING
FAMILY MEMBERS Restrictions on
positions:
[1]
Registered foreign enterprises
with the Board of Investments [BOI] 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 BOI.
[2]
BOI-registered majority foreign-owned
enterprises may employ foreign nationals in the positions of president,
treasurer or general manager beyond the period of five [5] years.
[3]
Foreign nationals under the Corporation
Code may be employed as members of the Board of Directors by way of
election.
[4]
Foreign enterprises located at
the Subic Bay Freeport may employ foreign nationals in any position
upon
prior approval of the Subic Bay Metropolitan Authority [SBMA] for a
period
of five [5] years which may be extended from year to year.
[5]
Foreign enterprises entering
into government contracts and service for coal operations and
exploration
and development of oil and geothermal resources are allowed to employ
foreign
nationals in any position.
Restrictions on
skills requirement:
Employment
of foreign technicians in foreign
enterprises in the Philippines is subject to the requirement that the
skills
they possess are not available in the Philippines. If there is
none
available in the Philippines, a pre-arranged employment visa may be
extended
to the foreign technician. Further, under the law, their
employment
should be accompanied by an understudy program wherein at least two [2]
Filipino understudies should be trained on the skills for which they
[foreign
technicians] were engaged.
PART XIIIMINIMUM
WAGES
AND OTHER LABOR STANDARDSAND LABOR
RELATIONS
LAW
Labor laws
in the Philippines respecting
wages, hours of work, overtime, night differential pay, service
incentive
leave, and other labor standards; strikes, picketing, termination of
employment,
and other labor relations rules, have all been codified. All
these
may be found in the Labor
Code of the Philippines, as amended.
As regards
minimum wages, the Labor
Code of the Philippines, as amended, provides for the basic
standards
for minimum wage fixing which is done through the various Regional
Tripartite
Wages and Productivity Boards. Each region has its own set of
minimum
wage rates and rules.
As regards
labor unions, strikes and picketing,
collective bargaining, voluntary modes of settling labor disputes and
other
labor-related rules, the Labor
Code of the Philippines has provided ample safeguards to protect
the
interest of both labor and management.
PART XIVTAXATION LAWON FOREIGN
INVESTMENTS
Corporate and
similar entities:
[1] Foreign
corporations engaged in business or trade in the Philippines -
Their
income derived from sources in the Philippines are taxed a flat rate of
thirty-five percent [35%] based on net income.
[2] Foreign
corporations not engaged in business or trade in the Philippines
- Their income derived from sources in the Philippines are taxed a flat
rate of thirty-five percent [35%] on gross income. Further,
interest
income on foreign loans earned is subject to a twenty percent [20%] tax.
[3] Foreign
international carriers - They are taxed at the rate of
two-and-a-half
percent [2.5%] on their gross Philippine billings.
[4] Non-resident
foreign cinematographic film owners, lessors or distributors -
They
are taxed at the rate of twenty-five percent [25%] on gross income.
[5] Foreign
mutual life insurance companies - They are taxed at the rate of
ten percent [10%] of their gross investment income derived from sources
within the Philippines.
Foreign individuals:
[1] Individual
resident foreigners- Their income:
[a] derived from all sources in
the Philippines and in foreign countries taxed from 1-35% on gross
compensation
income [arising from an employer-employee relationship]; and net on
non-compensation
[business and other] income.
[b] twenty percent [20%] on
royalties,
prizes, winnings [final tax].
[c] twenty percent [20%] on
interest
on bank deposit, and on substitute arrangements [final tax].
[d] five percent [5%] capital
gains
tax on sale of realty [final tax].
[2]
Foreigners
engaged in trade or business in the Philippines- Their income:
[a] derived from Philippine
sources
are taxed from 1-35% on gross compensation income and net on
non-compensation
income.
[b] thirty percent [30%] on
royalties,
interests and dividends, and others.
