Omnibus Investment Code (Eo 226)
Omnibus Investment Code (Eo 226)
Omnibus Investment Code (Eo 226)
Secretary of Trade and Industry, three (3) Undersecretaries of Trade and Industry
to be chosen by the President, and three (3) representatives from other
government agencies and the private sector. The Secretary of Trade and
Industry shall be concurrently Chairman of the Board and the Undersecretary of
the Department of Trade and Industry for Industry and Investments shall be
appointed by the President for a term of four (4) years: Provided, That upon the
expiration of his term, a governor shall serve as such until his successor shall have
been appointed and qualified: Provided, further, That no vacancy shall be filled
except for the unexpired portion of any term, and that no one may be
designated to be governor of the Board in an acting capacity but all
appointments shall be ad interim or permanent.
Article 5. Qualifications of Governors of the Board. The governors of the Board
shall be citizens of the Philippines, at least thirty (30) years old, of good moral
character and of recognized competence in the fields of economics, finance,
banking, commerce, industry, agriculture, engineering, law, management or
labor.
Article 16. "Preferred areas of investments" shall mean the economic activities
that the Board shall have declared as such in accordance with Article 28 which
shall be either non-pioneer or pioneer.
Article 28. Criteria in Investment Priority Determination. No economic activity
shall be included in the Investment Priority Plan unless it is shown to be
economically, technically and financially sound after thorough investigation
and analysis by the Board.
The determination of preferred areas of investment to be listed in the Investment
Priorities Plan shall be based on long-run comparative advantage, taking into
account the value of social objectives and employing economic criteria along
with market, technical, and financial analyses.
The Board shall take into account the following:
(a) Primarily, the economic soundness of the specific activity as
shown by its economic internal rate of return;
(b) The extent of contribution of an activity to a specific
developmental goal;
(c) Other indicators or comparative advantage;
(d) Measured capacity as defined in Article 20; and
(e) The market and technical aspects and considerations of the
activity proposed to be included.
In any of the declared preferred areas of investment, the Board may designate
as pioneer areas the specific products and commodities that meet the
requirements of Article 17 of this Code and review yearly whether such activity,
as determined by the Board, shall continue as pioneer, otherwise, it shall be
considered as non-pioneer and accordingly listed as such in the Investment
Priorities Plan or removed from the Investment Priorities Plan.
Article 27. Investment Priorities Plan. Not later than the end of March of every
year, the Board of Investments, after consultation with the appropriate
government agencies and the private sector, shall submit to the President an
Investment Priorities Plan: Provided, however, That the deadline for submission,
may be extended by the President.
Article 29. Approval of the Investment Priorities Plan. The President shall proclaim
the whole or part of such plan as in effect; or alternatively, return the whole or
part of the plan to the Board of Investment for revision.
Upon the effectivity of the plan or portions thereof, the President shall issue all
necessary directives to all departments, bureaus, agencies or instrumentalities of
the government to ensure the implementation of the plan by the agencies
concerned in a synchronized and integrated manner. No government body
shall adopt any policy or take any course of action contrary to or inconsistent
with the plan.
QUALIFICATIONS and INCENTIVES
Article 32. Qualifications of a Registered Enterprises. To be entitled to registration
under the Investment Priorities Plan, an applicant must satisfy the Board that:
(1) He is a citizen of the Philippines, in case the applicant is a natural
person, or in case of a partnership or any other association, it is
organized under Philippine laws and that at least sixty percent (60%)
of its capital is owned and controlled by citizens of the Philippines;
or in case of a corporation or a cooperative, it is organized under
Philippine laws and that at least sixty per cent (60%) of the capital
stock outstanding and entitled to vote is owned and held by
Philippine nationals as defined under Article 15 of this Code, and at
least sixty per cent (60%) of the members of the Board of Directors
are citizens of the Philippines. If it does not possess the required
degree of ownership as mentioned above by Philippine nationals,
the following circumstances must be satisfactorily established:
(a) That it proposes to engage in a pioneer projects as
defined in Article 17 of this Code, which, considering
the nature and extent of capital requirements,
processes, technical skills and relative business risks
involved, is in the opinion of the Board of such a nature
that the available measured capacity thereof cannot
be readily and adequately filled by Philippine nationals;
or, if the applicant is exporting at least seventy per cent
(70%) of is total production, the export requirement
herein provided may be reduced in meritorious cases
under such conditions and/or limited incentives as the
Board may determine;
(b) That it obligates itself to attain the status of a
Philippine national, as defined in Article 15, within thirty
(30) years from the date of registration or with such
longer period as the Board may require taking into
account the export potential of the project: Provided,
of
proven
technical
enterprise shall be exempt from all taxes and duties: Provided, That
such breeding stocks and genetic materials are (1) not locally
available and/or obtainable locally in comparable quality and at
reasonable prices; (2) reasonably needed in the registered activity;
and (3) approved by the Board.
(j) Tax Credit on Domestic Breeding Stocks and Genetic Materials. A
tax credit equivalent to one hundred percent (100%) of the value of
national internal revenue taxes and customs duties that would have
been waived on the breeding stocks and genetic materials had
these items been imported shall be given to the registered
enterprise which purchases breeding stocks and generic materials
from a domestic producer: Provided, 1) That said breeding stocks
and generic materials would have qualified for tax and duty free
importation under the preceding paragraph; 2) that the breeding
stocks and genetic materials are reasonably needed in the
registered activity; 3) that the approval of the board has been
obtained by the registered enterprise; and 4) that the purchase is
made within ten (10) years from date of registration or commercial
operation of the registered enterprise.
(k) Tax Credit for Taxes and Duties on Raw Materials. Every
registered enterprise shall enjoy a tax credit equivalent to the
National Internal Revenue taxes and Customs duties paid on the
supplies, raw materials and semi-manufactured products used in
the manufacture, processing or production of its export products
and forming part thereof, exported directly or indirectly by the
registered enterprise: Provided, however, that the taxes on the
supplies, raw materials and semi- manufactured products
domestically purchased are indicated as a separate item in the
sales invoice.
Nothing herein shall be construed as to preclude the Board from
setting a fixed percentage of export sales as the approximate tax
credit for taxes and duties of raw materials based on an average or
standard usage for such materials in the industry.
(l) Access to Bonded Manufacturing/Trading Warehouse System.
Registered export oriented enterprises shall have access to the
utilization of the bonded warehousing system in all areas required
by the project subject to such guidelines as may be issued by the
Board upon prior consultation with the Bureau of Customs.
(m) Exemption from Taxes and Duties on Imported Spare Parts.
Importation of required supplies and spare parts for consigned
equipment or those imported tax and duty free by a registered
enterprise with a bonded manufacturing warehouse shall be
exempt from customs duties and national internal revenue taxes
payable thereon, Provided, However, That at least seventy percent
(70%) of production is exported; Provided, further, that such spare
parts and supplies are not locally available at reasonable prices,
sufficient quantity and comparable quality; Provided, finally, That all
such spare parts and supplies shall be used only in the bonded