[3]
Foreigners
not engaged in trade or business in the Philippines- Their
income
derived from Philippine sources are taxed a flat rate of thirty percent
[30%] on gross Philippine income.
PART XVFISCAL
INCENTIVES
TO FOREIGN INVESTMENTS
FISCAL INCENTIVES
- Omnibus
Investments
Code of 1987:
- Income tax
holiday.chanrobles virtual law library
[1] Full exemption from
income tax for six (6) years for newly-registered pioneer
projects
from the start of commercial operations; and
[2] Full exemption from income
tax
for four (4) years from the start of commercial operations for
newly-registered
non-pioneer projects.
These exemption periods may be
extended
for another year each under the following cases:
[a] the project used
indigenous
raw materials;
[b] the project meets
the
BOI-prescribed ratio of capital equipment to the number of workers;
[c] the net foreign
exchange
savings or earnings amount to at least US$500,000 annually during the
first
three (3) years of the commercial operations of the project.
Any project which is established in less
developed areas [LDAs] shall be entitled to the incentive for six (6)
years.
Expansion projects of
domestic-oriented
industries are not entitled to the income tax holiday incentive.
- Tax credit on
domestic
capital equipment.chanrobles virtual law library
[a] Firms registered on or
before
December 31, 1994 shall be entitled to tax credit equivalent to one
hundred
percent [100%] of any taxes and duties which could have been waived had
the capital equipment and accompanying spare parts been imported until
December 31, 1997, provided that those firms located outside the
National
Capital Region [NCR] shall enjoy said tax credit until December 31,
1999.
[b] Firms registered after
December
31, 1994 shall be entitled to tax credit on the duty portion equivalent
to the difference between the three percent [3%] minimum duty and the
actual
duty rate provided under the Philippine Tariffs and Customs Code, as
amended.
- Tax and
duty-free importation
of capital equipment.chanrobles virtual law library
[a] Firms registered on or
before
December 31, 1994 shall be entitled to tax and duty free importation of
capital equipment and accompanying spare parts until December 31,
1997.
However, firms located outside the National Capital Region [NCR] shall
be entitled to the incentive until December 31, 1999.
[b] Firms registered
after
December 31, 1994 shall be subject to ten percent [10%] Value-Added Tax
[VAT] upon the implementation of Republic Act No. 7716, the expanded
VAT
Law and three percent [3%] duty.
Additional
deduction
for labor expense.chanrobles virtual law library
For the first five [5] years
from
registration, a registered enterprise shall be allowed an additional
deduction
from taxable income of fifty percent [50%] of the wages corresponding
to
the increment in the number of the direct labor for skilled and
unskilled
workers if the project meets the prescribed ratio of capital equipment
to the number of workers set by the Board of Investments. This
additional
deduction shall be doubled if the activity is located in less developed
areas [LDAs].
Tax and duty
free importation
of breeding stocks and genetic materials for ten [10] years from
registration
or commercial operation for agricultural producers.chanrobles virtual law library
- Tax credit on
domestic
breeding stocks and genetic materials.chanrobles virtual law library
- Simplification
of customs
procedures for the importation of equipment, spare parts, raw materials
and supplies and exports of processed products.chanrobles virtual law library
Unrestricted use
of
consigned equipment provided a re-export bond is posted.chanrobles virtual law library
Employment Of
Foreign
Nationals.chanrobles virtual law library
Tax credit for
taxes
and duties paid on raw materials, supplies and semi-manufactured
products
used in the manufacture of export products and forming part thereof.chanrobles virtual law library
Access to
bonded manufacturing/trading
warehouse system. Registered export-oriented enterprises may have
access to bonded warehousing systems.chanrobles virtual law library
Exemption from
wharfage
dues and any export tax, duty, impost and fees.chanrobles virtual law library
New enterprises registered
under
the 1995 Investments Priorities Plan [IPP] shall be granted a five-year
period to avail of the exemption from wharfage dues and any export tax,
impost and fees. Expansion and existing projects, however, are not
entitled
to this incentive.
Tax and duty
exemption
of imported spare parts and supplies for export producers with customs
bonded warehouse exporting at least seventy percent [70%] of the
production.chanrobles virtual law library
FISCAL INCENTIVES
- Special
Economic Zone Act of 1995:
- Fiscal
incentives, in
general.chanrobles virtual law library
Enterprises operating within the
Economic
Zones [ECOZONES] are entitled to the fiscal incentives granted under
Presidential
Decree No. 66, [Export Processing Zone Authority Law], or those
provided
under Book VI of Executive Order No. 226, [Omnibus Investments Code of
1987].
Tax credit for
exporters
using local materials as inputs in accordance with the Export
Development
Act of 1994.chanrobles virtual law library
Exemption from
taxes
under the National Internal Revenue Code [NIRC] but in lieu of paying
taxes,
five percent [5%] of the gross income earned by all businesses and
enterprises
within the ECOZONE shall be remitted to the national government.chanrobles virtual law library
FISCAL INCENTIVES
- Export
Development Act of 1994:
Exemption from
Presidential
Decree No. 1853 on the advanced payment of customs duties.chanrobles virtual law library
Duty-free
importation
of machinery and equipment and accompanying spare parts until December
31, 1997.chanrobles virtual law library
Tax credit for
imported
inputs and raw materials primarily used for the production and packages
of export goods that are not readily available locally until December
31,
1999.chanrobles virtual law library
Tax credit for
increase
in current year's export revenues.chanrobles virtual law library
First five percent [5%] increase in
annual
export revenue over the previous year a credit of 2.5% shall be granted
to be applied on incremental export revenue converted to pesos.
Next five percent [5%[ increase
shall be entitled
to a credit of 5%.
Next five percent [5%] increase
shall be entitled
to a credit of 7.5%.
In excess of fifteen percent [15%]
shall be
entitled to a credit of 10%.
Tax credit for
the use
or import-substitution of non-traditional products.chanrobles virtual law library
- Tax credit equivalent to twenty-five
percent
[25%] of duties until December 31, 1997.
Claims For Tax
Credits.chanrobles virtual law library
- Imported inputs, raw materials and
capital
equipment.
- Increase in current year's export
revenues.
- Import-substitution.
FISCAL INCENTIVES
- Bases Conversion and Development Act
of 1992:
- Exempted from
any and
all Philippine national and local taxes. In lieu, however, of
paying
taxes, a final tax of five percent [5%] of gross income earned is
imposed.chanrobles virtual law library
PART XVIINTELLECTUAL
PROPERTY RIGHTSPROTECTION
Intellectual Property
Code of the Philippines:
In order
to strengthen protection to intellectual
property rights, Republic Act No. 8293 [otherwise known as the Intellectual
Property Code of the Philippines] was approved on June 6,
1997
and took effect on January 1, 1998. This is the codification of all
laws
on intellectual property rights in the Philippines. It
repealed
and superseded the Philippine Law on Patents [R. A. No. 165], the Law
on
Trademarks [R. A. No. 166], Articles 188 and 189 of the Revised
Penal
Code and the Law on Copyright [Presidential Decree No. 49] including
Presidential
Decree No. 285, as amended. [See
Overview
on the Intellectual
Property Code of the Philippines in a related page].
Related Laws and
Issuances:
The
following are some related laws and
executive issuances:
- Presidential Decree No. 1987
[Decree Creating
the Videogram Regulatory Board] ·
- Executive Order No. 60 issued on
February
26, 1993, creating the Presidential Inter-Agency Committee on
Intellectual
Property Rights. Several member-agencies of this Committee have
created
special task forces on IPR such as: the Department of Trade and
Industry
[DTI], Department of Justice [DOJ], National Bureau of Investigation
[NBI],
Bureau of Customs [BOC] and the Philippine National Police [PNP].
- Executive Order No. 913
[Strengthening the
Rule-Making and Adjudicatory Powers of the Minister of Trade and
Industry
in order to further protect consumers].
Treaties on Intellectual
Property Rights [Philippines is a signatory]:
The
Republic of the Philippines is a signatory
to several international treaties on intellectual property rights, to
wit:
- Convention Establishing the World
Intellectual
Property Organization [since 1980]
- Paris Convention for the
Protection of Industrial
Property [since 1965]
- Budapest Treaty on the
International Recognition
of the Deposit of Microorganisms for Purposes of Patent Procedure
[since
1981]
- Berne Convention for the
Protection of Literary
and Artistic Works [since 1984]
- International Convention for the
Protection
of Performers, Producers of Phonographs and Broadcasting Organizations
[since 1984]
- Agreement on Trade-Related Aspects
of Intellectual
Property Rights [TRIPS Agreement]
PART XVIIINTERNATIONAL
INVESTMENT AGREEMENTS[PHILIPPINES,
A PARTY-SIGNATORY]
The
following is a rundown of international
agreements [in force and in effect] to which the Philippines is a
party-signatory,
which are of commercial or economic nature and significance:
- Friendship
Commerce
and Navigation Treaty:
- "The Treaty of
Amity,
Commerce and Navigation between the Republic of the Philippines and
Japan"where they express their intent to maintain and strengthen
amicable
relations existing between them on a mutually advantageous basis.
- Bilateral
Investment
Treaties:
- Philippines
and Kingdom
of Great Britain and Northern Ireland
- Philippines
and Kingdom
of Netherlands
- Philippines
and Republic
of Italy
- Philippines
and Socialist
Republic of Vietnam
- Philippines
and Chinese
Taipei
- Philippines
and People's
Republic of China
- Philippines
and Kingdom
of Spain
- Philippines
and Romania
- Philippines
and Republic
of Korea
- Philippines
and France
- Philippines
and Australia
- Philippines
and Czech
- Philippines
and Thailand
- Philippines
and Iran
- Philippines
and Canada
- Philippines
and Chile
- Philippines
and Switzerland
- Philippines
and Germany
- The ASEAN
Agreement
for the Promotion and Protection of
Investments
All the foregoing treaties commonly
embody
the following basic tenets:
[1] Promotion of investments in
either economy by investors of the other economy through the creation
of
favorable conditions of investments to foster their respective economic
developments.
[2] Provision on
Most-Favoured-Nation
(MFN) Treatment arrangement where respective investors are accorded
treatment
no less favorable than that accorded to investors of any third State.
[3] Provision on expropriation
which
ordains that if any investors of either economy suffer losses in the
other
economy by reason of national emergency, revolution, revolt or similar
events, the host economy shall accord treatment to that economy no less
favorable than that it accords to investments of any third State.
[4] Provision on transfer
of
investments which guarantees the free transfer of investments and
returns
held in the territory of one contracting economy to the other economy.
[5] Provision on subrogation of
rights.
PART XVIIIDISPUTES
SETTLEMENT
Government vs.
Government:
As a
member of the WTO, the Philippines
adheres to the procedures for dispute settlement prescribed by
WTO.
Consequently, it considers these procedures as being applicable to any
case or controversy falling within WTO's jurisdiction.
Private Party/ies
vs. Government:
The
Philippines adheres to the dispute
settlement procedures prescribed under the International Convention on
the Settlement of Investment Disputes Between States and Nationals of
Other
States [ICSID] as well as the Convention on the Recognition and
Enforcement
of Foreign Arbitral Awards [New York Convention], being a signatory
thereof.
Private Party/ies
vs. Private Party/ies:
The basic
legal framework applicable in
the resolution of conflicts and disputes between private parties are as
follows:
- Executive Order No. 1008 - provides
for the
creation of an Arbitration Machinery in the Construction Industry of
the
Philippines.
- Republic Act No. 876 - provides for
arbitration
and submission agreements, appointment of arbitrators and the procedure
for arbitration in civil controversies.
- Republic Act No. 6715 - promotes
voluntary
arbitration in labor relations disputes.
PART XIXGOVERNMENT
AGENCIESCONCERNED
WITH
FOREIGN INVESTMENTS The following agencies of the Philippine
government
are involved in processing and approval of foreign investments:
[a] Board
of Investments [BOI]
Industry and Investment Building
385 Sen. Gil J. Puyat Avenue
Makati City, Metro Manila
Telephone: (632) 895-5602;895-8370
Fax: (632) 895-3521
[b] One
Stop
Action Center [OSAC]
Board of Investments [See above physical
address]
Telephone: (632) 896-7884; 895-7342
or 896-7342
[c] Securities
and Exchange Commission [SEC]
SEC Building E. de los Santos Ave.
Mandaluyong City, Metro Manila
Telephone: (632) 780-931
Fax: (632) 793-072
[d] Philippine
Economic Zone Authority [PEZA]
4th Floor, Legaspi Towers 300 corner
Vito Cruz St. and Roxas Blvd., Manila
Telephone: (632) 521-0546
Fax: (632) 521-0419
[e] Subic
Bay Metropolitan Authority [SBMA]
Subic Freeport, Subic, Olongapo City
Law/s
enforced and implemented:Bases
Conversion
and Development Act of 1992 [Republic Act No. 7227]
[f] Bases
Conversion Development Authority [BCDA]
2nd Floor, Rufino Building
Ayala Avenue, Makati City, Metro Manila
Telephone: (632) 813-5380
Fax: (632) 813-5425
Law/s
enforced and implemented:Bases
Conversion
and Development Act of 1992 [Republic Act No. 7227]
[g] Bureau
of Internal Revenue [BIR]
Atrium Building
Makati City, Metro Manila
Telephone: (632) 811-4448
Fax: (632) 811-4390
[h] Bangko
Sentral ng Pilipinas [BSP]
A. Mabini Street, Ermita
Manila
Telephone: (632) 815-1729
Law/s
enforced and implemented:Revised Central
Bank Act, as amended
[i] Social
Security System [SSS]
SSS Bldg., East Avenue, Diliman
Quezon City
Telephone: (632) 920-6401
B
PART XXONE-STOP
ACTION
CENTERS
In the
Philippines, there are several One-Stop
Action Centers which houses in one place representatives from all the
government
agencies with which a foreign investor will deal and submit his
application
and pertinent documents. Under this concept, processing of
applications
is made within twenty (20) days. Its special feature is when no
action
is made on the application within said period, it is deemed
automatically
approved after the lapse of said period.
The
following One-Stop Action Centers are
now in full operation:
[1] One-Stop
Action Center [OSAC]
Board of Investments
Industry and Investment Bldg.
385 Sen. Gil J. Puyat Avenue,
Makati City, Metro Manila
Telephone: (632) 895-5602; 895-8370
or 895-3521
[2] One-Stop
Export Documentation Center
International Trade Center Complex
Roxas Blvd. cor. Sen. Gil Puyat Ave.,
Pasay City, Metro Manila
Telephone: (632) 834-1344 to 49 Local 125
[3] One-Stop
Import Processing Center
Bureau of Import Services (BIS)
349 Sen. Gil Puyat Ave.,
Makati City, Metro Manila
Telephone: (632) 818-9111
[4] One-Stop
Action Garments Export Assistance Center
Garments and Textile Export Board (GTEB)
357 Sen. Gil Puyat Ave., New Solid Bldg.,
Makati City, Metro Manila
Telephone: (632) 817-4323
[5] One-Stop
Shop
Tax Credit Center
Department of Finance (DOF)
Roxas Blvd., Multi-Purpose Bldg., Bangko
Sentral ng Pilipinas
Telephone: (632) 526-2293
The
Philippines has a total number of eighty
[80] economic zones (ECOZONES). Out of this number, a total of 29
has been proclaimed and 51 has been an expansion. Below is the
list
of the ECOZONES and their respective locations and total areas.
GOVERNMENT
ECOZONES |
LOCATION |
TOTAL
AREA [hectares] |
Bataan
Ecozone |
Marivelez,
Bataan |
1,600 |
Bagui
City Ecozone |
Loakan
Road, Baguio City |
113.7 |
Mactan
Ecozone |
Lapu-Lapu
City, Mactan, Cebu |
160 |
Cavite
Ecozone |
Rosario,
Cavite |
275.8 |
PRIVATE
ECOZONES [LUZON] |
LOCATION |
TOTAL
AREA [hectares] |
PRIVATE
ECOZONES [LUZON] |
LOCATION |
TOTAL
AREA [hectares] |
Abra
Agro-Industrial Center |
Tayum,
Abra |
35 |
Light
Industry & Science Park I |
Cabuyao,
Laguna |
67 |
Angeles
Industrial Park |
Angeles,
Pampanga |
32 |
Light
Industry & Science Park II |
Calamba,
Laguna |
63.7 |
Best
World Industrial Park |
Batas,
Silang, Cavite |
145 |
Light
Industry & Science Park III |
Sto.
Tomas, Batangas |
133 |
Bicol
Industrial Park |
San
Jose, Camarines Sur |
100 |
LIIP
Calamba Industrial Community/Calamba Premier |
Calamba,
Laguna |
65.6 |
Cambridge
Intelligent Park |
Dasmarinas,
Cavite |
86 |
Lima
Technology Center |
Lipa
City & Malvar, Batangas City |
280 |
Carmelray
Industrial Park |
Canlubang,
Laguna |
46 |
Luisita
Industrial Park I |
San
Miguel, Tarlac |
29.4 |
Carmelray
Industrial Park |
Calamba,
Laguna |
145 |
Luisita
Industrial Park II |
San
Miguel, Tarlac |
300 |
Cocochem
Agro-Industrial Park |
Bauan,
Batangas |
42 |
Pagbilao
Industrial & Science Park |
Pagbilao,
Quezon |
198 |
Daiichi
Industrial Park |
Silang,
Cavite |
55 |
Palayan
City Agro-Industrial Center |
Palayan
City, Nueva Ecija |
149 |
Eastern
Pangasinan Agro-Industrial Park |
Sta.
Maria, Pangasinan |
57 |
Pangasinan
Industrial Park |
Mabini,
Pangasinan |
97 |
Fil-Estate
Industrial Park |
Trece
Martirez & Tanza, Cavite |
266.9 |
PEC
Industrial Park |
Gen.
Trias, Cavite |
177 |
Filinvest
Industrial Park-Cavite |
Trece
Martirez & Tanza, Cavite |
86 |
Phil.
International Air Terminals |
Villamor
Air Base, Pasay City |
63.5 |
Filinvest
[Calamba] SEZ |
Calamba,
Laguna |
250 |
Plastic
City Special Ecozone |
Marivelez,
Bataan |
26.6 |
Filoil
Special Economic Zone |
Rosario,
Cavite |
50.3 |
PNOC
Petrochemical Complex |
Limay,
Bataan |
150 |
First
Cavite Industrial Park |
Dasmarinas,
Cavite |
53.7 |
Prince
Cabuyao SEZ |
Cabuyao,
Laguna |
25.447 |
First
Batangas Industrial Park |
Manghinao,
Batangas |
54 |
Puerto
Princesa Environmental Estate |
Puerto
Princesa, Palawan |
1,072 |
First
Philippine Industrial Park |
Sto.
Tomas, Batangas |
75 |
Rancho
Montana Ecozone |
Tanauan,
Batangas |
900 |
First
Philippine Industrial Park II |
Tanauan,
Batangas |
61.97 |
Rizal
Industrial Estate |
Tanay,
Rizal |
326 |
Gateway
Business Park [Expansion] |
Gen.
Trias, Cavite |
89.2 |
RLC
Special Economic Zone |
Simlong,
Batangas City |
95 |
Gateway
Business Park [Expansion II] |
Gen.
Trias, Cavite |
18.7 |
Southwoods
Ecocentrum Tourism Estate |
Binan,
Laguna |
76 |
Gateway
Business Park [Expansion III] |
Gen.
Trias, Cavite |
0.6 |
Smokey
Mountain Devt. & Reclamation Project |
Tondo,
Manila |
400 |
Hermosa
Ecozone |
Hermosa,
Bataan |
600 |
Sta.
Rita Industrial Park |
Pili,
Camarines Sur |
219 |
Laguna
International Industrial Park |
Binan,
Laguna |
32 |
Subic
Shipyard Special Zone |
Subic,
Olongapo City |
52 |
Laguna
Technopark I |
Sta.
Rosa, Laguna |
71 |
Subic
Shipyard Special Zone II |
Subic,
Olongapo City |
19 |
Laguna
Technopark II |
Sta.
Rosa, Laguna |
68 |
Tabangao
Special Economic Zone |
Tabangao,
Batangas City |
86 |
Laguna
Technopark III |
Binan,
Laguna |
89 |
Taipan
Gold Industrial Park |
Gen.
Trias, Cavite |
100 |
Legaspi
City SEZ |
Caridad,
Banquerohan |
33.1 |
Toyota
Sta. Rosa Special Zone---------------Victoria
Wave Special Zone |
Sta.
Rosa, Laguna---------------Tala,
Caloocan City |
25-----50 |
chanroblesvirtualawlibrary
PRIVATE
ECOZONES [VISAYAS] |
LOCATION |
TOTAL
AREA [hectares] |
PRIVATE
ECOZONES [MINDANAO] |
LOCATION |
TOTAL
AREA [hectares] |
Amihan
Woodlands Township |
San
Isidro & Calubian, Leyte |
2,300 |
Ayala
de Zamboanga Industrial Park |
Zamboanga
City |
50 |
Cebu
Light Industrial Park Ecozone |
Mactan,
Cebu |
63 |
Filinvest
[General Santos City] SEZ |
General
Santos City, Soutch Cotabato |
80 |
Cebu
South Reclamation Project |
Talisay,
Cebu |
330 |
First
Oriental Business & Industrial Park |
Ilang,
Davao Oriental |
57.3 |
Guimaras
Special Economic Zone |
Guimaras,
Iloilo |
216.49 |
Maguindanao
Ecocity SEZ |
Parang,
Maguidanao |
351.76 |
Leganes
Industrial Growth Center |
Leganes,
Iloilo |
177.58 |
Nasipit
Agusan del Norte Industrial Estate |
Nasipit,
Agusan del Norte |
296 |
Leyte
Industrial Development Estate |
Isabel,
Leyte |
424.7 |
NSC
SEZ |
Iligan
City |
274 |
Mactan
Ecozone II |
Mactan,
Cebu |
63.3 |
Philnico
Industrial Estate SEZ |
Nonoc
Island, Northeastern Mindanao |
100 |
New
Cebu Township |
Naga,
Cebu |
36.6 |
Samal
Casino Resort |
Tucanga,
Katipunan, Davao del Norte |
215 |
Pavia
Special Economic Zone |
Pavia,
Iloilo |
50 |
Tubay
Agri-Processing Center |
Tubay,
Agusan del Norte |
196 |
Tacloban
Industrial Estate |
Tacloban
City |
44 |
|
|
|
West
Cebu Industrial Park |
Balamban,
Cebu |
245 |
|
|
|
|